diff --git a/src/libexpr/flake/call-flake.nix b/src/libexpr/flake/call-flake.nix
index a411564df5b..43ecb7f156f 100644
--- a/src/libexpr/flake/call-flake.nix
+++ b/src/libexpr/flake/call-flake.nix
@@ -38,10 +38,17 @@ let
       (key: node:
         let
 
+          parentNode = allNodes.${getInputByPath lockFile.root node.parent};
+
           sourceInfo =
             if overrides ? ${key}
             then
               overrides.${key}.sourceInfo
+            else if node.locked.type == "path" && builtins.substring 0 1 node.locked.path != "/"
+            then
+              parentNode.sourceInfo // {
+                outPath = parentNode.sourceInfo.outPath + ("/" + node.locked.path);
+              }
             else
               # FIXME: remove obsolete node.info.
               fetchTree (node.info or {} // removeAttrs node.locked ["dir"]);
diff --git a/src/libexpr/flake/flake.cc b/src/libexpr/flake/flake.cc
index 3af9ef14ee3..d4cabe68f06 100644
--- a/src/libexpr/flake/flake.cc
+++ b/src/libexpr/flake/flake.cc
@@ -93,12 +93,17 @@ static void expectType(EvalState & state, ValueType type,
 }
 
 static std::map<FlakeId, FlakeInput> parseFlakeInputs(
-    EvalState & state, Value * value, const PosIdx pos,
-    const std::optional<Path> & baseDir, InputPath lockRootPath);
+    EvalState & state,
+    Value * value,
+    const PosIdx pos,
+    InputPath lockRootPath);
 
-static FlakeInput parseFlakeInput(EvalState & state,
-    const std::string & inputName, Value * value, const PosIdx pos,
-    const std::optional<Path> & baseDir, InputPath lockRootPath)
+static FlakeInput parseFlakeInput(
+    EvalState & state,
+    const std::string & inputName,
+    Value * value,
+    const PosIdx pos,
+    InputPath lockRootPath)
 {
     expectType(state, nAttrs, *value, pos);
 
@@ -122,7 +127,7 @@ static FlakeInput parseFlakeInput(EvalState & state,
                 expectType(state, nBool, *attr.value, attr.pos);
                 input.isFlake = attr.value->boolean();
             } else if (attr.name == sInputs) {
-                input.overrides = parseFlakeInputs(state, attr.value, attr.pos, baseDir, lockRootPath);
+                input.overrides = parseFlakeInputs(state, attr.value, attr.pos, lockRootPath);
             } else if (attr.name == sFollows) {
                 expectType(state, nString, *attr.value, attr.pos);
                 auto follows(parseInputPath(attr.value->c_str()));
@@ -173,7 +178,7 @@ static FlakeInput parseFlakeInput(EvalState & state,
         if (!attrs.empty())
             throw Error("unexpected flake input attribute '%s', at %s", attrs.begin()->first, state.positions[pos]);
         if (url)
-            input.ref = parseFlakeRef(*url, baseDir, true, input.isFlake);
+            input.ref = parseFlakeRef(*url, {}, true, input.isFlake, true);
     }
 
     if (!input.follows && !input.ref)
@@ -183,8 +188,10 @@ static FlakeInput parseFlakeInput(EvalState & state,
 }
 
 static std::map<FlakeId, FlakeInput> parseFlakeInputs(
-    EvalState & state, Value * value, const PosIdx pos,
-    const std::optional<Path> & baseDir, InputPath lockRootPath)
+    EvalState & state,
+    Value * value,
+    const PosIdx pos,
+    InputPath lockRootPath)
 {
     std::map<FlakeId, FlakeInput> inputs;
 
@@ -196,7 +203,6 @@ static std::map<FlakeId, FlakeInput> parseFlakeInputs(
                 state.symbols[inputAttr.name],
                 inputAttr.value,
                 inputAttr.pos,
-                baseDir,
                 lockRootPath));
     }
 
@@ -232,7 +238,7 @@ static Flake readFlake(
     auto sInputs = state.symbols.create("inputs");
 
     if (auto inputs = vInfo.attrs()->get(sInputs))
-        flake.inputs = parseFlakeInputs(state, inputs->value, inputs->pos, flakePath.parent().path.abs(), lockRootPath); // FIXME
+        flake.inputs = parseFlakeInputs(state, inputs->value, inputs->pos, lockRootPath);
 
     auto sOutputs = state.symbols.create("outputs");
 
@@ -366,13 +372,29 @@ LockedFlake lockFlake(
 
         debug("old lock file: %s", oldLockFile);
 
