diff --git a/INSTALL.md b/INSTALL.md
index de188040b..de22c8278 100644
--- a/INSTALL.md
+++ b/INSTALL.md
@@ -405,7 +405,13 @@ Here's an example:
 
 `<string name="ROMDirectory" value="~/games/roms" />`
 
-Keep in mind though that you still need to group the ROMs into directories corresponding to the system names. Well at least if you want to use the default es_systems.cfg file. See below how to customize that file, which gives you full control over the location of the ROMs.
+Keep in mind though that you still need to group the ROMs into directories corresponding to the platform names in es_systems.cfg.
+
+There is also support to add the variable %ESPATH% to the ROM directory setting, this will expand to the path where the ES executable is started from. This is useful for a portable emulator installation, for example on a USB memory stick.
+
+Here is such an example:
+
+`<string name="ROMDirectory" value="%ESPATH%/../roms" />`
 
 **Keep in mind that you have to set up your emulator separately from EmulationStation!**
 
diff --git a/es-app/src/FileData.cpp b/es-app/src/FileData.cpp
index c21168461..1e15abfa7 100644
--- a/es-app/src/FileData.cpp
+++ b/es-app/src/FileData.cpp
@@ -116,6 +116,11 @@ const std::string FileData::getROMDirectory()
             romDirPath = romDirPath + "/";
     }
 
+    // If %ESPATH% is used for the ROM path configuration, then expand it to the executable
+    // directory of ES. This is useful for a portable emulator installation, for instance on
+    // a USB memory stick.
+    romDirPath = Utils::String::replace(romDirPath, "%ESPATH%", Utils::FileSystem::getExePath());
+
     return romDirPath;
 }
 
@@ -129,12 +134,10 @@ const std::string FileData::getMediaDirectory()
     }
     else {
         mediaDirPath = mediaDirSetting;
-
+        // Expand home path if ~ is used.
+        mediaDirPath = Utils::FileSystem::expandHomePath(mediaDirPath);
         // Expand home symbol if the path starts with ~
-        if (mediaDirPath[0] == '~') {
-            mediaDirPath.erase(0, 1);
-            mediaDirPath.insert(0, Utils::FileSystem::getHomePath());
-        }
+
         if (mediaDirPath.back() !=  '/')
             mediaDirPath = mediaDirPath + "/";
     }