diff --git a/README.rst b/README.rst
index 7c2f634..0a3498e 100644
--- a/README.rst
+++ b/README.rst
@@ -57,6 +57,9 @@ Configure the following settings::
         # ...
     )
 
+    # The subdirectory of STATIC_ROOT that you wish to use for compiled bundles
+    BUNDLES_DIR = 'bundled'
+
     # This is the important part.
     MINIFY_BUNDLES = {
         'css': {},
diff --git a/jingo_minify/helpers.py b/jingo_minify/helpers.py
index d049345..dc44016 100644
--- a/jingo_minify/helpers.py
+++ b/jingo_minify/helpers.py
@@ -70,7 +70,10 @@ def get_js_urls(bundle, debug=None):
         bundle_full = 'js:%s' % bundle
         if bundle_full in BUNDLE_HASHES:
             build_id = BUNDLE_HASHES[bundle_full]
-        return (_get_item_path('js/%s-min.js?build=%s' % (bundle, build_id,)),)
+        return (_get_item_path(
+            os.path.join(
+                getattr(settings, 'BUNDLES_DIR', ''),
+                'js/%s-min.js?build=%s' % (bundle, build_id,))),)
 
 
 def _get_compiled_css_url(item):
@@ -120,8 +123,9 @@ def get_css_urls(bundle, debug=None):
         bundle_full = 'css:%s' % bundle
         if bundle_full in BUNDLE_HASHES:
             build_id = BUNDLE_HASHES[bundle_full]
-        return (_get_item_path('css/%s-min.css?build=%s' %
-                               (bundle, build_id)),)
+        item = 'css/%s-min.css?build=%s' % (bundle, build_id)
+        item = os.path.join(getattr(settings, 'BUNDLES_DIR', ''), item)
+        return (_get_item_path(item),)
 
 
 @register.function
diff --git a/jingo_minify/management/commands/compress_assets.py b/jingo_minify/management/commands/compress_assets.py
index 7467ae1..b46529a 100644
--- a/jingo_minify/management/commands/compress_assets.py
+++ b/jingo_minify/management/commands/compress_assets.py
@@ -32,10 +32,12 @@ class Command(BaseCommand):  # pragma: no cover
     checked_hash = {}
     bundle_hashes = {}
 
+    tmp_files = []
     missing_files = 0
     minify_skipped = 0
     cmd_errors = False
     ext_media_path = os.path.join(get_media_root(), 'external')
+    bundles_dir = getattr(settings, 'BUNDLES_DIR', '.')
 
     def update_hashes(self, update=False):
         def media_git_id(media_path):
@@ -76,12 +78,17 @@ def handle(self, **options):
         for ftype, bundle in settings.MINIFY_BUNDLES.iteritems():
             for name, files in bundle.iteritems():
                 # Set the paths to the files.
-                concatted_file = path(ftype, '%s-all.%s' % (name, ftype,))
-                compressed_file = path(ftype, '%s-min.%s' % (name, ftype,))
+                concatted_file = path(self.bundles_dir, ftype,
+                                      '%s-all.%s' % (name, ftype,))
+                compressed_file = path(self.bundles_dir, ftype,
+                                       '%s-min.%s' % (name, ftype,))
+
+                if not os.path.exists(path(self.bundles_dir, ftype)):
+                    os.makedirs(path(self.bundles_dir, ftype))
 
                 files_all = []
                 for fn in files:
-                    processed = self._preprocess_file(fn)
+                    processed = self._preprocess_file(fn, compressed_file)
                     # If the file can't be processed, we skip it.
                     if processed is not None:
                         files_all.append(processed)
@@ -111,6 +118,16 @@ def handle(self, **options):
                 else:
                     self.minify_skipped += 1
 
+        # Clean up.
+        for file in self.tmp_files:
+            try:
+                os.remove(path(file))
+
+                # Try to remove the temporary directory (only removed if empty)
+                os.rmdir(os.path.dirname(path(file)))
+            except OSError:
+                pass
+
         # Write out the hashes
         self.update_hashes(options.get('add_timestamp', False))
 
@@ -134,11 +151,11 @@ def _get_url_or_path(self, item):
         """
         if item.startswith('//'):
             return 'http:%s' % item
-        elif item.startswith(('http', 'https')):
+        elif item.startswith(('http:', 'https:')):
             return item
         return None
 