-        std::map<InputPath, FlakeInput> overrides;
+        struct Override
+        {
+            FlakeInput input;
+            SourcePath sourcePath;
+            std::optional<InputPath> parentPath; // FIXME: rename to inputPathPrefix?
+        };
+
+        std::map<InputPath, Override> overrides;
         std::set<InputPath> explicitCliOverrides;
         std::set<InputPath> overridesUsed, updatesUsed;
         std::map<ref<Node>, SourcePath> nodePaths;
 
         for (auto & i : lockFlags.inputOverrides) {
-            overrides.insert_or_assign(i.first, FlakeInput { .ref = i.second });
+            overrides.emplace(
+                i.first,
+                Override {
+                    .input = FlakeInput { .ref = i.second },
+                    /* Note: any relative overrides
+                       (e.g. `--override-input B/C "path:./foo/bar"`)
+                       are interpreted relative to the top-level
+                       flake. */
+                    .sourcePath = flake.path,
+                });
             explicitCliOverrides.insert(i.first);
         }
 
@@ -386,7 +408,7 @@ LockedFlake lockFlake(
             const InputPath & inputPathPrefix,
             std::shared_ptr<const Node> oldNode,
             const InputPath & lockRootPath,
-            const Path & parentPath,
+            const SourcePath & sourcePath,
             bool trustLock)>
             computeLocks;
 
@@ -402,7 +424,8 @@ LockedFlake lockFlake(
                copied. */
             std::shared_ptr<const Node> oldNode,
             const InputPath & lockRootPath,
-            const Path & parentPath,
+            /* The source path of this node's flake. */
+            const SourcePath & sourcePath,
             bool trustLock)
         {
             debug("computing lock file node '%s'", printInputPath(inputPathPrefix));
@@ -414,7 +437,12 @@ LockedFlake lockFlake(
                     auto inputPath(inputPathPrefix);
                     inputPath.push_back(id);
                     inputPath.push_back(idOverride);
-                    overrides.insert_or_assign(inputPath, inputOverride);
+                    overrides.emplace(inputPath,
+                        Override {
+                            .input = inputOverride,
+                            .sourcePath = sourcePath,
+                            .parentPath = inputPathPrefix // FIXME: should this be inputPath?
+                        });
                 }
             }
 
@@ -446,13 +474,18 @@ LockedFlake lockFlake(
                     auto i = overrides.find(inputPath);
                     bool hasOverride = i != overrides.end();
                     bool hasCliOverride = explicitCliOverrides.contains(inputPath);
-                    if (hasOverride) {
+                    if (hasOverride)
                         overridesUsed.insert(inputPath);
-                        // Respect the “flakeness” of the input even if we
-                        // override it
-                        i->second.isFlake = input2.isFlake;
-                    }
-                    auto & input = hasOverride ? i->second : input2;
+                    auto input = hasOverride ? i->second.input : input2;
+
+                    /* Resolve relative 'path:' inputs relative to
+                       the source path of the overrider. */
+                    auto overridenSourcePath = hasOverride ? i->second.sourcePath : sourcePath;
+
+                    /* Respect the "flakeness" of the input even if we
+                       override it. */
+                    if (hasOverride)
+                        input.isFlake = input2.isFlake;
 
                     /* Resolve 'follows' later (since it may refer to an input
                        path we haven't processed yet. */
@@ -468,6 +501,33 @@ LockedFlake lockFlake(
 
                     assert(input.ref);
 
+                    auto overridenParentPath =
+                        input.ref->input.isRelative()
+                        ? std::optional<InputPath>(hasOverride ? i->second.parentPath : inputPathPrefix)
+                        : std::nullopt;
+
+                    auto resolveRelativePath = [&]() -> std::optional<SourcePath>
+                    {
+                        if (auto relativePath = input.ref->input.isRelative()) {
+                            return SourcePath {
+                                overridenSourcePath.accessor,
+                                CanonPath(*relativePath, overridenSourcePath.path.parent().value())
+                            };
+                        } else
+                            return std::nullopt;
+                    };
+
+                    /* Get the input flake, resolve 'path:./...'
+                       flakerefs relative to the parent flake. */
+                    auto getInputFlake = [&]()
+                    {
+                        if (auto resolvedPath = resolveRelativePath()) {
+                            return readFlake(state, *input.ref, *input.ref, *input.ref, *resolvedPath, inputPath);
+                        } else {
+                            return getFlake(state, *input.ref, useRegistries, flakeCache, inputPath);
+                        }
+                    };
+
                     /* Do we have an entry in the existing lock file?
                        And the input is not in updateInputs? */
                     std::shared_ptr<LockedNode> oldLock;
@@ -481,6 +541,7 @@ LockedFlake lockFlake(
 
                     if (oldLock
                         && oldLock->originalRef == *input.ref
+                        && oldLock->parentPath == overridenParentPath
                         && !hasCliOverride)
                     {
                         debug("keeping existing input '%s'", inputPathS);
@@ -489,7 +550,10 @@ LockedFlake lockFlake(
                            didn't change and there is no override from a
                            higher level flake. */
                         auto childNode = make_ref<LockedNode>(
-                            oldLock->lockedRef, oldLock->originalRef, oldLock->isFlake);
+                            oldLock->lockedRef,
+                            oldLock->originalRef,
+                            oldLock->isFlake,
+                            oldLock->parentPath);
 
