diff --git a/Changelog.md b/Changelog.md
index f649d22a3..54dd5a9b4 100644
--- a/Changelog.md
+++ b/Changelog.md
@@ -7,6 +7,7 @@ This file only reflects the changes that are made in this image. Please refer to
 - gitlab-workhorse: upgrade to v0.7.1
 - gitlab: upgrade to CE v8.6.0
 - exposed configuration parameters for auth0 OAUTH support
+- fixed relative_url support
 
 **8.5.8**
 - gitlab: upgrade to CE v8.5.8
diff --git a/assets/runtime/config/gitlabhq/relative_url.rb b/assets/runtime/config/gitlabhq/relative_url.rb
new file mode 100644
index 000000000..3dba76169
--- /dev/null
+++ b/assets/runtime/config/gitlabhq/relative_url.rb
@@ -0,0 +1,10 @@
+# Relative URL support
+# WARNING: We recommend using an FQDN to host GitLab in a root path instead
+# of using a relative URL.
+# Documentation: http://doc.gitlab.com/ce/install/relative_url.html
+# Copy this file to relative_url.rb and customize it to run in a non-root path
+#
+
+Rails.application.configure do
+  config.relative_url_root = "{{GITLAB_RELATIVE_URL_ROOT}}"
+end
diff --git a/assets/runtime/config/nginx/gitlab b/assets/runtime/config/nginx/gitlab
index d1c50a9dc..27fc0e647 100644
--- a/assets/runtime/config/nginx/gitlab
+++ b/assets/runtime/config/nginx/gitlab
@@ -16,10 +16,6 @@
 ##
 ## See installation.md#using-https for additional HTTPS configuration details.
 
-upstream gitlab {
-  server unix:{{GITLAB_INSTALL_DIR}}/tmp/sockets/gitlab.socket fail_timeout=0;
-}
-
 upstream gitlab-workhorse {
   server unix:{{GITLAB_INSTALL_DIR}}/tmp/sockets/gitlab-workhorse.socket fail_timeout=0;
 }
@@ -34,7 +30,6 @@ server {
   listen [::]:80 default_server;
   server_name {{GITLAB_HOST}}; ## Replace this with something like gitlab.example.com
   server_tokens off; ## Don't show the nginx version number, a security best practice
-  root {{GITLAB_INSTALL_DIR}}/public;
 
   ## See app/controllers/application_controller.rb for headers set
   add_header X-Accel-Buffering {{NGINX_ACCEL_BUFFERING}};
@@ -44,7 +39,7 @@ server {
   access_log  {{GITLAB_LOG_DIR}}/nginx/gitlab_access.log;
   error_log   {{GITLAB_LOG_DIR}}/nginx/gitlab_error.log;
 
-  location {{GITLAB_RELATIVE_URL_ROOT__without_trailing_slash}} {
+  location / {
     client_max_body_size 0;
     gzip off;
 
@@ -65,32 +60,13 @@ server {
     proxy_pass http://gitlab-workhorse;
   }
 
-  ## If a static asset file is requested, then proxy passes the request to
-  ## the upsteam (gitlab unicorn).
-  ## As of 8.3.0 gitlab-workhorse does not properly generated the static assets
-  ## when relative_url is used
-  location {{GITLAB_RELATIVE_URL_ROOT__with_trailing_slash}}assets {
-    try_files $uri /index.html $uri.html @gitlab;
+  error_page 404 /404.html;
+  error_page 422 /422.html;
+  error_page 500 /500.html;
+  error_page 502 /502.html;
+  location ~ ^/(404|422|500|502)\.html$ {
+    root {{GITLAB_INSTALL_DIR}}/public;
+    internal;
   }
 