-    def _preprocess_file(self, filename):
+    def _preprocess_file(self, filename, compressed_file):
         """Preprocess files and return new filenames."""
         url = self._get_url_or_path(filename)
         if url:
@@ -186,6 +203,12 @@ def _preprocess_file(self, filename):
                        (settings.STYLUS_BIN, os.path.dirname(fp), fp, fp),
                        shell=True, stdout=PIPE)
             filename = '%s.css' % filename
+
+        if not url:
+            # Fix relative paths.
+            filename = self._fix_urls(filename, compressed_file)
+            self.tmp_files.append(filename)
+
         return path(filename.lstrip('/'))
 
     def _is_changed(self, concatted_file):
@@ -205,6 +228,38 @@ def _clean_tmp(self, concatted_file):
             os.remove(concatted_file)
         os.rename(tmp_concatted, concatted_file)
 
+    def _fix_urls(self, filename, compressed_file):
+        """Fix the relative URLs in css files."""
+        css_content = ''
+        with open(path(filename)) as css_in:
+            css_content = css_in.read()
+
+        relpath = os.path.relpath(os.path.dirname(compressed_file),
+                                  path(os.path.dirname(filename)))
+
+        parse = lambda url: self._fix_urls_regex(url, relpath)
+
+        css_parsed = re.sub(r'url\(([^)]*?)\)', parse, css_content)
+
+        # Write to a temporary file.
+        out_file = path(os.path.join(self.bundles_dir, '.tmp',
+                                     '%s.tmp' % filename))
+
+        if not os.path.exists(os.path.dirname(out_file)):
+            os.makedirs(os.path.dirname(out_file))
+
+        with open(out_file, 'w') as css_out:
+            css_out.write(css_parsed)
+
+        return os.path.relpath(out_file, path('.'))
+
+    def _fix_urls_regex(self, url, relpath):
+        """Run over the regex; Fix relative URL's"""
+        url = url.group(1).strip('"\'')
+        if not url.startswith(('data:', 'http:', 'https:')):
+            url = os.path.relpath(url, relpath)
+        return 'url(%s)' % url
+
     def _cachebust(self, css_file, bundle_name):
         """Cache bust images.  Return a new bundle hash."""
         print "Cache busting images in %s" % re.sub('.tmp$', '', css_file)
@@ -268,7 +323,7 @@ def _file_hash(self, url):
     def _cachebust_regex(self, img, parent):
         """Run over the regex; img is the structural regex object."""
         url = img.group(1).strip('"\'')
-        if url.startswith('data:') or url.startswith('http'):
+        if url.startswith(('data:', 'http:', 'https:')):
             return "url(%s)" % url
 
         url = url.split('?')[0]
diff --git a/jingo_minify/tests.py b/jingo_minify/tests.py
index 80c9c69..5507f32 100644
--- a/jingo_minify/tests.py
+++ b/jingo_minify/tests.py
@@ -1,11 +1,16 @@
+import os
+import tempfile
+
 from django.conf import settings
 from django.test.utils import override_settings
 
 import jingo
+
 from mock import ANY, call, patch
 from nose.tools import eq_
 
 from .utils import get_media_root, get_media_url
+from .management.commands.compress_assets import Command
 
 try:
     from build import BUILD_ID_CSS, BUILD_ID_JS
@@ -66,8 +71,9 @@ def test_js_helper(getmtime, time):
     t = env.from_string("{{ js('common_protocol_less_url', debug=False) }}")
     s = t.render()
 
-    eq_(s, '<script src="%sjs/common_protocol_less_url-min.js?build=%s">'
-           '</script>' % (settings.STATIC_URL, BUILD_ID_JS))
+    eq_(s,
+        '<script src="%sjs/common_protocol_less_url-min.js?build=%s">'
+        '</script>' % (settings.STATIC_URL, BUILD_ID_JS))
 
     t = env.from_string("{{ js('common_bundle', debug=True) }}")
     s = t.render()
@@ -81,7 +87,7 @@ def test_js_helper(getmtime, time):
     s = t.render()
 
     eq_(s, '<script src="%sjs/common_bundle-min.js?build=%s"></script>' %
-           (settings.STATIC_URL, BUILD_ID_JS))
+        (settings.STATIC_URL, BUILD_ID_JS))
 
 
 @patch('jingo_minify.helpers.time.time')
@@ -163,6 +169,33 @@ def test_css_helper(getmtime, time):
            (settings.STATIC_URL, BUILD_ID_CSS))
 
