diff --git a/include/dos_system.h b/include/dos_system.h
index 631c5cbf..1c3289b3 100644
--- a/include/dos_system.h
+++ b/include/dos_system.h
@@ -162,6 +162,8 @@ public:
 
 	void		CacheOut			(const char* path, bool ignoreLastDir = false);
 	void		AddEntry			(const char* path, bool checkExist = false);
+	void		AddEntryDirOverlay			(const char* path, bool checkExist = false);
+
 	void		DeleteEntry			(const char* path, bool ignoreLastDir = false);
 
 	void		EmptyCache			(void);
@@ -172,7 +174,7 @@ public:
 	public:
 		CFileInfo(void) {
 			orgname[0] = shortname[0] = 0;
-			isDir = false;
+			isOverlayDir = isDir = false;
 			id = MAX_OPENDIRS;
 			nextEntry = shortNr = 0;
 		}
@@ -183,6 +185,7 @@ public:
 		};
 		char		orgname		[CROSS_LEN];
 		char		shortname	[DOS_NAMELENGTH_ASCII];
+		bool		isOverlayDir;
 		bool		isDir;
 		Bit16u		id;
 		Bitu		nextEntry;
@@ -206,7 +209,7 @@ private:
 	CFileInfo*	FindDirInfo		(const char* path, char* expandedPath);
 	bool		RemoveSpaces		(char* str);
 	bool		OpenDir			(CFileInfo* dir, const char* path, Bit16u& id);
-	void		CreateEntry		(CFileInfo* dir, const char* name, bool query_directory);
+	void		CreateEntry		(CFileInfo* dir, const char* name, bool is_directory);
 	void		CopyEntry		(CFileInfo* dir, CFileInfo* from);
 	Bit16u		GetFreeID		(CFileInfo* dir);
 	void		Clear			(void);
diff --git a/src/dos/drive_cache.cpp b/src/dos/drive_cache.cpp
index d3c50ce5..e0500d30 100644
--- a/src/dos/drive_cache.cpp
+++ b/src/dos/drive_cache.cpp
@@ -187,6 +187,7 @@ char* DOS_Drive_Cache::GetExpandName(const char* path) {
 	if (*work) {
 		size_t len = strlen(work);
 #if defined (WIN32) 
+		//What about OS/2 
 		if((work[len-1] == CROSS_FILESPLIT ) && (len >= 2) && (work[len-2] != ':')) {
 #else
 		if((len > 1) && (work[len-1] == CROSS_FILESPLIT )) {
@@ -228,6 +229,72 @@ void DOS_Drive_Cache::AddEntry(const char* path, bool checkExists) {
 //		LOG_DEBUG("DIR: Error: Failed to add %s",path);	
 	}
 }
+void DOS_Drive_Cache::AddEntryDirOverlay(const char* path, bool checkExists) {
+	// Get Last part...
+	char file	[CROSS_LEN];
+	char expand	[CROSS_LEN];
+	char dironly[CROSS_LEN + 1];
+
+	//When adding a directory, the directory we want to operate inside in is the above it. (which can go wrong if the directory already exists.)
+	strcpy(dironly,path);
+	char* post = strrchr(dironly,CROSS_FILESPLIT);
+
+	if (post) {
+#if defined (WIN32) 
+		//OS2 ?
+		if (post > dironly && *(post - 1) == ':' && (post - dironly) == 2) 
+			post++; //move away from X: as need to end up with x:\ 
+#else
+	//Lets hope this is not really used.. (root folder specified as overlay)
+		if (post == dironly)
+			post++; //move away from / 
+#endif
+		*post = 0; //TODO take care of AddEntryDIR D:\\piet) (so mount d d:\ as base)
+		*(post + 1) = 0; //As FindDirInfo is skipping over the base directory
+	}
+	CFileInfo* dir = FindDirInfo(dironly,expand);
+	const char* pos = strrchr(path,CROSS_FILESPLIT);
+
+	if (pos) {
+		strcpy(file,pos + 1);	
+		// Check if directory already exists, then don't add new entry...
+		if (checkExists) {
+			Bits index = GetLongName(dir,file);
+			if (index >= 0) {
+				//directory already exists, but most likely empty. 
+				dir = dir->fileList[index];
+				if (dir->isOverlayDir && dir->fileList.empty()) {
+					//maybe care about searches ? but this function should only run on cache inits/refreshes.
+					//add dot entries
+					CreateEntry(dir,".",true);
+					CreateEntry(dir,"..",true);
+				}
+				return;
+			}
+		}
+
+		CreateEntry(dir,file,true);
+		
+
+		Bits index = GetLongName(dir,file);
+		if (index>=0) {
+			Bit32u i;
+			// Check if there are any open search dir that are affected by this...
+			if (dir) for (i=0; i<MAX_OPENDIRS; i++) {
+				if ((dirSearch[i]==dir) && ((Bit32u)index<=dirSearch[i]->nextEntry)) 
+					dirSearch[i]->nextEntry++;
+			}
+
+			dir = dir->fileList[index];
+			dir->isOverlayDir = true;
+			CreateEntry(dir,".",true);
+			CreateEntry(dir,"..",true);
+		}
+		//		LOG_DEBUG("DIR: Added Entry %s",path);
+	} else {
+		//		LOG_DEBUG("DIR: Error: Failed to add %s",path);	
+	}
+}
 
 void DOS_Drive_Cache::DeleteEntry(const char* path, bool ignoreLastDir) {
 	CacheOut(path,ignoreLastDir);
@@ -278,7 +345,7 @@ void DOS_Drive_Cache::CacheOut(const char* path, bool ignoreLastDir) {
 }
 
 bool DOS_Drive_Cache::IsCachedIn(CFileInfo* curDir) {
-	return (curDir->fileList.size()>0);
+	return (curDir->isOverlayDir || curDir->fileList.size()>0);
 }
 
 
@@ -676,9 +743,9 @@ bool DOS_Drive_Cache::OpenDir(CFileInfo* dir, const char* expand, Bit16u& id) {
 	if (dirSearch[id]) {
 		// open dir
 		dir_information* dirp = open_directory(expandcopy);
-		if (dirp) { 
+		if (dirp || dir->isOverlayDir) { 
 			// Reset it..
-			close_directory(dirp);
+			if (dirp) close_directory(dirp);
 			strcpy(dirPath,expandcopy);
 			return true;
 		}