This gist describes briefly how to setup a virtual host for nginx that will be a project as a sub folder. Please note that you need a virtual host like this one for every project you have.

bootstrap.php

<?php
// In APP/Config/bootstrap.php add the following code:
if (($baseUrl = Configure::read('App.baseUrl')) !== false) {
        Configure::write('App.base', $baseUrl);
}

core.php

<?php
// In APP/Config/core.php uncomment the line:
Configure::write('App.baseUrl', env('SCRIPT_NAME'));

myproject.nginxconf

# Author: Frank de Graaf (Phally)
# Date: 15-01-2013
 
# Location for the project.
location /myproject {
 
        # Basic password protection.
	auth_basic "Authorization required";
	auth_basic_user_file htpasswd/myproject;
 
	# The webroot of the project.
	root /home/phally/projects/myproject/webroot;
 
	# Strip a trailing slash if any and redirect.
	rewrite (.+)/$ $1 permanent;
 
	# Strip the sub folder name.
	rewrite ^/myproject/(.+)$ /$1 break;
 
	# For all other php files which aren't for the CakePHP
	# core. Example: CakePHP test suite.
	location ~ \.php$ {
 
        	# Strip the sub folder name.
        	rewrite ^/myproject/(.+)$ /$1 break;
 
        	# Pass it to PHP-FPM.
        	fastcgi_pass 127.0.0.1:9000;
 
        	# Include the fastcgi parameter commands.
        	include /etc/nginx/fastcgi_params;
 
        	# Prepend the sub folder name to the script name.
        	fastcgi_param SCRIPT_NAME /myproject$uri;
 
	}
 
	# Try static files first, else pass it on to CakePHP.
	try_files $uri @myproject;
}
 
# Location for the CakePHP paths.
location @myproject {
 
	# Pass it to PHP-FPM.
	fastcgi_pass 127.0.0.1:9000;
 
	# Include the fastcgi parameter commands.
	include /etc/nginx/fastcgi_params;
 
	# Always execute the index.php from the webroot.
	fastcgi_param SCRIPT_FILENAME /home/phally/projects/myproject/webroot/index.php;
 
	# Set the sub folder name as the script name.
	fastcgi_param SCRIPT_NAME /myproject;
}