diff --git a/src/libflake/flake/flakeref.cc b/src/libflake/flake/flakeref.cc
index cdf0a40e8..15d1191b3 100644
--- a/src/libflake/flake/flakeref.cc
+++ b/src/libflake/flake/flakeref.cc
@@ -102,8 +102,8 @@ std::pair<FlakeRef, std::string> parsePathFlakeRefWithFragment(
 
     if (baseDir) {
         /* Check if 'url' is a path (either absolute or relative
-            to 'baseDir'). If so, search upward to the root of the
-            repo (i.e. the directory containing .git). */
+           to 'baseDir'). If so, search upward to the root of the
+           repo (i.e. the directory containing .git). */
 
         path = absPath(path, baseDir);
 
@@ -232,7 +232,12 @@ std::optional<std::pair<FlakeRef, std::string>> parseURLFlakeRef(
 )
 {
     try {
-        return fromParsedURL(fetchSettings, parseURL(url), isFlake);
+        auto parsed = parseURL(url);
+        if (baseDir
+            && (parsed.scheme == "path" || parsed.scheme == "git+file")
+            && !hasPrefix(parsed.path, "/"))
+            parsed.path = absPath(parsed.path, *baseDir);
+        return fromParsedURL(fetchSettings, std::move(parsed), isFlake);
     } catch (BadURL &) {
         return std::nullopt;
     }
diff --git a/tests/functional/flakes/flakes.sh b/tests/functional/flakes/flakes.sh
index 6c466a0c7..342c075a8 100755
--- a/tests/functional/flakes/flakes.sh
+++ b/tests/functional/flakes/flakes.sh
@@ -97,6 +97,9 @@ nix build -o "$TEST_ROOT/result" flake1
 
 nix build -o "$TEST_ROOT/result" "$flake1Dir"
 nix build -o "$TEST_ROOT/result" "git+file://$flake1Dir"
+(cd "$flake1Dir" && nix build -o "$TEST_ROOT/result" ".")
+(cd "$flake1Dir" && nix build -o "$TEST_ROOT/result" "path:.")
+(cd "$flake1Dir" && nix build -o "$TEST_ROOT/result" "git+file:.")
 
 # Test explicit packages.default.
 nix build -o "$TEST_ROOT/result" "$flake1Dir#default"