diff --git a/commands/Makefile b/commands/Makefile
index 94e987cb..8f1b884f 100644
--- a/commands/Makefile
+++ b/commands/Makefile
@@ -12,10 +12,9 @@ SRCS      = CmdSubrs.c CmdAB.c CmdCD.c CmdE.c CmdFI.c \
 
 module: ${MAGICDIR}/readline/readline lib${MODULE}.o
 
+# Delegate this task to the readline/Makefile
 ${MAGICDIR}/readline/readline:
-	@if ( ! test -f ${MAGICDIR}/readline/readline ) ; then \
-	(cd ${MAGICDIR}/readline; ln -s `ls | grep readline` readline) ; \
-	fi
+	${MAKE} -C ${MAGICDIR}/readline readline-create-symlinks
 
 include ${MAGICDIR}/defs.mak
 include ${MAGICDIR}/rules.mak
diff --git a/readline/Makefile b/readline/Makefile
index 5dbf33f5..1ef05d7b 100644
--- a/readline/Makefile
+++ b/readline/Makefile
@@ -2,7 +2,7 @@ MAGICDIR = ..
 
 include ${MAGICDIR}/defs.mak
 
-module: readline readline/libreadline.a readline/libhistory.a
+module: readline-create-symlinks libreadline.a libhistory.a
 
 depend:
 
@@ -11,17 +11,58 @@ depend:
 # link has been removed, and code is now just in real directory
 # "readline".
 
-readline:
+#
+# The symlink resolves where the source for readline is coming from,
+# so it is a well known path ${top_builddir}/readline/readline
+#
+# For the purpose of #include <readline/readline/readline.h> to work
+#
+# Then we do an out of tree build in build-readline subdir in $builddir
+#
+# Then we symlink the output archives inside build-readline to
+#  ${top_builddir}/readline/lib*.a so they are on a well known path
+# for the project to find and link against.
+#
 
-readline/libhistory.a: readline/libreadline.a
+.PHONY: readline-create-symlinks
+readline-create-symlinks:
+	@if ! test -e readline ; then \
+	readline_target_dir=$$(ls | grep readline | grep -v "^readline$$" | tail -n1); \
+	if test -d "$${readline_target_dir}" ; then \
+	$(LN) -nsf "$${readline_target_dir}" ./readline ; \
+	fi; \
+	fi
 
-readline/libreadline.a:
-	@echo --- building GNU readline
-	(cd readline; CC="${CC}" CFLAGS="${CFLAGS}" LOCAL_DEFS="${READLINE_DEFS}" ./configure --disable-shared ; ${MAKE})
+libhistory.a: build-readline/libhistory.a
+	@if ! test -e libhistory.a ; then \
+	    $(LN) -nsf build-readline/libreadline.a libhistory.a ; \
+	fi
+
+libreadline.a: build-readline/libreadline.a
+	@if ! test -e libreadline.a ; then \
+	    $(LN) -nsf build-readline/libreadline.a libreadline.a ; \
+	fi
+
+build-readline/libreadline.a build-readline/libhistory.a: readline-create-symlinks build-readline
+
+.PHONY: build-readline
+build-readline:
+	@if ! test -e build-readline/Makefile ; then \
+	echo --- building GNU readline ; \
+	$(MKDIR) -p build-readline ; \
+	(cd build-readline && CC="${CC}" CFLAGS="${CFLAGS}" LOCAL_DEFS="${READLINE_DEFS}" \
+	    "../readline/configure" --disable-shared) || exit 1 ; \
+	fi
+	@(cd build-readline && ${MAKE}) || exit 1
 
 clean:
-	@if ( test -f readline/Makefile ) ; then \
-	(cd readline && ${MAKE} distclean) ; \
+	@if test -f build-readline/Makefile ; then \
+	    (cd build-readline && ${MAKE} distclean) ; \
 	fi
-	${RM} readline
+	@for d in build-readline/doc build-readline/examples build-readline/shlib build-readline ; do \
+	    test -d "$$d" && $(RMDIR) "$$d" 2>/dev/null ; \
+	done ; true
+	$(RM) libhistory.a
+	$(RM) libreadline.a
+	$(RM) readline