diff --git a/src/babel.nim b/src/babel.nim
index da2b493..8de3625 100644
--- a/src/babel.nim
+++ b/src/babel.nim
@@ -272,6 +272,8 @@ proc processDeps(pkginfo: TPackageInfo, options: TOptions): seq[string] =
       else:
         echo("Dependency already satisfied.")
         result.add(pkg.mypath.splitFile.dir)
+        # Process the dependencies of this dependency.
+        result.add(processDeps(pkg, options))
   
   # Check if two packages of the same name (but different version) are listed
   # in the path.
diff --git a/tests/issue27/a/issue27a.babel b/tests/issue27/a/issue27a.babel
new file mode 100644
index 0000000..cfe8493
--- /dev/null
+++ b/tests/issue27/a/issue27a.babel
@@ -0,0 +1,9 @@
+[Package]
+name          = "issue27a"
+version       = "0.1.0"
+author        = "Dominik Picheta"
+description   = "Dependency A for Issue 27"
+license       = "BSD"
+
+[Deps]
+Requires: "nimrod >= 0.9.3, issue27b"
diff --git a/tests/issue27/a/issue27a.nim b/tests/issue27/a/issue27a.nim
new file mode 100644
index 0000000..0019ab8
--- /dev/null
+++ b/tests/issue27/a/issue27a.nim
@@ -0,0 +1 @@
+import issue27b
diff --git a/tests/issue27/b/issue27b.babel b/tests/issue27/b/issue27b.babel
new file mode 100644
index 0000000..6942a35
--- /dev/null
+++ b/tests/issue27/b/issue27b.babel
@@ -0,0 +1,9 @@
+[Package]
+name          = "issue27b"
+version       = "0.1.0"
+author        = "Dominik Picheta"
+description   = "Dependency B for Issue 27"
+license       = "BSD"
+
+[Deps]
+Requires: "nimrod >= 0.9.3"
diff --git a/tests/issue27/b/issue27b.nim b/tests/issue27/b/issue27b.nim
new file mode 100644
index 0000000..0b4a370
--- /dev/null
+++ b/tests/issue27/b/issue27b.nim
@@ -0,0 +1 @@
+proc test(): int = 4
diff --git a/tests/issue27/issue27.babel b/tests/issue27/issue27.babel
new file mode 100644
index 0000000..13aeb45
--- /dev/null
+++ b/tests/issue27/issue27.babel
@@ -0,0 +1,11 @@
+[Package]
+name          = "issue27"
+version       = "0.1.0"
+author        = "Dominik Picheta"
+description   = "Test package for Issue 27"
+license       = "BSD"
+
+bin = "issue27"
+
+[Deps]
+Requires: "nimrod >= 0.9.3, issue27a"
diff --git a/tests/issue27/issue27.nim b/tests/issue27/issue27.nim
new file mode 100644
index 0000000..012e88a
--- /dev/null
+++ b/tests/issue27/issue27.nim
@@ -0,0 +1 @@
+import issue27a
diff --git a/tests/tester.nim b/tests/tester.nim
index 97e141f..132aff7 100644
--- a/tests/tester.nim
+++ b/tests/tester.nim
@@ -1,9 +1,17 @@
-import osproc, unittest, strutils
+import osproc, unittest, strutils, os
 
 const path = "../src/babel"
 
 discard execCmdEx("nimrod c " & path)
 
+template cd*(dir: string, body: stmt) =
+  ## Sets the current dir to ``dir``, executes ``body`` and restores the
+  ## previous working dir.
+  let lastDir = getCurrentDir()
+  setCurrentDir(dir)
+  body
+  setCurrentDir(lastDir)
+
 test "can install packagebin2":
   let (outp, exitCode) = execCmdEx(path & " install -y https://github.com/babel-test/packagebin2.git")
   check exitCode == QuitSuccess
@@ -19,3 +27,15 @@ test "can reject same version dependencies":
 test "can update":
   let (outp, exitCode) = execCmdEx(path & " update")
   check exitCode == QuitSuccess
+
+test "issue #27":
+  # Install b
+  cd "issue27/b":
+    check execCmdEx("../../" & path & " install -y").exitCode == QuitSuccess
+
+  # Install a
+  cd "issue27/a":
+    check execCmdEx("../../" & path & " install -y").exitCode == QuitSuccess
+
+  cd "issue27":
+    check execCmdEx("../" & path & " install -y").exitCode == QuitSuccess