 
+@patch('jingo_minify.helpers.time.time')
+@patch('jingo_minify.helpers.os.path.getmtime')
+@override_settings(STATIC_ROOT='static',
+                   MEDIA_ROOT='media',
+                   STATIC_URL='http://example.com/static/',
+                   MEDIA_URL='http://example.com/media/',
+                   BUNDLES_DIR='bundled')
+def test_bundles_dir(getmtime, time):
+    getmtime.return_value = 1
+    time.return_value = 1
+    env = jingo.env
+
+    t = env.from_string("{{ js('common', debug=False) }}")
+    s = t.render()
+
+    eq_(s, '<script src="%sbundled/js/common-min.js?build=%s"></script>' %
+           (settings.STATIC_URL, BUILD_ID_JS))
+
+    t = env.from_string("{{ css('common', debug=False) }}")
+    s = t.render()
+
+    eq_(s,
+        '<link rel="stylesheet" media="screen,projection,tv" '
+        'href="%sbundled/css/common-min.css?build=%s" />'
+        % (settings.STATIC_URL, BUILD_ID_CSS))
+
+
 def test_inline_css_helper():
     env = jingo.env
     t = env.from_string("{{ inline_css('common', debug=True) }}")
@@ -296,3 +329,72 @@ def test_js(getmtime, time):
          for j in settings.MINIFY_BUNDLES['js']['common']])
 
     eq_(s, expected)
+
+
+@override_settings(STATIC_ROOT='static',
+                   MEDIA_ROOT='media',
+                   STATIC_URL='http://example.com/static/',
+                   MEDIA_URL='http://example.com/media/')
+def test_fix_urls():
+    """Make sure relative URLs are fixed correctly."""
+    command = Command()
+
+    tmp = tempfile.mkstemp()[1]
+
+    tmp_file = open(tmp, 'w')
+    tmp_file.write('url(../img/test.png);')
+    tmp_file.close()
+
+    # Test files in same directory
+    compressed = command._fix_urls(tmp,
+        os.path.join(os.path.dirname(tmp), 'compiled'))
+    compressed_file = open(compressed, 'r')
+    eq_(compressed_file.read(), 'url(../img/test.png);')
+    compressed_file.close()
+
+    # Test files in different directory
+    compressed = command._fix_urls(tmp,
+        os.path.join(os.path.dirname(tmp), 'dir', 'compiled'))
+    compressed_file = open(compressed, 'r')
+    eq_(compressed_file.read(), 'url(../../img/test.png);')
+    compressed_file.close()
+
+    # Remove temporary files
+    os.remove(compressed)
+    os.remove(tmp)
+
+    # Test data urls are unchanged
+    data_url = 'url(data:image/gif;base64,R0lGODlhEAAQAMQAAORHHOVSKudfOulr);'
+
+    tmp = tempfile.mkstemp()[1]
+    tmp_file = open(tmp, 'w')
+    tmp_file.write(data_url)
+    tmp_file.close()
+
+    compressed = command._fix_urls(tmp,
+        os.path.join(os.path.dirname(tmp), 'compiled'))
+    compressed_file = open(compressed, 'r')
+    eq_(compressed_file.read(), data_url)
+    compressed_file.close()
+
+    # Remove temporary files
+    os.remove(compressed)
+    os.remove(tmp)
+
+    # Test absolute paths are unchanged
+    content = ('url(http://example.com/image.gif); '
+               'url(https://example.com/image.png);')
+    tmp = tempfile.mkstemp()[1]
+    tmp_file = open(tmp, 'w')
+    tmp_file.write(content)
+    tmp_file.close()
+
+    compressed = command._fix_urls(tmp,
+        os.path.join(os.path.dirname(tmp), 'compiled'))
+    compressed_file = open(compressed, 'r')
+    eq_(compressed_file.read(), content)
+    compressed_file.close()
+
+    # Remove temporary files
+    os.remove(compressed)
+    os.remove(tmp)
diff --git a/requirements.txt b/requirements.txt
index 8c9140b..596451a 100644
--- a/requirements.txt
+++ b/requirements.txt
@@ -2,3 +2,4 @@ Django==1.4.5
 jingo==0.4
 -e git://github.com/jbalogh/django-nose.git@83c7867c3f90ff3c7c7471716da91b643e8b2c01#egg=django_nose-dev
 mock==1.0b1
+GitPython==0.1.7