                         node->inputs.insert_or_assign(id, childNode);
 
@@ -541,11 +605,15 @@ LockedFlake lockFlake(
                         }
 
                         if (mustRefetch) {
-                            auto inputFlake = getFlake(state, oldLock->lockedRef, false, flakeCache, inputPath);
+                            auto inputFlake = getInputFlake();
                             nodePaths.emplace(childNode, inputFlake.path.parent());
-                            computeLocks(inputFlake.inputs, childNode, inputPath, oldLock, lockRootPath, parentPath, false);
+                            computeLocks(inputFlake.inputs, childNode, inputPath, oldLock, lockRootPath, inputFlake.path, false);
                         } else {
-                            computeLocks(fakeInputs, childNode, inputPath, oldLock, lockRootPath, parentPath, true);
+                            // FIXME: sourcePath is wrong here, we
+                            // should pass a lambda that lazily
+                            // fetches the parent flake if needed
+                            // (i.e. getInputFlake()).
+                            computeLocks(fakeInputs, childNode, inputPath, oldLock, lockRootPath, sourcePath, true);
                         }
 
                     } else {
@@ -553,7 +621,9 @@ LockedFlake lockFlake(
                            this input. */
                         debug("creating new input '%s'", inputPathS);
 
-                        if (!lockFlags.allowUnlocked && !input.ref->input.isLocked())
+                        if (!lockFlags.allowUnlocked
+                            && !input.ref->input.isLocked()
+                            && !input.ref->input.isRelative())
                             throw Error("cannot update unlocked flake input '%s' in pure mode", inputPathS);
 
                         /* Note: in case of an --override-input, we use
@@ -566,17 +636,9 @@ LockedFlake lockFlake(
                         auto ref = (input2.ref && explicitCliOverrides.contains(inputPath)) ? *input2.ref : *input.ref;
 
                         if (input.isFlake) {
-                            Path localPath = parentPath;
-                            FlakeRef localRef = *input.ref;
-
-                            // If this input is a path, recurse it down.
-                            // This allows us to resolve path inputs relative to the current flake.
-                            if (localRef.input.getType() == "path")
-                                localPath = absPath(*input.ref->input.getSourcePath(), parentPath);
+                            auto inputFlake = getInputFlake();
 
-                            auto inputFlake = getFlake(state, localRef, useRegistries, flakeCache, inputPath);
-
-                            auto childNode = make_ref<LockedNode>(inputFlake.lockedRef, ref);
+                            auto childNode = make_ref<LockedNode>(inputFlake.lockedRef, ref, true, overridenParentPath);
 
                             node->inputs.insert_or_assign(id, childNode);
 
@@ -598,17 +660,26 @@ LockedFlake lockFlake(
                                 ? std::dynamic_pointer_cast<const Node>(oldLock)
                                 : readLockFile(inputFlake.lockFilePath()).root.get_ptr(),
                                 oldLock ? lockRootPath : inputPath,
-                                localPath,
+                                inputFlake.path,
                                 false);
                         }
 
                         else {
-                            auto [storePath, resolvedRef, lockedRef] = fetchOrSubstituteTree(
-                                state, *input.ref, useRegistries, flakeCache);
+                            auto [path, lockedRef] = [&]() -> std::tuple<SourcePath, FlakeRef>
+                            {
+                                // Handle non-flake 'path:./...' inputs.
+                                if (auto resolvedPath = resolveRelativePath()) {
+                                    return {*resolvedPath, *input.ref};
+                                } else {
+                                    auto [storePath, resolvedRef, lockedRef] = fetchOrSubstituteTree(
+                                        state, *input.ref, useRegistries, flakeCache);
+                                    return {state.rootPath(state.store->toRealPath(storePath)), lockedRef};
+                                }
+                            }();
 
-                            auto childNode = make_ref<LockedNode>(lockedRef, ref, false);
+                            auto childNode = make_ref<LockedNode>(lockedRef, ref, false, overridenParentPath);
 
-                            nodePaths.emplace(childNode, state.rootPath(state.store->toRealPath(storePath)));
+                            nodePaths.emplace(childNode, path);
 
