diff --git a/CHANGES.rst b/CHANGES.rst
index d5fd66a376..3886854a1c 100644
--- a/CHANGES.rst
+++ b/CHANGES.rst
@@ -1,3 +1,9 @@
+v38.2.2
+-------
+
+* #1214: fix handling of namespace packages when installing
+  from a wheel.
+
 v38.2.1
 -------
 
diff --git a/setuptools/tests/test_wheel.py b/setuptools/tests/test_wheel.py
index 2e857253d5..408c357612 100644
--- a/setuptools/tests/test_wheel.py
+++ b/setuptools/tests/test_wheel.py
@@ -412,6 +412,38 @@ def __repr__(self):
         ),
     ),
 
+    dict(
+        id='namespace_package',
+        file_defs={
+            'foo': {
+                'bar': {
+                    '__init__.py': ''
+                },
+            },
+        },
+        setup_kwargs=dict(
+            namespace_packages=['foo'],
+            packages=['foo.bar'],
+        ),
+        install_tree=DALS(
+            '''
+            foo-1.0-py{py_version}.egg/
+            |-- foo-1.0-py{py_version}-nspkg.pth
+            |-- EGG-INFO/
+            |  |-- DESCRIPTION.rst
+            |  |-- PKG-INFO
+            |  |-- RECORD
+            |  |-- WHEEL
+            |  |-- metadata.json
+            |  |-- namespace_packages.txt
+            |  |-- top_level.txt
+            |-- foo/
+            |  |-- __init__.py
+            |  |-- bar/
+            |  |  |-- __init__.py
+            '''),
+    ),
+
 )
 
 @pytest.mark.parametrize(
diff --git a/setuptools/wheel.py b/setuptools/wheel.py
index f711f38bae..c23272133f 100644
--- a/setuptools/wheel.py
+++ b/setuptools/wheel.py
@@ -20,6 +20,13 @@
     )\.whl$""",
 re.VERBOSE).match
 
+NAMESPACE_PACKAGE_INIT = '''\
+try:
+    __import__('pkg_resources').declare_namespace(__name__)
+except ImportError:
+    __path__ = __import__('pkgutil').extend_path(__path__, __name__)
+'''
+
 
 class Wheel(object):
 
@@ -124,3 +131,14 @@ def raw_req(req):
                 os.rmdir(subdir)
             if os.path.exists(dist_data):
                 os.rmdir(dist_data)
+            # Fix namespace packages.
+            namespace_packages = os.path.join(egg_info, 'namespace_packages.txt')
+            if os.path.exists(namespace_packages):
+                with open(namespace_packages) as fp:
+                    namespace_packages = fp.read().split()
+                for mod in namespace_packages:
+                    mod_dir = os.path.join(destination_eggdir, *mod.split('.'))
+                    mod_init = os.path.join(mod_dir, '__init__.py')
+                    if os.path.exists(mod_dir) and not os.path.exists(mod_init):
+                        with open(mod_init, 'w') as fp:
+                            fp.write(NAMESPACE_PACKAGE_INIT)