-  location @gitlab {
-    ## If you use HTTPS make sure you disable gzip compression
-    ## to be safe against BREACH attack.
-    # gzip off;
-
-    ## /~https://github.com/gitlabhq/gitlabhq/issues/694
-    ## Some requests take more than 30 seconds.
-    proxy_read_timeout       300;
-    proxy_connect_timeout    300;
-    proxy_redirect           off;
-    proxy_buffering          {{NGINX_PROXY_BUFFERING}};
-
-    proxy_set_header    Host                $http_host;
-    proxy_set_header    X-Real-IP           $remote_addr;
-    proxy_set_header    X-Forwarded-For     $proxy_add_x_forwarded_for;
-    proxy_set_header    X-Forwarded-Proto   {{NGINX_X_FORWARDED_PROTO}};
-    proxy_set_header    X-Frame-Options     SAMEORIGIN;
-
-    proxy_pass http://gitlab;
-  }
 }
diff --git a/assets/runtime/config/nginx/gitlab-ssl b/assets/runtime/config/nginx/gitlab-ssl
index 0c4eccfd6..4362d1217 100644
--- a/assets/runtime/config/nginx/gitlab-ssl
+++ b/assets/runtime/config/nginx/gitlab-ssl
@@ -20,10 +20,6 @@
 ##
 ## See installation.md#using-https for additional HTTPS configuration details.
 
-upstream gitlab {
-  server unix:{{GITLAB_INSTALL_DIR}}/tmp/sockets/gitlab.socket fail_timeout=0;
-}
-
 upstream gitlab-workhorse {
   server unix:{{GITLAB_INSTALL_DIR}}/tmp/sockets/gitlab-workhorse.socket fail_timeout=0;
 }
@@ -49,7 +45,6 @@ server {
   listen [::]:443 ssl spdy default_server;
   server_name {{GITLAB_HOST}}; ## Replace this with something like gitlab.example.com
   server_tokens off; ## Don't show the nginx version number, a security best practice
-  root {{GITLAB_INSTALL_DIR}}/public;
 
   ## Strong SSL Security
   ## https://raymii.org/s/tutorials/Strong_SSL_Security_On_nginx.html & https://cipherli.st/
@@ -90,7 +85,7 @@ server {
   access_log  {{GITLAB_LOG_DIR}}/nginx/gitlab_access.log;
   error_log   {{GITLAB_LOG_DIR}}/nginx/gitlab_error.log;
 
-  location {{GITLAB_RELATIVE_URL_ROOT__without_trailing_slash}} {
+  location / {
     client_max_body_size 0;
     gzip off;
 
@@ -111,32 +106,12 @@ server {
     proxy_pass http://gitlab-workhorse;
   }
 
-  ## If a static asset file is requested, then proxy passes the request to
-  ## the upsteam (gitlab unicorn).
-  ## As of 8.3.0 gitlab-workhorse does not properly generated the static assets
-  ## when relative_url is used
-  location {{GITLAB_RELATIVE_URL_ROOT__with_trailing_slash}}assets {
-    try_files $uri /index.html $uri.html @gitlab;
-  }
-
-  location @gitlab {
-    ## If you use HTTPS make sure you disable gzip compression
-    ## to be safe against BREACH attack.
-    # gzip off;
-
-    ## /~https://github.com/gitlabhq/gitlabhq/issues/694
-    ## Some requests take more than 30 seconds.
-    proxy_read_timeout       300;
-    proxy_connect_timeout    300;
-    proxy_redirect           off;
-    proxy_buffering          {{NGINX_PROXY_BUFFERING}};
-
-    proxy_set_header    Host                $http_host;
-    proxy_set_header    X-Real-IP           $remote_addr;
-    proxy_set_header    X-Forwarded-For     $proxy_add_x_forwarded_for;
-    proxy_set_header    X-Forwarded-Proto   {{NGINX_X_FORWARDED_PROTO}};
-    proxy_set_header    X-Frame-Options     SAMEORIGIN;
-
-    proxy_pass http://gitlab;
+  error_page 404 /404.html;
+  error_page 422 /422.html;
+  error_page 500 /500.html;
+  error_page 502 /502.html;
+  location ~ ^/(404|422|500|502)\.html$ {
+    root {{GITLAB_INSTALL_DIR}}/public;
+    internal;
   }
 }
diff --git a/assets/runtime/functions b/assets/runtime/functions
index 60dd0f767..9cdbc5ddb 100644
--- a/assets/runtime/functions
+++ b/assets/runtime/functions
@@ -8,6 +8,7 @@ USERCONF_TEMPLATES_DIR="${GITLAB_DATA_DIR}/config"
 GITLAB_CONFIG="${GITLAB_INSTALL_DIR}/config/gitlab.yml"
 GITLAB_DATABASE_CONFIG="${GITLAB_INSTALL_DIR}/config/database.yml"
 GITLAB_UNICORN_CONFIG="${GITLAB_INSTALL_DIR}/config/unicorn.rb"
+GITLAB_RELATIVE_URL_CONFIG="${GITLAB_INSTALL_DIR}/config/initializers/relative_url.rb"
 GITLAB_RACK_ATTACK_CONFIG="${GITLAB_INSTALL_DIR}/config/initializers/rack_attack.rb"
 GITLAB_SMTP_CONFIG="${GITLAB_INSTALL_DIR}/config/initializers/smtp_settings.rb"
 GITLAB_RESQUE_CONFIG="${GITLAB_INSTALL_DIR}/config/resque.yml"
@@ -286,6 +287,13 @@ gitlab_configure_unicorn() {
     UNICORN_TIMEOUT
 }
 
