diff --git a/read-tree b/read-tree
index cb29ad0..70db41e 100755
--- a/read-tree
+++ b/read-tree
@@ -7,16 +7,19 @@ import sys
 
 import index
 
-_, tree_sha1 = sys.argv
-tree = subprocess.check_output(['cat-file', 'tree', tree_sha1])
-entries = []
-while tree:
-    header, rest = tree.split('\0', 1)
-    mode, filename = header.split(' ', 1)
-    rawsha1 = rest[:20]
-    tree = rest[20:]
-    # TODO handle directories
-    if mode != '040000':
-        entries.append((filename, int(mode, 8), rawsha1))
+def unpack_trees(tree_sha1, base):
+    tree = subprocess.check_output(['cat-file', 'tree', tree_sha1])
+    entries = []
+    while tree:
+        header, rest = tree.split('\0', 1)
+        mode, filename = header.split(' ', 1)
+        rawsha1 = rest[:20]
+        tree = rest[20:]
+        if mode == '40000': # for directories
+            entries += unpack_trees(rawsha1.encode('hex'), filename + '/')
+        else:
+            entries.append((base + filename, int(mode, 8), rawsha1))
+    return entries
 
-index.write_index(entries)
+_, tree_sha1 = sys.argv
+index.write_index(unpack_trees(tree_sha1, ''))
diff --git a/test b/test
index d6228b6..e15e6e9 100755
--- a/test
+++ b/test
@@ -117,20 +117,34 @@ header 'Checkout detached HEAD [checkout]'
 $ZIT checkout HEAD
 [[ $(<.zit/HEAD) == $second_commit ]]
 
-header 'Commit executable file, symlink, and directory [add]'
+header 'Commit executable file, symlink [add]'
 chmod +x handle
-mkdir and
-ln -s ../handle and/spout
-git add handle and/spout
+ln -s handle spout
+git add handle spout
 EDITOR=tee $ZIT commit <<< 'first stanza' > /dev/null
-[[ $($ZIT rev-parse HEAD^{tree}) == 6a8ad12fa34d4f1ea64abb28c8ae143b1e8fde40 ]]
+[[ $($ZIT rev-parse HEAD^{tree}) == 32b256d0e79f6c2a3ccca5ef6bd67aa7b37fc6eb ]]
 
 header 'Checkout a new branch [checkout, checkout-index]'
-rm -rf handle and
+rm -f handle spout
 $ZIT checkout -b stanza
 [[ $(<.zit/HEAD) == 'ref: refs/heads/stanza' ]]
 [[ -x handle ]]
-[[ $(python -c 'import os; print os.readlink("and/spout")') == ../handle ]]
+[[ $(python -c 'import os; print os.readlink("spout")') == handle ]]
+
+header 'Commit directory [write-tree]'
+mkdir stanza2
+echo 'When I get all steamed up' > stanza2/line1
+echo 'hear me shout' > stanza2/line2
+echo 'tip me over and pour me out' > stanza2/line3
+git add stanza2
+EDITOR=tee $ZIT commit <<< 'second stanza' > /dev/null
+[[ $($ZIT rev-parse HEAD^{tree}) == 211fce66889894e23c9d710e2ae9df93066be410 ]]
+
+header 'Checkout a new branch [checkout, checkout-index]'
+rm -rf stanza
+$ZIT checkout stanza
+[[ $(<.zit/HEAD) == 'ref: refs/heads/stanza' ]]
+[[ $(<stanza2/line1) == 'When I get all steamed up' ]]
 
 [[ -n $keep ]] || { rm -rf "$repo"; trap '' EXIT; }
 header PASS
diff --git a/write-tree b/write-tree
index ccb6fc4..3353bb0 100755
--- a/write-tree
+++ b/write-tree
@@ -5,14 +5,29 @@ import subprocess
 
 import index
 
-entries = index.read_index()
-# TODO write directories recursively? groupby?
-f = open('.zit/tree.tmp', 'w')
-for filename, mode, rawsha1 in entries:
-    f.write('{:o} '.format(mode))
-    f.write(filename)
-    f.write('\0')
-    f.write(rawsha1)
-f.close()
+def write_tree(entries, base):
+    i = 0
+    buf = ''
+    while i < len(entries):
+        filename, mode, rawsha1 = entries[i]
 
-subprocess.check_call(['hash-object', 'tree', '.zit/tree.tmp'])
+        # for directories
+        if not filename.startswith(base):
+            break
+        filename = filename[len(base):]
+        if '/' in filename:
+            filename = filename.split('/', 1)[0]
+            num_written, sha1 = write_tree(entries[i:], base + filename + '/')
+            i += num_written
+            i -= 1 # write the directory entry, but don't count it
+            mode = 040000
+            rawsha1 = bytearray.fromhex(sha1)
+
+        buf += '{:o} {}\0{}'.format(mode, filename, rawsha1)
+        i += 1
+    with open('.zit/tree.tmp', 'w') as f:
+        f.write(buf)
+    return i, subprocess.check_output(['hash-object', 'tree', '.zit/tree.tmp']).strip()
+
+_, sha1 = write_tree(index.read_index(), '')
+print sha1