diff --git a/doc/source/manual/reference.rst b/doc/source/manual/reference.rst
index 6480bb97..38ce3afa 100644
--- a/doc/source/manual/reference.rst
+++ b/doc/source/manual/reference.rst
@@ -85,8 +85,13 @@ Waveform tracing
       This attribute is used to overwrite the default top-level instance name and the
       basename of the VCD output filename.
 
+   .. attribute:: directory
+
+      This attribute is used to set the directory to which VCD files are written. By
+      default, the current working directory is used.
+
    .. attribute:: timescale
-   
+
       This attribute is used to set the timescale corresponding to unit steps,
       according to the VCD format. The assigned value should be a string.
       The default timescale is "1ns".
diff --git a/myhdl/_traceSignals.py b/myhdl/_traceSignals.py
index 35cee8f1..bc814a87 100644
--- a/myhdl/_traceSignals.py
+++ b/myhdl/_traceSignals.py
@@ -50,12 +50,14 @@ _error.MultipleTraces = "Cannot trace multiple instances simultaneously"
 class _TraceSignalsClass(object):
 
     __slot__ = ("name",
+                "directory",
                 "timescale",
                 "tracelists"
                 )
 
     def __init__(self):
         self.name = None
+        self.directory = None
         self.timescale = "1ns"
         self.tracelists = True
 
@@ -82,8 +84,14 @@ class _TraceSignalsClass(object):
                 name = str(self.name)
             if name is None:
                 raise TraceSignalsError(_error.TopLevelName)
+
+            if self.directory is None:
+                directory = ''
+            else:
+                directory = self.directory
+
             h = _HierExtr(name, dut, *args, **kwargs)
-            vcdpath = name + ".vcd"
+            vcdpath = os.path.join(directory, name + ".vcd")
             if path.exists(vcdpath):
                 backup = vcdpath + '.' + str(path.getmtime(vcdpath))
                 shutil.copyfile(vcdpath, backup)
@@ -111,7 +119,7 @@ def _genNameCode():
     while 1:
         yield _namecode(n)
         n += 1
-        
+
 def _namecode(n):
     q, r = divmod(n, _mod)
     code = _codechars[r]
@@ -175,7 +183,7 @@ def _writeVcdSigs(f, hierarchy, tracelists):
             else:
                 print("$var real 1 %s %s $end" % (s._code, n), file=f)
         # Memory dump by Frederik Teichert, http://teichert-ing.de, date: 2011.03.28
-        # The Value Change Dump standard doesn't support multidimensional arrays so 
+        # The Value Change Dump standard doesn't support multidimensional arrays so
         # all memories are flattened and renamed.
         if tracelists:
             for n in memdict.keys():
@@ -207,16 +215,3 @@ def _writeVcdSigs(f, hierarchy, tracelists):
     for s in siglist:
         s._printVcd() # initial value
     print("$end", file=f)
-            
-            
-        
-        
-
-
-    
-    
-
-            
-        
-    
-    
diff --git a/myhdl/test/core/test_traceSignals.py b/myhdl/test/core/test_traceSignals.py
index d591bc4b..7f79c00a 100644
--- a/myhdl/test/core/test_traceSignals.py
+++ b/myhdl/test/core/test_traceSignals.py
@@ -173,3 +173,16 @@ class TestTraceSigs:
         assert path.exists(pbak)
         assert path.getsize(pbak) == size
         assert path.getsize(p) < size
+
+    def testSetDirectory(self, vcd_dir):
+        traceSignals.directory = 'some_vcd_dir'
+        os.mkdir(path.join(str(vcd_dir), traceSignals.directory))
+        pdut = "%s.vcd" % top.__name__
+        psub = "%s.vcd" % fun.__name__
+        pdutd = path.join(traceSignals.directory, "%s.vcd" % top.__name__)
+        psubd = path.join(traceSignals.directory, "%s.vcd" % fun.__name__)
+        dut = traceSignals(top)
+        assert not path.exists(pdut)
+        assert not path.exists(psub)
+        assert path.exists(pdutd)
+        assert not path.exists(psubd)