+gitlab_configure_relative_url() {
+  if [[ -n ${GITLAB_RELATIVE_URL_ROOT} ]]; then
+    echo "Configuring gitlab::relative_url..."
+    update_template ${GITLAB_RELATIVE_URL_CONFIG} GITLAB_RELATIVE_URL_ROOT
+  fi
+}
+
 gitlab_configure_timezone() {
   echo "Configuring gitlab::timezone..."
   update_template ${GITLAB_CONFIG} GITLAB_TIMEZONE
@@ -797,20 +805,6 @@ nginx_configure_gitlab_hsts() {
   fi
 }
 
-nginx_configure_gitlab_relative_url() {
-  if [[ -n ${GITLAB_RELATIVE_URL_ROOT} ]]; then
-    echo "Configuring nginx::gitlab::relative_url..."
-    GITLAB_RELATIVE_URL_ROOT__with_trailing_slash=${GITLAB_RELATIVE_URL_ROOT}/
-    GITLAB_RELATIVE_URL_ROOT__without_trailing_slash=${GITLAB_RELATIVE_URL_ROOT}
-  else
-    GITLAB_RELATIVE_URL_ROOT__with_trailing_slash=/
-    GITLAB_RELATIVE_URL_ROOT__without_trailing_slash=/
-  fi
-  update_template ${GITLAB_NGINX_CONFIG} \
-    GITLAB_RELATIVE_URL_ROOT__with_trailing_slash \
-    GITLAB_RELATIVE_URL_ROOT__without_trailing_slash
-}
-
 nginx_configure_gitlab_ipv6() {
   if [[ ! -f /proc/net/if_inet6 ]]; then
     # disable ipv6 support
@@ -834,7 +828,6 @@ nginx_configure_gitlab() {
 
   nginx_configure_gitlab_ssl
   nginx_configure_gitlab_hsts
-  nginx_configure_gitlab_relative_url
   nginx_configure_gitlab_ipv6
 }
 