                             node->inputs.insert_or_assign(id, childNode);
                         }
@@ -621,9 +692,6 @@ LockedFlake lockFlake(
             }
         };
 
-        // Bring in the current ref for relative path resolution if we have it
-        auto parentPath = flake.path.parent().path.abs();
-
         nodePaths.emplace(newLockFile.root, flake.path.parent());
 
         computeLocks(
@@ -632,7 +700,7 @@ LockedFlake lockFlake(
             {},
             lockFlags.recreateLockFile ? nullptr : oldLockFile.root.get_ptr(),
             {},
-            parentPath,
+            flake.path,
             false);
 
         for (auto & i : lockFlags.inputOverrides)
diff --git a/src/libexpr/flake/flakeref.cc b/src/libexpr/flake/flakeref.cc
index 6e4aad64d28..bac237a2a33 100644
--- a/src/libexpr/flake/flakeref.cc
+++ b/src/libexpr/flake/flakeref.cc
@@ -51,9 +51,10 @@ FlakeRef parseFlakeRef(
     const std::string & url,
     const std::optional<Path> & baseDir,
     bool allowMissing,
-    bool isFlake)
+    bool isFlake,
+    bool allowRelative)
 {
-    auto [flakeRef, fragment] = parseFlakeRefWithFragment(url, baseDir, allowMissing, isFlake);
+    auto [flakeRef, fragment] = parseFlakeRefWithFragment(url, baseDir, allowMissing, isFlake, allowRelative);
     if (fragment != "")
         throw Error("unexpected fragment '%s' in flake reference '%s'", fragment, url);
     return flakeRef;
@@ -69,11 +70,25 @@ std::optional<FlakeRef> maybeParseFlakeRef(
     }
 }
 
+static std::pair<FlakeRef, std::string> fromParsedURL(
+    ParsedURL && parsedURL,
+    bool isFlake)
+{
+    auto dir = getOr(parsedURL.query, "dir", "");
+    parsedURL.query.erase("dir");
+
+    std::string fragment;
+    std::swap(fragment, parsedURL.fragment);
+
+    return std::make_pair(FlakeRef(fetchers::Input::fromURL(parsedURL, isFlake), dir), fragment);
+}
+
 std::pair<FlakeRef, std::string> parsePathFlakeRefWithFragment(
     const std::string & url,
     const std::optional<Path> & baseDir,
     bool allowMissing,
-    bool isFlake)
+    bool isFlake,
+    bool allowRelative)
 {
     std::string path = url;
     std::string fragment = "";
@@ -90,7 +105,7 @@ std::pair<FlakeRef, std::string> parsePathFlakeRefWithFragment(
         fragment = percentDecode(url.substr(fragmentStart+1));
     }
     if (pathEnd != std::string::npos && fragmentStart != std::string::npos) {
-        query = decodeQuery(url.substr(pathEnd+1, fragmentStart-pathEnd-1));
+        query = decodeQuery(url.substr(pathEnd + 1, fragmentStart - pathEnd - 1));
     }
 
     if (baseDir) {
@@ -154,6 +169,7 @@ std::pair<FlakeRef, std::string> parsePathFlakeRefWithFragment(
                         .authority = "",
                         .path = flakeRoot,
                         .query = query,
+                        .fragment = fragment,
                     };
 
                     if (subdir != "") {
@@ -165,9 +181,7 @@ std::pair<FlakeRef, std::string> parsePathFlakeRefWithFragment(
                     if (pathExists(flakeRoot + "/.git/shallow"))
                         parsedURL.query.insert_or_assign("shallow", "1");
 
-                    return std::make_pair(
-                        FlakeRef(fetchers::Input::fromURL(parsedURL), getOr(parsedURL.query, "dir", "")),
-                        fragment);
+                    return fromParsedURL(std::move(parsedURL), isFlake);
                 }
 
                 subdir = std::string(baseNameOf(flakeRoot)) + (subdir.empty() ? "" : "/" + subdir);
@@ -176,25 +190,30 @@ std::pair<FlakeRef, std::string> parsePathFlakeRefWithFragment(
         }
 
     } else {
-        if (!hasPrefix(path, "/"))
+        if (!allowRelative && !hasPrefix(path, "/"))
             throw BadURL("flake reference '%s' is not an absolute path", url);
-        path = canonPath(path + "/" + getOr(query, "dir", ""));
     }
 
     fetchers::Attrs attrs;
     attrs.insert_or_assign("type", "path");
     attrs.insert_or_assign("path", path);
 
