diff --git a/IPython/core/application.py b/IPython/core/application.py
index 19d0910..b13410d 100644
--- a/IPython/core/application.py
+++ b/IPython/core/application.py
@@ -146,6 +146,20 @@ class BaseIPythonApplication(Application):
 
     def __init__(self, **kwargs):
         super(BaseIPythonApplication, self).__init__(**kwargs)
+        # ensure current working directory exists
+        level_up = False
+        while True:
+            try:
+                directory = os.getcwdu()
+            except OSError:
+                # search level up until directory exists
+                os.chdir("..")
+                level_up = True
+            else:
+                if level_up:
+                    self.log.warn("Current working directory doesn't exist.\nSetting to: %s"%(directory))
+                break
+
         # ensure even default IPYTHONDIR exists
         if not os.path.exists(self.ipython_dir):
             self._ipython_dir_changed('ipython_dir', self.ipython_dir, self.ipython_dir)