diff --git a/config/module/detect_file.go b/config/module/detect_file.go
index 2b8dbacbe6f2..859739f95489 100644
--- a/config/module/detect_file.go
+++ b/config/module/detect_file.go
@@ -2,6 +2,7 @@ package module
 
 import (
 	"fmt"
+	"os"
 	"path/filepath"
 	"runtime"
 )
@@ -20,8 +21,27 @@ func (d *FileDetector) Detect(src, pwd string) (string, bool, error) {
 				"relative paths require a module with a pwd")
 		}
 
+		// Stat the pwd to determine if its a symbolic link. If it is,
+		// then the pwd becomes the original directory. Otherwise,
+		// `filepath.Join` below does some weird stuff.
+		//
+		// We just ignore if the pwd doesn't exist. That error will be
+		// caught later when we try to use the URL.
+		if fi, err := os.Lstat(pwd); !os.IsNotExist(err) {
+			if err != nil {
+				return "", true, err
+			}
+			if fi.Mode()&os.ModeSymlink != 0 {
+				pwd, err = os.Readlink(pwd)
+				if err != nil {
+					return "", true, err
+				}
+			}
+		}
+
 		src = filepath.Join(pwd, src)
 	}
+
 	return fmtFileURL(src), true, nil
 }
 
diff --git a/config/module/test-fixtures/basic-parent/a/a.tf b/config/module/test-fixtures/basic-parent/a/a.tf
new file mode 100644
index 000000000000..b9b44f464037
--- /dev/null
+++ b/config/module/test-fixtures/basic-parent/a/a.tf
@@ -0,0 +1,3 @@
+module "b" {
+    source = "../c"
+}
diff --git a/config/module/test-fixtures/basic-parent/c/c.tf b/config/module/test-fixtures/basic-parent/c/c.tf
new file mode 100644
index 000000000000..fec56017dc1b
--- /dev/null
+++ b/config/module/test-fixtures/basic-parent/c/c.tf
@@ -0,0 +1 @@
+# Hello
diff --git a/config/module/test-fixtures/basic-parent/main.tf b/config/module/test-fixtures/basic-parent/main.tf
new file mode 100644
index 000000000000..2326ee22acca
--- /dev/null
+++ b/config/module/test-fixtures/basic-parent/main.tf
@@ -0,0 +1,3 @@
+module "a" {
+    source = "./a"
+}
diff --git a/config/module/tree_test.go b/config/module/tree_test.go
index d8a75352259e..9ac0c582da00 100644
--- a/config/module/tree_test.go
+++ b/config/module/tree_test.go
@@ -94,6 +94,44 @@ func TestTreeLoad_duplicate(t *testing.T) {
 	}
 }
 
+func TestTreeLoad_parentRef(t *testing.T) {
+	storage := testStorage(t)
+	tree := NewTree("", testConfig(t, "basic-parent"))
+
+	if tree.Loaded() {
+		t.Fatal("should not be loaded")
+	}
+
+	// This should error because we haven't gotten things yet
+	if err := tree.Load(storage, GetModeNone); err == nil {
+		t.Fatal("should error")
+	}
+
+	if tree.Loaded() {
+		t.Fatal("should not be loaded")
+	}
+
+	// This should get things
+	if err := tree.Load(storage, GetModeGet); err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	if !tree.Loaded() {
+		t.Fatal("should be loaded")
+	}
+
+	// This should no longer error
+	if err := tree.Load(storage, GetModeNone); err != nil {
+		t.Fatalf("err: %s", err)
+	}
+
+	actual := strings.TrimSpace(tree.String())
+	expected := strings.TrimSpace(treeLoadParentStr)
+	if actual != expected {
+		t.Fatalf("bad: \n\n%s", actual)
+	}
+}
+
 func TestTreeLoad_subdir(t *testing.T) {
 	storage := testStorage(t)
 	tree := NewTree("", testConfig(t, "basic-subdir"))
@@ -239,6 +277,11 @@ root
   foo
 `
 
+const treeLoadParentStr = `
+root
+  a
+    b
+`
 const treeLoadSubdirStr = `
 root
   foo