diff --git a/mercurial/dirstate.py b/mercurial/dirstate.py
--- a/mercurial/dirstate.py
+++ b/mercurial/dirstate.py
@@ -162,8 +162,12 @@ class dirstate(object):
         else:
             return fallback
 
+    @propertycache
+    def _cwd(self):
+        return os.getcwd()
+
     def getcwd(self):
-        cwd = os.getcwd()
+        cwd = self._cwd
         if cwd == self._root:
             return ''
         # self._root ends with a path separator if self._root is '/' or 'C:\'
diff --git a/tests/test-rebase-scenario-global.t b/tests/test-rebase-scenario-global.t
--- a/tests/test-rebase-scenario-global.t
+++ b/tests/test-rebase-scenario-global.t
@@ -649,3 +649,28 @@ each root have a different common ancest
   |/
   o  0: 'A'
   
+
+Test that rebase is not confused by $CWD disapearing during rebase (issue 4121)
+
+  $ cd ..
+  $ hg init cwd-vanish
+  $ cd cwd-vanish
+  $ touch initial-file
+  $ hg add initial-file
+  $ hg commit -m 'initial commit'
+  $ touch dest-file
+  $ hg add dest-file
+  $ hg commit -m 'dest commit'
+  $ hg up 0
+  0 files updated, 0 files merged, 1 files removed, 0 files unresolved
+  $ touch other-file
+  $ hg add other-file
+  $ hg commit -m 'first source commit'
+  created new head
+  $ mkdir subdir
+  $ cd subdir
+  $ touch subfile
+  $ hg add subfile
+  $ hg commit -m 'second source with subdir'
+  $ hg rebase -b . -d 1 --traceback
+  saved backup bundle to $TESTTMP/cwd-vanish/.hg/strip-backup/779a07b1b7a0-backup.hg (glob)