diff --git a/src/ownership/validator.rs b/src/ownership/validator.rs
index 664de3a..39509d9 100644
--- a/src/ownership/validator.rs
+++ b/src/ownership/validator.rs
@@ -65,6 +65,7 @@ impl Validator {
 
         errors.append(&mut self.invalid_team_annotation(&team_names));
         errors.append(&mut self.invalid_package_ownership(&team_names));
+        errors.append(&mut self.invalid_directory_ownership(&team_names));
 
         errors
     }
@@ -107,6 +108,20 @@ impl Validator {
             .collect()
     }
 
+    /// `DirectoryMapper::entries` skips unresolvable owners, so the directory silently
+    /// inherits its ancestor's owner and nothing else reports the bad name.
+    fn invalid_directory_ownership(&self, team_names: &HashSet<&TeamName>) -> Vec<Error> {
+        self.project
+            .directory_codeowner_files
+            .iter()
+            .filter(|directory_codeowner_file| !team_names.contains(&directory_codeowner_file.owner))
+            .map(|directory_codeowner_file| Error::InvalidTeam {
+                name: directory_codeowner_file.owner.clone(),
+                path: self.project.relative_path(&directory_codeowner_file.path).to_owned(),
+            })
+            .collect()
+    }
+
     fn validate_file_ownership(&self) -> Vec<Error> {
         let mut validation_errors = Vec::new();
 
diff --git a/tests/fixtures/invalid-directory-codeowner/.github/CODEOWNERS b/tests/fixtures/invalid-directory-codeowner/.github/CODEOWNERS
new file mode 100644
index 0000000..fed28cf
--- /dev/null
+++ b/tests/fixtures/invalid-directory-codeowner/.github/CODEOWNERS
@@ -0,0 +1,14 @@
+# STOP! - DO NOT EDIT THIS FILE MANUALLY
+# This file was automatically generated by "bin/codeownership validate".
+#
+# CODEOWNERS is used for GitHub to suggest code/file owners to various GitHub
+# teams. This is useful when developers create Pull Requests since the
+# code/file owner is notified. Reference GitHub docs for more details:
+# https://help.github.com/en/articles/about-code-owners
+
+
+# Owner in .codeowner
+/app/services/**/** @footeam
+
+# Team YML ownership
+/config/teams/foo.yml @footeam
diff --git a/tests/fixtures/invalid-directory-codeowner/app/services/.codeowner b/tests/fixtures/invalid-directory-codeowner/app/services/.codeowner
new file mode 100644
index 0000000..bc56c4d
--- /dev/null
+++ b/tests/fixtures/invalid-directory-codeowner/app/services/.codeowner
@@ -0,0 +1 @@
+Foo
diff --git a/tests/fixtures/invalid-directory-codeowner/app/services/nested/.codeowner b/tests/fixtures/invalid-directory-codeowner/app/services/nested/.codeowner
new file mode 100644
index 0000000..c2075a5
--- /dev/null
+++ b/tests/fixtures/invalid-directory-codeowner/app/services/nested/.codeowner
@@ -0,0 +1 @@
+Web3
diff --git a/tests/fixtures/invalid-directory-codeowner/app/services/nested/nested_file.rb b/tests/fixtures/invalid-directory-codeowner/app/services/nested/nested_file.rb
new file mode 100644
index 0000000..d19bcc1
--- /dev/null
+++ b/tests/fixtures/invalid-directory-codeowner/app/services/nested/nested_file.rb
@@ -0,0 +1,2 @@
+class NestedFile
+end
diff --git a/tests/fixtures/invalid-directory-codeowner/config/code_ownership.yml b/tests/fixtures/invalid-directory-codeowner/config/code_ownership.yml
new file mode 100644
index 0000000..c76f028
--- /dev/null
+++ b/tests/fixtures/invalid-directory-codeowner/config/code_ownership.yml
@@ -0,0 +1,10 @@
+---
+owned_globs:
+  - "{app,components,config,frontend,lib,packs,spec}/**/*.{rb,rake,js,jsx,ts,tsx,json,yml}"
+unowned_globs:
+  - config/code_ownership.yml
+javascript_package_paths:
+  - javascript/packages/**
+vendored_gems_path: gems
+team_file_glob:
+  - config/teams/**/*.yml
\ No newline at end of file
diff --git a/tests/fixtures/invalid-directory-codeowner/config/teams/foo.yml b/tests/fixtures/invalid-directory-codeowner/config/teams/foo.yml
new file mode 100644
index 0000000..7c3977c
--- /dev/null
+++ b/tests/fixtures/invalid-directory-codeowner/config/teams/foo.yml
@@ -0,0 +1,5 @@
+name: Foo
+github:
+  team: "@footeam"
+  members:
+    - fooer
diff --git a/tests/invalid_directory_codeowner_test.rs b/tests/invalid_directory_codeowner_test.rs
new file mode 100644
index 0000000..260db32
--- /dev/null
+++ b/tests/invalid_directory_codeowner_test.rs
@@ -0,0 +1,25 @@
+use indoc::indoc;
+use predicates::prelude::*;
+use std::error::Error;
+
+mod common;
+use common::OutputStream;
+use common::run_codeowners;
+
+/// A nested `.codeowner` naming an unregistered team, under one naming a real team:
+/// ownership falls through to the ancestor, so nothing else reports the bad name.
+#[test]
+fn test_validate_reports_directory_codeowner_with_invalid_team() -> Result<(), Box<dyn Error>> {
+    run_codeowners(
+        "invalid-directory-codeowner",
+        &["validate"],
+        false,
+        OutputStream::Stdout,
+        predicate::str::contains(indoc! {"
+            Found invalid team annotations
+            - app/services/nested/.codeowner is referencing an invalid team - 'Web3'
+        "}),
+    )?;
+
+    Ok(())
+}