-    return std::make_pair(FlakeRef(fetchers::Input::fromAttrs(std::move(attrs)), ""), fragment);
-};
-
+    return fromParsedURL({
+        .url = path,
+        .base = path,
+        .scheme = "path",
+        .authority = "",
+        .path = path,
+        .query = query,
+        .fragment = fragment
+    }, isFlake);
+}
 
 /* Check if 'url' is a flake ID. This is an abbreviated syntax for
     'flake:<flake-id>?ref=<ref>&rev=<rev>'. */
 std::optional<std::pair<FlakeRef, std::string>> parseFlakeIdRef(
     const std::string & url,
-    bool isFlake
-)
+    bool isFlake)
 {
     std::smatch match;
 
@@ -223,32 +242,21 @@ std::optional<std::pair<FlakeRef, std::string>> parseFlakeIdRef(
 std::optional<std::pair<FlakeRef, std::string>> parseURLFlakeRef(
     const std::string & url,
     const std::optional<Path> & baseDir,
-    bool isFlake
-)
+    bool isFlake)
 {
-    ParsedURL parsedURL;
     try {
-        parsedURL = parseURL(url);
+        return fromParsedURL(parseURL(url), isFlake);
     } catch (BadURL &) {
         return std::nullopt;
     }
-
-    std::string fragment;
-    std::swap(fragment, parsedURL.fragment);
-
-    auto input = fetchers::Input::fromURL(parsedURL, isFlake);
-    input.parent = baseDir;
-
-    return std::make_pair(
-        FlakeRef(std::move(input), getOr(parsedURL.query, "dir", "")),
-        fragment);
 }
 
 std::pair<FlakeRef, std::string> parseFlakeRefWithFragment(
     const std::string & url,
     const std::optional<Path> & baseDir,
     bool allowMissing,
-    bool isFlake)
+    bool isFlake,
+    bool allowRelative)
 {
     using namespace fetchers;
 
@@ -259,7 +267,7 @@ std::pair<FlakeRef, std::string> parseFlakeRefWithFragment(
     } else if (auto res = parseURLFlakeRef(url, baseDir, isFlake)) {
         return *res;
     } else {
-        return parsePathFlakeRefWithFragment(url, baseDir, allowMissing, isFlake);
+        return parsePathFlakeRefWithFragment(url, baseDir, allowMissing, isFlake, allowRelative);
     }
 }
 
diff --git a/src/libexpr/flake/flakeref.hh b/src/libexpr/flake/flakeref.hh
index 04c812ed099..ea6c4e4d7aa 100644
--- a/src/libexpr/flake/flakeref.hh
+++ b/src/libexpr/flake/flakeref.hh
@@ -75,7 +75,8 @@ FlakeRef parseFlakeRef(
     const std::string & url,
     const std::optional<Path> & baseDir = {},
     bool allowMissing = false,
-    bool isFlake = true);
+    bool isFlake = true,
+    bool allowRelative = false);
 
 /**
  * @param baseDir Optional [base directory](https://nixos.org/manual/nix/unstable/glossary#gloss-base-directory)
@@ -90,7 +91,8 @@ std::pair<FlakeRef, std::string> parseFlakeRefWithFragment(
     const std::string & url,
     const std::optional<Path> & baseDir = {},
     bool allowMissing = false,
-    bool isFlake = true);
+    bool isFlake = true,
+    bool allowRelative = false);
 
 /**
  * @param baseDir Optional [base directory](https://nixos.org/manual/nix/unstable/glossary#gloss-base-directory)
diff --git a/src/libexpr/flake/lockfile.cc b/src/libexpr/flake/lockfile.cc
index d252214dd2b..2884ca26274 100644
--- a/src/libexpr/flake/lockfile.cc
+++ b/src/libexpr/flake/lockfile.cc
@@ -36,8 +36,9 @@ LockedNode::LockedNode(const nlohmann::json & json)
     : lockedRef(getFlakeRef(json, "locked", "info")) // FIXME: remove "info"
     , originalRef(getFlakeRef(json, "original", nullptr))
     , isFlake(json.find("flake") != json.end() ? (bool) json["flake"] : true)
+    , parentPath(json.find("parent") != json.end() ? (std::optional<InputPath>) json["parent"] : std::nullopt)
 {
-    if (!lockedRef.input.isLocked())
+    if (!lockedRef.input.isLocked() && !lockedRef.input.isRelative())
         throw Error("lock file contains unlocked input '%s'",
             fetchers::attrsToJSON(lockedRef.input.toAttrs()));
 }
@@ -184,6 +185,8 @@ std::pair<nlohmann::json, LockFile::KeyMap> LockFile::toJSON() const
             n["locked"] = fetchers::attrsToJSON(lockedNode->lockedRef.toAttrs());
             if (!lockedNode->isFlake)
                 n["flake"] = false;
+            if (lockedNode->parentPath)
+                n["parent"] = *lockedNode->parentPath;
         }
 
