diff --git a/doc/release-notes.md b/doc/release-notes.md
--- a/doc/release-notes.md
+++ b/doc/release-notes.md
@@ -3,3 +3,6 @@
   <https://download.bitcoinabc.org/0.20.9/>
 
 This release includes the following features and fixes:
+ - Fixed a bug with Multiwallets that have their own directories (i.e. cases
+   such as `DATADIR/wallets/mywallet/wallet.dat`).  Backups of these wallets
+   will now take each wallet's specific directory into account.
diff --git a/src/wallet/db.cpp b/src/wallet/db.cpp
--- a/src/wallet/db.cpp
+++ b/src/wallet/db.cpp
@@ -838,7 +838,7 @@
                 env->mapFileUseCount.erase(strFile);
 
                 // Copy wallet file.
-                fs::path pathSrc = GetWalletDir() / strFile;
+                fs::path pathSrc = env->Directory() / strFile;
                 fs::path pathDest(strDest);
                 if (fs::is_directory(pathDest)) {
                     pathDest /= strFile;
diff --git a/test/functional/wallet_multiwallet.py b/test/functional/wallet_multiwallet.py
--- a/test/functional/wallet_multiwallet.py
+++ b/test/functional/wallet_multiwallet.py
@@ -31,6 +31,11 @@
 
         def wallet(name): return node.get_wallet_rpc(name)
 
+        def wallet_file(name):
+            if os.path.isdir(wallet_dir(name)):
+                return wallet_dir(name, "wallet.dat")
+            return wallet_dir(name)
+
         # check wallet.dat is created
         self.stop_nodes()
         assert_equal(os.path.isfile(wallet_dir('wallet.dat')), True)
@@ -44,6 +49,12 @@
         # directory paths) can be loaded
         os.rename(wallet_dir("wallet.dat"), wallet_dir("w8"))
 
+        # create another dummy wallet for use in testing backups later
+        self.start_node(0, [])
+        self.stop_nodes()
+        empty_wallet = os.path.join(self.options.tmpdir, 'empty.dat')
+        os.rename(wallet_dir("wallet.dat"), empty_wallet)
+
         # restart node with a mix of wallet names:
         #   w1, w2, w3 - to verify new wallets created when non-existing paths specified
         #   w          - to verify wallet name matching works when one wallet path is prefix of another
@@ -61,11 +72,7 @@
         # check that all requested wallets were created
         self.stop_node(0)
         for wallet_name in wallet_names:
-            if os.path.isdir(wallet_dir(wallet_name)):
-                assert_equal(os.path.isfile(
-                    wallet_dir(wallet_name, "wallet.dat")), True)
-            else:
-                assert_equal(os.path.isfile(wallet_dir(wallet_name)), True)
+            assert_equal(os.path.isfile(wallet_file(wallet_name)), True)
 
         # should not initialize if wallet path can't be created
         exp_stderr = "boost::filesystem::create_directory: (The system cannot find the path specified|Not a directory):"
@@ -283,6 +290,25 @@
         assert_equal(self.nodes[0].listwallets(), ['w1'])
         assert_equal(w1.getwalletinfo()['walletname'], 'w1')
 
+        # Test backing up and restoring wallets
+        self.log.info("Test wallet backup")
+        self.restart_node(0, ['-nowallet'])
+        for wallet_name in wallet_names:
+            self.nodes[0].loadwallet(wallet_name)
+        for wallet_name in wallet_names:
+            rpc = self.nodes[0].get_wallet_rpc(wallet_name)
+            addr = rpc.getnewaddress()
+            backup = os.path.join(self.options.tmpdir, 'backup.dat')
+            rpc.backupwallet(backup)
+            self.nodes[0].unloadwallet(wallet_name)
+            shutil.copyfile(empty_wallet, wallet_file(wallet_name))
+            self.nodes[0].loadwallet(wallet_name)
+            assert_equal(rpc.getaddressinfo(addr)['ismine'], False)
+            self.nodes[0].unloadwallet(wallet_name)
+            shutil.copyfile(backup, wallet_file(wallet_name))
+            self.nodes[0].loadwallet(wallet_name)
+            assert_equal(rpc.getaddressinfo(addr)['ismine'], True)
+
 
 if __name__ == '__main__':
     MultiWalletTest().main()