diff --git a/bin/stow.in b/bin/stow.in
index 024b152..c4654d0 100755
--- a/bin/stow.in
+++ b/bin/stow.in
@@ -460,6 +460,7 @@ require 5.006_001;
 use POSIX qw(getcwd);
 use Getopt::Long qw(GetOptionsFromArray);
 use Scalar::Util qw(reftype);
+use Text::ParseWords qw(shellwords);
 
 @USE_LIB_PMDIR@
 use Stow;
@@ -683,7 +684,7 @@ sub get_config_file_options {
                 or die "Could not open $file for reading\n";
             while (my $line = <$FILE>){
                 chomp $line;
-                push @defaults, split " ", $line;
+                push @defaults, shellwords($line);
             }
             close $FILE or die "Could not close open file: $file\n";
         }
diff --git a/t/rc_options.t b/t/rc_options.t
index cbbbee2..bc36e78 100755
--- a/t/rc_options.t
+++ b/t/rc_options.t
@@ -22,7 +22,7 @@
 use strict;
 use warnings;
 
-use Test::More tests => 34;
+use Test::More tests => 35;
 
 use testutil;
 
@@ -119,6 +119,19 @@ is($options->{target},  "$ABS_TEST_DIR/target"
 is($options->{dir}, "$ABS_TEST_DIR/stow"
    => "-d from \$HOME/.stowrc");
 
+#
+# Test ~/.stowrc file with with options with paths containing spaces.
+#
+local @ARGV = ('dummy');
+make_file($HOME_RC_FILE, <<HERE);
+    -d "$ABS_TEST_DIR/stow directory"
+    --target "$ABS_TEST_DIR/target"
+HERE
+
+($options, $pkgs_to_delete, $pkgs_to_stow) = process_options();
+is($options->{dir},  "$ABS_TEST_DIR/stow directory",
+   => "-d from \$HOME/.stowrc with spaces");
+
 #
 # Test that some but not all options ~/.stowrc file are overridden by
 # .stowrc in cwd.
@@ -229,11 +242,11 @@ is($options->{dir}, "$ABS_TEST_DIR/stow",
     "apply environment expansion on \$HOME/.stowrc --dir");
 is($options->{target}, "$ABS_TEST_DIR/stow",
     "apply environment expansion on \$HOME/.stowrc --target");
-is_deeply($options->{ignore}, [qr(\$HOME\z)],
+is($options->{ignore}->[0], '(?^:$HOME\z)',
     "environment expansion not applied on --ignore");
-is_deeply($options->{defer}, [qr(\A\$HOME)],
+is($options->{defer}->[0], '(?^:\A$HOME)',
     "environment expansion not applied on --defer");
-is_deeply($options->{override}, [qr(\A\$HOME)],
+is($options->{override}->[0], '(?^:\A$HOME)',
     "environment expansion not applied on --override");
 
 #
@@ -263,4 +276,3 @@ is_deeply($options->{override}, [qr(\A~/stow)],
 #
 unlink $HOME_RC_FILE or die "Unable to clean up $HOME_RC_FILE.\n";
 remove_dir($ABS_TEST_DIR);
-
diff --git a/t/testutil.pm b/t/testutil.pm
index 2b4e097..9fb9862 100755
--- a/t/testutil.pm
+++ b/t/testutil.pm
@@ -56,7 +56,7 @@ sub init_test_dirs {
     # Create a run_from/ subdirectory for tests which want to run
     # from a separate directory outside the Stow directory or
     # target directory.
-    for my $dir ("target", "stow", "run_from") {
+    for my $dir ("target", "stow", "run_from", "stow directory") {
         my $path = "$test_dir/$dir";
         -d $path and remove_tree($path);
         make_path($path);