Under SS 2.2.x I was able to install a subdomain on a site and have it work separately from SS by modifying the .htaccess file to read:

### SILVERSTRIPE START ###
RewriteEngine On
RewriteRule ^subdomaindirectory$ - [L]
RewriteRule ^subdomaindirectory/.* - [L] 
RewriteBase /

RewriteCond %{REQUEST_URI} !(^$)|(\.gif)|(\.jpg)|(\.png)|(\.css)|(\.js)|(\.php)$ 

RewriteCond %{REQUEST_URI} ^(.*)$
RewriteCond %{REQUEST_FILENAME} !-f
RewriteRule .* sapphire/main.php?url=%1&%{QUERY_STRING} [L]
### SILVERSTRIPE END ### 

With the advents of 2.3 when I add a subdomain I receive the following message.

The requested URL /sapphire/main.php was not found on this server.

Additionally, a 404 Not Found error was encountered while trying to use an ErrorDocument to handle the request. 

If I attempt to modify the .htaccess to include the following code as I did under 2.2 outlined above, this does not work.

RewriteRule ^subdomaindirectory$ - [L]
RewriteRule ^subdomaindirectory/.* - [L] 

Any help would be appreciated. I really need to get this subdomain up and running!

Thanks!

I have the same issue: ss 2.3.3 on root, non-ss on subdomain "shop". Will not work with subdomain at all, same error. Please assist! Thanks loads.

It looks like a lot of people are having this issue, including me!

BUT it looks like there is a simple solution, well, it worked for me. See this tread...

http://silverstripe.org/general-questions/show/268289?start=0#post269856

Just place your own .htaccess with your own rewrite rules in the subdomain folder. If you don't need URL rewriting, enter the following in the subdomain .htaccess:

<IfModule mod_rewrite.c>
RewriteEngine Off
</IfModule>

Edit: spelling

Thank you so much, this one works for me, and I like it better than the previous because its so clean. You're a gem!