diff --git a/powerlevel9k.zsh-theme b/powerlevel9k.zsh-theme
index d60219eb..c404c0c2 100755
--- a/powerlevel9k.zsh-theme
+++ b/powerlevel9k.zsh-theme
@@ -723,7 +723,10 @@ set_default POWERLEVEL9K_DIR_PATH_SEPARATOR "/"
 set_default POWERLEVEL9K_HOME_FOLDER_ABBREVIATION "~"
 set_default POWERLEVEL9K_DIR_PATH_HIGHLIGHT_BOLD false
 prompt_dir() {
-  local current_path="$(print -P '%~')"
+  # using $PWD instead of "$(print -P '%~')" to allow use of POWERLEVEL9K_DIR_PATH_ABSOLUTE
+  local current_path=$PWD # WAS: local current_path="$(print -P '%~')"
+  # check if the user wants to use absolute paths or "~" paths
+  [[ ${(L)POWERLEVEL9K_DIR_PATH_ABSOLUTE} != "true" ]] && current_path=${current_path//$HOME/"~"}
   # save this path so that we can use the pure path for STATE icons and colors later.
   local state_path=$current_path
   # declare all local variables
@@ -891,9 +894,9 @@ prompt_dir() {
   local current_state="DEFAULT"
   if [[ "${POWERLEVEL9K_DIR_SHOW_WRITABLE}" == true && ! -w "$PWD" ]]; then
     current_state="NOT_WRITABLE"
-  elif [[ $state_path == '~' ]]; then
+  elif [[ $state_path == $HOME ]]; then # changed '~' to $HOME for compatibility with POWERLEVEL9K_DIR_PATH_ABSOLUTE
     current_state="HOME"
-  elif [[ $state_path == '~'* ]]; then
+  elif [[ $state_path == $HOME* ]]; then # changed '~'* to $HOME* for compatibility with POWERLEVEL9K_DIR_PATH_ABSOLUTE
     current_state="HOME_SUBFOLDER"
   fi
 
diff --git a/test/segments/dir.spec b/test/segments/dir.spec
index 12242961..efe99672 100755
--- a/test/segments/dir.spec
+++ b/test/segments/dir.spec
@@ -18,6 +18,16 @@ function tearDown() {
   unset POWERLEVEL9K_LEFT_PROMPT_ELEMENTS
 }
 
+function testAbsolutePathWorks() {
+  POWERLEVEL9K_DIR_PATH_ABSOLUTE=true
+
+  cd ~
+  assertEquals "%K{blue} %F{black}…/12345678/123456789 %k%F{blue}%f " "$(build_left_prompt)"
+
+  cd -
+  unset POWERLEVEL9K_DIR_PATH_ABSOLUTE
+}
+
 function testTruncateFoldersWorks() {
   POWERLEVEL9K_SHORTEN_DIR_LENGTH=2
   POWERLEVEL9K_SHORTEN_STRATEGY='truncate_folders'