diff --git a/.pre-commit-config.yaml b/.pre-commit-config.yaml
index b14317ea4..a9ba6790d 100644
--- a/.pre-commit-config.yaml
+++ b/.pre-commit-config.yaml
@@ -28,7 +28,7 @@ repos:
   rev: v1.11.0
   hooks:
   - id: blacken-docs
-    additional_dependencies: [black==20.8b1]
+    additional_dependencies: [black==21.9b0]
 - repo: https://github.com/pre-commit/pygrep-hooks
   rev: v1.9.0
   hooks:
diff --git a/docs/changelog/2220.feature.rst b/docs/changelog/2220.feature.rst
new file mode 100644
index 000000000..2bdc76875
--- /dev/null
+++ b/docs/changelog/2220.feature.rst
@@ -0,0 +1 @@
+Special-case ``--prompt .`` to the name of the current directory - by :user:`rkm`.
diff --git a/src/virtualenv/activation/activator.py b/src/virtualenv/activation/activator.py
index 587ac105b..80d7e47fd 100644
--- a/src/virtualenv/activation/activator.py
+++ b/src/virtualenv/activation/activator.py
@@ -1,5 +1,6 @@
 from __future__ import absolute_import, unicode_literals
 
+import os
 from abc import ABCMeta, abstractmethod
 
 from six import add_metaclass
@@ -14,7 +15,7 @@ def __init__(self, options):
 
         :param options: the parsed options as defined within :meth:`add_parser_arguments`
         """
-        self.flag_prompt = options.prompt
+        self.flag_prompt = os.path.basename(os.getcwd()) if options.prompt == "." else options.prompt
 
     @classmethod
     def supports(cls, interpreter):
diff --git a/src/virtualenv/run/plugin/activators.py b/src/virtualenv/run/plugin/activators.py
index dea28277f..8180981b1 100644
--- a/src/virtualenv/run/plugin/activators.py
+++ b/src/virtualenv/run/plugin/activators.py
@@ -43,7 +43,10 @@ def handle_selected_arg_parse(self, options):
             "--prompt",
             dest="prompt",
             metavar="prompt",
-            help="provides an alternative prompt prefix for this environment",
+            help=(
+                "provides an alternative prompt prefix for this environment "
+                "(value of . means name of the current working directory)"
+            ),
             default=None,
         )
         for activator in self.active.values():
diff --git a/tests/unit/activation/test_activator.py b/tests/unit/activation/test_activator.py
new file mode 100644
index 000000000..4a8a51c66
--- /dev/null
+++ b/tests/unit/activation/test_activator.py
@@ -0,0 +1,18 @@
+from __future__ import absolute_import, unicode_literals
+
+from argparse import Namespace
+
+from virtualenv.activation.activator import Activator
+
+
+def test_activator_prompt_cwd(monkeypatch, tmp_path):
+    class FakeActivator(Activator):
+        def generate(self, creator):
+            raise NotImplementedError
+
+    cwd = tmp_path / "magic"
+    cwd.mkdir()
+    monkeypatch.chdir(cwd)
+
+    activator = FakeActivator(Namespace(prompt="."))
+    assert activator.flag_prompt == "magic"