         nodes[key] = std::move(n);
@@ -230,7 +233,9 @@ std::optional<FlakeRef> LockFile::isUnlocked() const
     for (auto & i : nodes) {
         if (i == ref<const Node>(root)) continue;
         auto node = i.dynamic_pointer_cast<const LockedNode>();
-        if (node && !node->lockedRef.input.isLocked())
+        if (node
+            && !node->lockedRef.input.isLocked()
+            && !node->lockedRef.input.isRelative())
             return node->lockedRef;
     }
 
diff --git a/src/libexpr/flake/lockfile.hh b/src/libexpr/flake/lockfile.hh
index 7e62e6d0970..aad805bafe1 100644
--- a/src/libexpr/flake/lockfile.hh
+++ b/src/libexpr/flake/lockfile.hh
@@ -38,11 +38,19 @@ struct LockedNode : Node
     FlakeRef lockedRef, originalRef;
     bool isFlake = true;
 
+    /* The node relative to which relative source paths
+       (e.g. 'path:../foo') are interpreted. */
+    std::optional<InputPath> parentPath;
+
     LockedNode(
         const FlakeRef & lockedRef,
         const FlakeRef & originalRef,
-        bool isFlake = true)
-        : lockedRef(lockedRef), originalRef(originalRef), isFlake(isFlake)
+        bool isFlake = true,
+        std::optional<InputPath> parentPath = {})
+        : lockedRef(lockedRef)
+        , originalRef(originalRef)
+        , isFlake(isFlake)
+        , parentPath(parentPath)
     { }
 
     LockedNode(const nlohmann::json & json);
diff --git a/src/libexpr/primops/fetchTree.cc b/src/libexpr/primops/fetchTree.cc
index e27f30512b8..1c5cd4ec2ee 100644
--- a/src/libexpr/primops/fetchTree.cc
+++ b/src/libexpr/primops/fetchTree.cc
@@ -31,9 +31,8 @@ void emitTreeAttrs(
 
     // FIXME: support arbitrary input attributes.
 
-    auto narHash = input.getNarHash();
-    assert(narHash);
-    attrs.alloc("narHash").mkString(narHash->to_string(HashFormat::SRI, true));
+    if (auto narHash = input.getNarHash())
+        attrs.alloc("narHash").mkString(narHash->to_string(HashFormat::SRI, true));
 
     if (input.getType() == "git")
         attrs.alloc("submodules").mkBool(
diff --git a/src/libfetchers/fetchers.cc b/src/libfetchers/fetchers.cc
index 73923907c3a..73cb4fea3e3 100644
--- a/src/libfetchers/fetchers.cc
+++ b/src/libfetchers/fetchers.cc
@@ -141,6 +141,12 @@ bool Input::isLocked() const
     return scheme && scheme->isLocked(*this);
 }
 
+std::optional<std::string> Input::isRelative() const
+{
+    assert(scheme);
+    return scheme->isRelative(*this);
+}
+
 Attrs Input::toAttrs() const
 {
     return attrs;
diff --git a/src/libfetchers/fetchers.hh b/src/libfetchers/fetchers.hh
index 551be9a1f9a..66cac706404 100644
--- a/src/libfetchers/fetchers.hh
+++ b/src/libfetchers/fetchers.hh
@@ -31,11 +31,6 @@ struct Input
     std::shared_ptr<InputScheme> scheme; // note: can be null
     Attrs attrs;
 
-    /**
-     * path of the parent of this input, used for relative path resolution
-     */
-    std::optional<Path> parent;
-
 public:
     /**
      * Create an `Input` from a URL.
@@ -73,6 +68,12 @@ public:
      */
     bool isLocked() const;
 
+    /**
+     * Only for relative path flakes, i.e. 'path:./foo', returns the
+     * relative path, i.e. './foo'.
+     */
+    std::optional<std::string> isRelative() const;
+
     bool operator ==(const Input & other) const;
 
     bool contains(const Input & other) const;
@@ -220,6 +221,9 @@ struct InputScheme
      * if there is a mismatch.
      */
     virtual void checkLocks(const Input & specified, const Input & final) const;
+
+    virtual std::optional<std::string> isRelative(const Input & input) const
+    { return std::nullopt; }
 };
 
 void registerInputScheme(std::shared_ptr<InputScheme> && fetcher);
diff --git a/src/libfetchers/path.cc b/src/libfetchers/path.cc
index 68958d55971..62500bbcbfc 100644
--- a/src/libfetchers/path.cc
+++ b/src/libfetchers/path.cc
@@ -116,31 +116,14 @@ struct PathInputScheme : InputScheme
     std::pair<ref<SourceAccessor>, Input> getAccessor(ref<Store> store, const Input & _input) const override
     {
         Input input(_input);
-        std::string absPath;
         auto path = getStrAttr(input.attrs, "path");
 
