diff --git a/Lib/compileall.py b/Lib/compileall.py
index 49306d9..bfac8ef 100644
--- a/Lib/compileall.py
+++ b/Lib/compileall.py
@@ -41,7 +41,7 @@
         else:
             dfile = None
         if not os.path.isdir(fullname):
-            yield fullname
+            yield fullname, ddir
         elif (maxlevels > 0 and name != os.curdir and name != os.pardir and
               os.path.isdir(fullname) and not os.path.islink(fullname)):
             yield from _walk_dir(fullname, ddir=dfile,
@@ -76,28 +76,33 @@
             from concurrent.futures import ProcessPoolExecutor
         except ImportError:
             workers = 1
-    files = _walk_dir(dir, quiet=quiet, maxlevels=maxlevels,
-                      ddir=ddir)
+    files_and_ddirs = _walk_dir(dir, quiet=quiet, maxlevels=maxlevels,
+                                ddir=ddir)
     success = True
     if workers != 1 and ProcessPoolExecutor is not None:
         # If workers == 0, let ProcessPoolExecutor choose
         workers = workers or None
         with ProcessPoolExecutor(max_workers=workers) as executor:
-            results = executor.map(partial(compile_file,
-                                           ddir=ddir, force=force,
-                                           rx=rx, quiet=quiet,
-                                           legacy=legacy,
-                                           optimize=optimize,
-                                           invalidation_mode=invalidation_mode),
-                                   files)
+            results = executor.map(
+                    partial(_compile_file_tuple,
+                            force=force, rx=rx, quiet=quiet,
+                            legacy=legacy, optimize=optimize,
+                            invalidation_mode=invalidation_mode,
+                        ),
+                    files_and_ddirs)
             success = min(results, default=True)
     else:
-        for file in files:
-            if not compile_file(file, ddir, force, rx, quiet,
+        for file, dfile in files_and_ddirs:
+            if not compile_file(file, dfile, force, rx, quiet,
                                 legacy, optimize, invalidation_mode):
                 success = False
     return success
 
+def _compile_file_tuple(file_and_dfile, **kwargs):
+    """Needs to be toplevel for ProcessPoolExecutor."""
+    file, dfile = file_and_dfile
+    return compile_file(file, dfile, **kwargs)
+
 def compile_file(fullname, ddir=None, force=False, rx=None, quiet=0,
                  legacy=False, optimize=-1,
                  invalidation_mode=None):
diff --git a/Lib/test/test_compileall.py b/Lib/test/test_compileall.py
index 04f6e1e..64f092b 100644
--- a/Lib/test/test_compileall.py
+++ b/Lib/test/test_compileall.py
@@ -577,6 +577,47 @@
             self.assertTrue(compile_dir.called)
             self.assertEqual(compile_dir.call_args[-1]['workers'], 0)
 
+    def _test_ddir_only(self, *, ddir, parallel=True):
+        """Recursive compile_dir ddir must contain package paths; bpo39769."""
+        fullpath = ["test", "foo"]
+        path = self.directory
+        mods = []
+        for subdir in fullpath:
+            path = os.path.join(path, subdir)
+            os.mkdir(path)
+            script_helper.make_script(path, "__init__", "")
+            mods.append(script_helper.make_script(path, "mod",
+                                                  "def fn(): 1/0\nfn()\n"))
+        compileall.compile_dir(
+                self.directory, quiet=True, ddir=ddir,
+                workers=2 if parallel else 1)
+        self.assertTrue(mods)
+        for mod in mods:
+            self.assertTrue(mod.startswith(self.directory), mod)
+            modcode = importlib.util.cache_from_source(mod)
+            modpath = mod[len(self.directory+os.sep):]
+            _, _, err = script_helper.assert_python_failure(modcode)
+            expected_in = os.path.join(ddir, modpath)
+            mod_code_obj = test.test_importlib.util._get_code_from_pyc(modcode)
+            self.assertEqual(mod_code_obj.co_filename, expected_in)
+            self.assertIn(f'"{expected_in}"', os.fsdecode(err))
+
+    def test_ddir_only_one_worker(self):
+        """Recursive compile_dir ddir= contains package paths; bpo39769."""
+        return self._test_ddir_only(ddir="<a prefix>", parallel=False)
+
+    def test_ddir_multiple_workers(self):
+        """Recursive compile_dir ddir= contains package paths; bpo39769."""
+        return self._test_ddir_only(ddir="<a prefix>", parallel=True)
+
+    def test_ddir_empty_only_one_worker(self):
+        """Recursive compile_dir ddir='' contains package paths; bpo39769."""
+        return self._test_ddir_only(ddir="", parallel=False)
+
+    def test_ddir_empty_multiple_workers(self):
+        """Recursive compile_dir ddir='' contains package paths; bpo39769."""
+        return self._test_ddir_only(ddir="", parallel=True)
+
 
 class CommmandLineTestsWithSourceEpoch(CommandLineTestsBase,
                                        unittest.TestCase,
diff --git a/Lib/test/test_importlib/util.py b/Lib/test/test_importlib/util.py
index e016ea4..e6a1476 100644
--- a/Lib/test/test_importlib/util.py
+++ b/Lib/test/test_importlib/util.py
@@ -7,6 +7,7 @@
 from importlib import machinery, util, invalidate_caches
 from importlib.abc import ResourceReader
 import io
+import marshal
 import os
 import os.path
 from pathlib import Path, PurePath
@@ -118,6 +119,16 @@
     return '{}.{}'.format(parent, name), path
 
 
+def _get_code_from_pyc(pyc_path):
+    """Reads a pyc file and returns the unmarshalled code object within.
+
+    No header validation is performed.
+    """
+    with open(pyc_path, 'rb') as pyc_f:
+        pyc_f.seek(16)
+        return marshal.load(pyc_f)
+
+
 @contextlib.contextmanager
 def uncache(*names):
     """Uncache a module from sys.modules.
diff --git a/Misc/NEWS.d/next/Library/2020-02-29-13-20-33.bpo-39769.hJmxu4.rst b/Misc/NEWS.d/next/Library/2020-02-29-13-20-33.bpo-39769.hJmxu4.rst
new file mode 100644
index 0000000..9b564bd
--- /dev/null
+++ b/Misc/NEWS.d/next/Library/2020-02-29-13-20-33.bpo-39769.hJmxu4.rst
@@ -0,0 +1,4 @@
+The :func:`compileall.compile_dir` function's *ddir* parameter and the
+compileall command line flag `-d` no longer write the wrong pathname to the
+generated pyc file for submodules beneath the root of the directory tree
+being compiled.  This fixes a regression introduced with Python 3.5.