diff --git a/apps/oxlint/test/e2e.test.ts b/apps/oxlint/test/e2e.test.ts
index 943cdc2158a44..296bd41d27a2d 100644
--- a/apps/oxlint/test/e2e.test.ts
+++ b/apps/oxlint/test/e2e.test.ts
@@ -15,6 +15,8 @@ interface TestOptions {
   snapshotName?: string;
   // Function to get extra data to include in the snapshot
   getExtraSnapshotData?: (dirPath: string) => Promise<{ [key: string]: string }>;
+
+  overrideFiles?: string;
 }
 
 /**
@@ -29,7 +31,7 @@ async function testFixture(fixtureName: string, options?: TestOptions): Promise<
     // Use current NodeJS executable, rather than `node`, to avoid problems with a Node version manager
     // installed on system resulting in using wrong NodeJS version
     command: process.execPath,
-    args: [CLI_PATH, ...args, 'files'],
+    args: [CLI_PATH, ...args, options?.overrideFiles ?? 'files'],
     fixtureName,
     snapshotName: options?.snapshotName ?? 'output',
     getExtraSnapshotData: options?.getExtraSnapshotData,
@@ -73,6 +75,12 @@ describe('oxlint CLI', () => {
     await testFixture('basic_custom_plugin_many_files');
   });
 
+  it('should load a custom plugin correctly when extending in a nested config', async () => {
+    await testFixture('custom_plugin_nested_config', {
+      overrideFiles: '.',
+    });
+  });
+
   it('should load a custom plugin when configured in overrides', async () => {
     await testFixture('custom_plugin_via_overrides');
   });
diff --git a/apps/oxlint/test/fixtures/custom_plugin_nested_config/.oxlintrc.json b/apps/oxlint/test/fixtures/custom_plugin_nested_config/.oxlintrc.json
new file mode 100644
index 0000000000000..cc94cf0993ae5
--- /dev/null
+++ b/apps/oxlint/test/fixtures/custom_plugin_nested_config/.oxlintrc.json
@@ -0,0 +1,7 @@
+{
+  "jsPlugins": ["./plugin.ts"],
+  "rules": {
+    "basic-custom-plugin/no-debugger": "error"
+  },
+  "categories": { "correctness": "off" }
+}
diff --git a/apps/oxlint/test/fixtures/custom_plugin_nested_config/nested/.oxlintrc.json b/apps/oxlint/test/fixtures/custom_plugin_nested_config/nested/.oxlintrc.json
new file mode 100644
index 0000000000000..d4ac61eb9366e
--- /dev/null
+++ b/apps/oxlint/test/fixtures/custom_plugin_nested_config/nested/.oxlintrc.json
@@ -0,0 +1,3 @@
+{
+  "extends": ["../.oxlintrc.json"]
+}
diff --git a/apps/oxlint/test/fixtures/custom_plugin_nested_config/nested/index.ts b/apps/oxlint/test/fixtures/custom_plugin_nested_config/nested/index.ts
new file mode 100644
index 0000000000000..eab74692130a6
--- /dev/null
+++ b/apps/oxlint/test/fixtures/custom_plugin_nested_config/nested/index.ts
@@ -0,0 +1 @@
+debugger;
diff --git a/apps/oxlint/test/fixtures/custom_plugin_nested_config/output.snap.md b/apps/oxlint/test/fixtures/custom_plugin_nested_config/output.snap.md
new file mode 100644
index 0000000000000..bd0cca621117f
--- /dev/null
+++ b/apps/oxlint/test/fixtures/custom_plugin_nested_config/output.snap.md
@@ -0,0 +1,20 @@
+# Exit code
+1
+
+# stdout
+```
+  x basic-custom-plugin(no-debugger): Unexpected Debugger Statement
+   ,-[nested/index.ts:1:1]
+ 1 | debugger;
+   : ^^^^^^^^^
+   `----
+
+Found 0 warnings and 1 error.
+Finished in Xms on 2 files using X threads.
+```
+
+# stderr
+```
+WARNING: JS plugins are experimental and not subject to semver.
+Breaking changes are possible while JS plugins support is under development.
+```
diff --git a/apps/oxlint/test/fixtures/custom_plugin_nested_config/plugin.ts b/apps/oxlint/test/fixtures/custom_plugin_nested_config/plugin.ts
new file mode 100644
index 0000000000000..d8f0b772b32f1
--- /dev/null
+++ b/apps/oxlint/test/fixtures/custom_plugin_nested_config/plugin.ts
@@ -0,0 +1,23 @@
+import type { Plugin } from '../../../dist/index.js';
+
+const plugin: Plugin = {
+  meta: {
+    name: 'basic-custom-plugin',
+  },
+  rules: {
+    'no-debugger': {
+      create(context) {
+        return {
+          DebuggerStatement(debuggerStatement) {
+            context.report({
+              message: 'Unexpected Debugger Statement',
+              node: debuggerStatement,
+            });
+          },
+        };
+      },
+    },
+  },
+};
+
+export default plugin;
diff --git a/crates/oxc_linter/src/config/oxlintrc.rs b/crates/oxc_linter/src/config/oxlintrc.rs
index d5e3bd3170d85..0fcfe9273ec00 100644
--- a/crates/oxc_linter/src/config/oxlintrc.rs
+++ b/crates/oxc_linter/src/config/oxlintrc.rs
@@ -152,6 +152,30 @@ impl Oxlintrc {
 
         config.path = path.to_path_buf();
 
+        // resolve relative paths
+        if let Some(external_plugins) = &mut config.external_plugins
+            && let Some(config_dir) = config.path.parent()
+        {
+            *external_plugins = std::mem::take(external_plugins)
+                .into_iter()
+                .map(|specifier| {
+                    let is_relative = specifier.starts_with("./") || specifier.starts_with("../");
+                    if is_relative {
+                        config_dir
+                            .join(&specifier)
+                            .into_os_string()
+                            .into_string()
+                            // there is a corner case where this can fail
+                            // for non-utf8 paths, this relative plugin specifier
+                            // may be resolved relative to the wrong config file
+                            // when two are merged.
+                            .unwrap_or(specifier)
+                    } else {
+                        specifier
+                    }
+                })
+                .collect();
+        }
         Ok(config)
     }