-        if (path[0] != '/') {
-            if (!input.parent)
-                throw Error("cannot fetch input '%s' because it uses a relative path", input.to_string());
+        auto absPath = getAbsPath(input);
 
-            auto parent = canonPath(*input.parent);
-
-            // the path isn't relative, prefix it
-            absPath = nix::absPath(path, parent);
-
-            // for security, ensure that if the parent is a store path, it's inside it
-            if (store->isInStore(parent)) {
-                auto storePath = store->printStorePath(store->toStorePath(parent).first);
-                if (!isDirOrInDir(absPath, storePath))
-                    throw BadStorePath("relative path '%s' points outside of its parent's store path '%s'", path, storePath);
-            }
-        } else
-            absPath = path;
-
-        Activity act(*logger, lvlTalkative, actUnknown, fmt("copying '%s'", absPath));
+        Activity act(*logger, lvlTalkative, actUnknown, fmt("copying '%s' to the store", absPath));
 
         // FIXME: check whether access to 'path' is allowed.
-        auto storePath = store->maybeParseStorePath(absPath);
+        auto storePath = store->maybeParseStorePath(absPath.abs());
 
         if (storePath)
             store->addTempRoot(*storePath);
@@ -149,7 +132,7 @@ struct PathInputScheme : InputScheme
         if (!storePath || storePath->name() != "source" || !store->isValidPath(*storePath)) {
             // FIXME: try to substitute storePath.
             auto src = sinkToSource([&](Sink & sink) {
-                mtime = dumpPathAndGetMtime(absPath, sink, defaultPathFilter);
+                mtime = dumpPathAndGetMtime(absPath.abs(), sink, defaultPathFilter);
             });
             storePath = store->addToStoreFromDump(*src, "source");
         }
diff --git a/src/nix/flake.md b/src/nix/flake.md
index 661dd2f7333..e60abe5fc21 100644
--- a/src/nix/flake.md
+++ b/src/nix/flake.md
@@ -195,18 +195,29 @@ Currently the `type` attribute can be one of the following:
   If the flake at *path* is not inside a git repository, the `path:`
   prefix is implied and can be omitted.
 
-  *path* generally must be an absolute path. However, on the command
-  line, it can be a relative path (e.g. `.` or `./foo`) which is
-  interpreted as relative to the current directory. In this case, it
-  must start with `.` to avoid ambiguity with registry lookups
-  (e.g. `nixpkgs` is a registry lookup; `./nixpkgs` is a relative
-  path).
+  If *path* is a relative path (i.e. if it does not start with `/`),
+  it is interpreted as follows:
+
+  - If *path* is a command line argument, it is interpreted relative
+    to the current directory.
+
+  - If *path* is used in a `flake.nix`, it is interpreted relative to
+    the directory containing that `flake.nix`. However, the resolved
+    path must be in the same tree. For instance, a `flake.nix` in the
+    root of a tree can use `path:./foo` to access the flake in
+    subdirectory `foo`, but `path:../bar` is illegal.
+
+  Note that if you omit `path:`, relative paths must start with `.` to
+  avoid ambiguity with registry lookups (e.g. `nixpkgs` is a registry
+  lookup; `./nixpkgs` is a relative path).
 
   For example, these are valid path flake references:
 
   * `path:/home/user/sub/dir`
   * `/home/user/sub/dir` (if `dir/flake.nix` is *not* in a git repository)
-  * `./sub/dir` (when used on the command line and `dir/flake.nix` is *not* in a git repository)
+  * `path:sub/dir`
+  * `./sub/dir`
+  * `path:../parent`
 
 * `git`: Git repositories. The location of the repository is specified
   by the attribute `url`.
diff --git a/tests/functional/flakes/follow-paths.sh b/tests/functional/flakes/follow-paths.sh
index 1afd91bd2f8..35f52f3ba47 100644
--- a/tests/functional/flakes/follow-paths.sh
+++ b/tests/functional/flakes/follow-paths.sh
@@ -115,7 +115,7 @@ nix flake lock $flakeFollowsA
 [[ $(jq -c .nodes.B.inputs.foobar $flakeFollowsA/flake.lock) = '"foobar"' ]]
 jq -r -c '.nodes | keys | .[]' $flakeFollowsA/flake.lock | grep "^foobar$"
 