@@ -960,6 +953,25 @@ initialize_datadir() {
   chmod 700 ${GITLAB_DATA_DIR}/.ssh
   chmod 600 ${GITLAB_DATA_DIR}/.ssh/authorized_keys
   chown -R ${GITLAB_USER}: ${GITLAB_DATA_DIR}/.ssh
+
+  # recompile and persist assets when relative_url is in use
+  if [[ -n ${GITLAB_RELATIVE_URL_ROOT} ]]; then
+    mkdir -p ${GITLAB_TEMP_DIR}/cache
+    chmod 755 ${GITLAB_TEMP_DIR}/cache
+    chown ${GITLAB_USER}: ${GITLAB_TEMP_DIR}/cache
+
+    mkdir -p ${GITLAB_TEMP_DIR}/assets
+    chmod 755 ${GITLAB_TEMP_DIR}/assets
+    chown ${GITLAB_USER}: ${GITLAB_TEMP_DIR}/assets
+
+    # symlink ${GITLAB_INSTALL_DIR}/tmp/cache -> ${GITLAB_TEMP_DIR}/cache
+    rm -rf ${GITLAB_INSTALL_DIR}/tmp/cache
+    exec_as_git ln -s ${GITLAB_TEMP_DIR}/cache ${GITLAB_INSTALL_DIR}/tmp/cache
+
+    # symlink ${GITLAB_INSTALL_DIR}/public/assets -> ${GITLAB_TEMP_DIR}/assets
+    rm -rf ${GITLAB_INSTALL_DIR}/public/assets
+    exec_as_git ln -s ${GITLAB_TEMP_DIR}/assets ${GITLAB_INSTALL_DIR}/public/assets
+  fi
 }
 
 sanitize_datadir() {
@@ -1038,6 +1050,10 @@ install_configuration_templates() {
   install_template ${GITLAB_USER}: gitlabhq/secrets.yml ${GITLAB_SECRETS_CONFIG} 0600
   install_template ${GITLAB_USER}: gitlab-shell/config.yml ${GITLAB_SHELL_CONFIG} 0640
 
+  if [[ -n ${GITLAB_RELATIVE_URL_ROOT} ]]; then
+    install_template ${GITLAB_USER}: gitlabhq/relative_url.rb ${GITLAB_RELATIVE_URL_CONFIG} 0644
+  fi
+
   if [[ ${SMTP_ENABLED} == true  ]]; then
     install_template ${GITLAB_USER}: gitlabhq/smtp_settings.rb ${GITLAB_SMTP_CONFIG}
   fi
@@ -1090,6 +1106,7 @@ configure_gitlab() {
   gitlab_configure_secrets
   gitlab_configure_sidekiq
   gitlab_configure_gitlab_workhorse
+  gitlab_configure_relative_url
   gitlab_configure_unicorn
   gitlab_configure_timezone
   gitlab_configure_rack_attack
@@ -1190,8 +1207,14 @@ migrate_database() {
   fi
 
   # clear cache if relative_url has changed.
-  [[ -f ${GITLAB_DATA_DIR}/tmp/GITLAB_RELATIVE_URL_ROOT ]] && CACHE_GITLAB_RELATIVE_URL_ROOT=$(cat ${GITLAB_DATA_DIR}/tmp/GITLAB_RELATIVE_URL_ROOT)
-  if [[ ! -f ${GITLAB_DATA_DIR}/tmp/GITLAB_RELATIVE_URL_ROOT || ${GITLAB_RELATIVE_URL_ROOT} != ${CACHE_GITLAB_RELATIVE_URL_ROOT} ]]; then
+  [[ -f ${GITLAB_TEMP_DIR}/GITLAB_RELATIVE_URL_ROOT ]] && CACHE_GITLAB_RELATIVE_URL_ROOT=$(cat ${GITLAB_TEMP_DIR}/GITLAB_RELATIVE_URL_ROOT)
+  if [[ ! -f ${GITLAB_TEMP_DIR}/GITLAB_RELATIVE_URL_ROOT || ${GITLAB_RELATIVE_URL_ROOT} != ${CACHE_GITLAB_RELATIVE_URL_ROOT} ]]; then
+    # assets need to be recompiled when GITLAB_RELATIVE_URL_ROOT is used
+    if [[ -n ${GITLAB_RELATIVE_URL_ROOT} ]]; then
+      echo "Recompiling assets (relative_url in use), this could take a while..."
+      exec_as_git bundle exec rake assets:clean assets:precompile >/dev/null 2>&1
+    fi
+
     echo "Clearing cache..."
     exec_as_git bundle exec rake cache:clear >/dev/null 2>&1
     echo "${GITLAB_RELATIVE_URL_ROOT}" > ${GITLAB_TEMP_DIR}/GITLAB_RELATIVE_URL_ROOT