diff --git a/samcli/commands/build/build_context.py b/samcli/commands/build/build_context.py
index 5c4dd9f947..2b00941452 100644
--- a/samcli/commands/build/build_context.py
+++ b/samcli/commands/build/build_context.py
@@ -73,21 +73,16 @@ def __exit__(self, *args):
 
     @staticmethod
     def _setup_build_dir(build_dir, clean):
+        build_path = pathlib.Path(build_dir)
 
-        # Get absolute path
-        build_dir = str(pathlib.Path(build_dir).resolve())
-
-        if not pathlib.Path(build_dir).exists():
-            # Build directory does not exist. Create the directory and all intermediate paths
-            os.makedirs(build_dir, BuildContext._BUILD_DIR_PERMISSIONS)
-
-        if os.listdir(build_dir) and clean:
-            # Build folder contains something inside. Clear everything.
+        if build_path.exists() and os.listdir(build_dir) and clean:
+            # build folder contains something inside. Clear everything.
             shutil.rmtree(build_dir)
-            # this would have cleared the parent folder as well. So recreate it.
-            os.mkdir(build_dir, BuildContext._BUILD_DIR_PERMISSIONS)
 
-        return build_dir
+        build_path.mkdir(mode=BuildContext._BUILD_DIR_PERMISSIONS, parents=True, exist_ok=True)
+
+        # ensure path resolving is done after creation: https://bugs.python.org/issue32434
+        return str(build_path.resolve())
 
     @property
     def container_manager(self):
diff --git a/tests/unit/commands/buildcmd/test_build_context.py b/tests/unit/commands/buildcmd/test_build_context.py
index 193b899bb6..3cadd737d5 100644
--- a/tests/unit/commands/buildcmd/test_build_context.py
+++ b/tests/unit/commands/buildcmd/test_build_context.py
@@ -1,5 +1,4 @@
 import os
-
 from unittest import TestCase
 from mock import patch, Mock
 
@@ -52,3 +51,89 @@ def test_must_setup_context(self, ContainerManagerMock, pathlib_mock, SamFunctio
         setup_build_dir_mock.assert_called_with("build_dir", True)
         ContainerManagerMock.assert_called_once_with(docker_network_id="network",
                                                      skip_pull_image=True)
+
+
+class TestBuildContext_setup_build_dir(TestCase):
+
+    @patch("samcli.commands.build.build_context.shutil")
+    @patch("samcli.commands.build.build_context.os")
+    @patch("samcli.commands.build.build_context.pathlib")
+    def test_build_dir_exists_with_non_empty_dir(self, pathlib_patch, os_patch, shutil_patch):
+        path_mock = Mock()
+        pathlib_patch.Path.return_value = path_mock
+        os_patch.listdir.return_value = True
+        path_mock.resolve.return_value = "long/full/path"
+        path_mock.exists.return_value = True
+        build_dir = "/somepath"
+
+        full_build_path = BuildContext._setup_build_dir(build_dir, True)
+
+        self.assertEquals(full_build_path, "long/full/path")
+
+        os_patch.listdir.assert_called_once()
+        path_mock.exists.assert_called_once()
+        path_mock.mkdir.assert_called_once_with(mode=0o755, parents=True, exist_ok=True)
+        pathlib_patch.Path.assert_called_once_with(build_dir)
+        shutil_patch.rmtree.assert_called_once_with(build_dir)
+
+    @patch("samcli.commands.build.build_context.shutil")
+    @patch("samcli.commands.build.build_context.os")
+    @patch("samcli.commands.build.build_context.pathlib")
+    def test_build_dir_exists_with_empty_dir(self, pathlib_patch, os_patch, shutil_patch):
+        path_mock = Mock()
+        pathlib_patch.Path.return_value = path_mock
+        os_patch.listdir.return_value = False
+        path_mock.resolve.return_value = "long/full/path"
+        path_mock.exists.return_value = True
+        build_dir = "/somepath"
+
+        full_build_path = BuildContext._setup_build_dir(build_dir, True)
+
+        self.assertEquals(full_build_path, "long/full/path")
+
+        os_patch.listdir.assert_called_once()
+        path_mock.exists.assert_called_once()
+        path_mock.mkdir.assert_called_once_with(mode=0o755, parents=True, exist_ok=True)
+        pathlib_patch.Path.assert_called_once_with(build_dir)
+        shutil_patch.rmtree.assert_not_called()
+
+    @patch("samcli.commands.build.build_context.shutil")
+    @patch("samcli.commands.build.build_context.os")
+    @patch("samcli.commands.build.build_context.pathlib")
+    def test_build_dir_does_not_exist(self, pathlib_patch, os_patch, shutil_patch):
+        path_mock = Mock()
+        pathlib_patch.Path.return_value = path_mock
+        path_mock.resolve.return_value = "long/full/path"
+        path_mock.exists.return_value = False
+        build_dir = "/somepath"
+
+        full_build_path = BuildContext._setup_build_dir(build_dir, True)
+
+        self.assertEquals(full_build_path, "long/full/path")
+
+        os_patch.listdir.assert_not_called()
+        path_mock.exists.assert_called_once()
+        path_mock.mkdir.assert_called_once_with(mode=0o755, parents=True, exist_ok=True)
+        pathlib_patch.Path.assert_called_once_with(build_dir)
+        shutil_patch.rmtree.assert_not_called()
+
+    @patch("samcli.commands.build.build_context.shutil")
+    @patch("samcli.commands.build.build_context.os")
+    @patch("samcli.commands.build.build_context.pathlib")
+    def test_non_clean_build_when_dir_exists_with_non_empty_dir(self, pathlib_patch, os_patch, shutil_patch):
+        path_mock = Mock()
+        pathlib_patch.Path.return_value = path_mock
+        os_patch.listdir.return_value = True
+        path_mock.resolve.return_value = "long/full/path"
+        path_mock.exists.return_value = True
+        build_dir = "/somepath"
+
+        full_build_path = BuildContext._setup_build_dir(build_dir, False)
+
+        self.assertEquals(full_build_path, "long/full/path")
+
+        os_patch.listdir.assert_called_once()
+        path_mock.exists.assert_called_once()
+        path_mock.mkdir.assert_called_once_with(mode=0o755, parents=True, exist_ok=True)
+        pathlib_patch.Path.assert_called_once_with(build_dir)
+        shutil_patch.rmtree.assert_not_called()