-# Ensure a relative path is not allowed to go outside the store path
+# Check that path: inputs cannot escape from their root.
 cat > $flakeFollowsA/flake.nix <<EOF
 {
     description = "Flake A";
@@ -128,7 +128,28 @@ EOF
 
 git -C $flakeFollowsA add flake.nix
 
-expect 1 nix flake lock $flakeFollowsA 2>&1 | grep 'points outside'
+expect 1 nix flake lock $flakeFollowsA 2>&1 | grep '/flakeB.*is forbidden in pure evaluation mode'
+expect 1 nix flake lock --impure $flakeFollowsA 2>&1 | grep '/flakeB.*does not exist'
+
+# Test relative non-flake inputs.
+cat > $flakeFollowsA/flake.nix <<EOF
+{
+    description = "Flake A";
+    inputs = {
+        E.flake = false;
+        E.url = "./foo.nix"; # test relative paths without 'path:'
+    };
+    outputs = { E, ... }: { e = import E; };
+}
+EOF
+
+echo 123 > $flakeFollowsA/foo.nix
+
+git -C $flakeFollowsA add flake.nix foo.nix
+
+nix flake lock $flakeFollowsA
+
+[[ $(nix eval --json $flakeFollowsA#e) = 123 ]]
 
 # Non-existant follows should print a warning.
 cat >$flakeFollowsA/flake.nix <<EOF
diff --git a/tests/functional/flakes/relative-paths.sh b/tests/functional/flakes/relative-paths.sh
new file mode 100644
index 00000000000..cecda44d4bc
--- /dev/null
+++ b/tests/functional/flakes/relative-paths.sh
@@ -0,0 +1,89 @@
+source ./common.sh
+
+requireGit
+
+rootFlake=$TEST_ROOT/flake1
+subflake0=$rootFlake/sub0
+subflake1=$rootFlake/sub1
+subflake2=$rootFlake/sub2
+
+rm -rf $rootFlake
+mkdir -p $rootFlake $subflake0 $subflake1 $subflake2
+
+cat > $rootFlake/flake.nix <<EOF
+{
+  inputs.sub0.url = "./sub0";
+  outputs = { self, sub0 }: {
+    x = 2;
+    y = self.x * sub0.x;
+  };
+}
+EOF
+
+cat > $subflake0/flake.nix <<EOF
+{
+  outputs = { self }: {
+    x = 7;
+  };
+}
+EOF
+
+[[ $(nix eval $rootFlake#x) = 2 ]]
+[[ $(nix eval $rootFlake#y) = 14 ]]
+
+cat > $subflake1/flake.nix <<EOF
+{
+  inputs.root.url = "../";
+  outputs = { self, root }: {
+    x = 3;
+    y = self.x * root.x;
+  };
+}
+EOF
+
+[[ $(nix eval $rootFlake?dir=sub1#y) = 6 ]]
+
+git init $rootFlake
+git -C $rootFlake add flake.nix sub0/flake.nix sub1/flake.nix
+
+[[ $(nix eval $subflake1#y) = 6 ]]
+
+cat > $subflake2/flake.nix <<EOF
+{
+  inputs.root.url = "../";
+  inputs.sub1.url = "../sub1";
+  outputs = { self, root, sub1 }: {
+    x = 5;
+    y = self.x * sub1.x;
+  };
+}
+EOF
+
+git -C $rootFlake add flake.nix sub2/flake.nix
+
+[[ $(nix eval $subflake2#y) = 15 ]]
+
+# Make sure there are no content locks for relative path flakes.
+(! grep "$TEST_ROOT" $subflake2/flake.lock)
+(! grep "$NIX_STORE_DIR" $subflake2/flake.lock)
+(! grep narHash $subflake2/flake.lock)
+
+# Test circular relative path flakes. FIXME: doesn't work at the moment.
+if false; then
+
+cat > $rootFlake/flake.nix <<EOF
+{
+  inputs.sub1.url = "./sub1";
+  inputs.sub2.url = "./sub1";
+  outputs = { self, sub1, sub2 }: {
+    x = 2;
+    y = self.x * sub1.x * sub2.x;
+    z = sub1.y * sub2.y;
+  };
+}
+EOF
+
+[[ $(nix eval $rootFlake#x) = 30 ]]
+[[ $(nix eval $rootFlake#z) = 90 ]]
+
+fi
diff --git a/tests/functional/local.mk b/tests/functional/local.mk
index 021af096c84..06aa7cabfe5 100644
--- a/tests/functional/local.mk
+++ b/tests/functional/local.mk
@@ -7,6 +7,7 @@ nix_tests = \
   flakes/circular.sh \
   flakes/init.sh \
   flakes/inputs.sh \
+  flakes/relative-paths.sh \
   flakes/follow-paths.sh \
   flakes/bundle.sh \
   flakes/check.sh \