diff --git a/bundle-uri.c b/bundle-uri.c
index 6919f541085..80370992773 100644
--- a/bundle-uri.c
+++ b/bundle-uri.c
@@ -7,6 +7,7 @@
 #include "hashmap.h"
 #include "pkt-line.h"
 #include "config.h"
+#include "remote.h"
 
 static int compare_bundles(const void *hashmap_cmp_fn_data,
 			   const struct hashmap_entry *he1,
@@ -49,6 +50,7 @@ void clear_bundle_list(struct bundle_list *list)
 
 	for_all_bundles_in_list(list, clear_remote_bundle_info, NULL);
 	hashmap_clear_and_free(&list->bundles, struct remote_bundle_info, ent);
+	free(list->baseURI);
 }
 
 int for_all_bundles_in_list(struct bundle_list *list,
@@ -163,7 +165,7 @@ static int bundle_list_update(const char *key, const char *value,
 	if (!strcmp(subkey, "uri")) {
 		if (bundle->uri)
 			return -1;
-		bundle->uri = xstrdup(value);
+		bundle->uri = relative_url(list->baseURI, value, NULL);
 		return 0;
 	}
 
@@ -190,6 +192,18 @@ int bundle_uri_parse_config_format(const char *uri,
 		.error_action = CONFIG_ERROR_ERROR,
 	};
 
+	if (!list->baseURI) {
+		struct strbuf baseURI = STRBUF_INIT;
+		strbuf_addstr(&baseURI, uri);
+
+		/*
+		 * If the URI does not end with a trailing slash, then
+		 * remove the filename portion of the path. This is
+		 * important for relative URIs.
+		 */
+		strbuf_strip_file_from_path(&baseURI);
+		list->baseURI = strbuf_detach(&baseURI, NULL);
+	}
 	result = git_config_from_file_with_options(config_to_bundle_list,
 						   filename, list,
 						   &opts);
diff --git a/bundle-uri.h b/bundle-uri.h
index 357111ecce8..e7e90a5f088 100644
--- a/bundle-uri.h
+++ b/bundle-uri.h
@@ -61,6 +61,20 @@ struct bundle_list {
 	int version;
 	enum bundle_list_mode mode;
 	struct hashmap bundles;
+
+	/**
+	 * The baseURI of a bundle_list is the URI that provided the list.
+	 *
+	 * In the case of the 'bundle-uri' protocol v2 command, the base
+	 * URI is the URI of the Git remote.
+	 *
+	 * Otherewise, the bundle list was downloaded over HTTP from some
+	 * known URI.
+	 *
+	 * The baseURI is used as the base for any relative URIs
+	 * advertised by the bundle list at that location.
+	 */
+	char *baseURI;
 };
 
 void init_bundle_list(struct bundle_list *list);
diff --git a/t/helper/test-bundle-uri.c b/t/helper/test-bundle-uri.c
index f8159187014..5df5bc3b89e 100644
--- a/t/helper/test-bundle-uri.c
+++ b/t/helper/test-bundle-uri.c
@@ -40,6 +40,8 @@ static int cmd__bundle_uri_parse(int argc, const char **argv, enum input_mode mo
 
 	init_bundle_list(&list);
 
+	list.baseURI = xstrdup("<uri>");
+
 	switch (mode) {
 	case KEY_VALUE_PAIRS:
 		if (argc != 1)
diff --git a/t/t5750-bundle-uri-parse.sh b/t/t5750-bundle-uri-parse.sh
index c2fe3f9c5a5..7b4f930e532 100755
--- a/t/t5750-bundle-uri-parse.sh
+++ b/t/t5750-bundle-uri-parse.sh
@@ -30,6 +30,58 @@ test_expect_success 'bundle_uri_parse_line() just URIs' '
 	test_cmp_config_output expect actual
 '
 
+test_expect_success 'bundle_uri_parse_line(): relative URIs' '
+	cat >in <<-\EOF &&
+	bundle.one.uri=bundle.bdl
+	bundle.two.uri=../bundle.bdl
+	bundle.three.uri=sub/dir/bundle.bdl
+	EOF
+
+	cat >expect <<-\EOF &&
+	[bundle]
+		version = 1
+		mode = all
+	[bundle "one"]
+		uri = <uri>/bundle.bdl
+	[bundle "two"]
+		uri = bundle.bdl
+	[bundle "three"]
+		uri = <uri>/sub/dir/bundle.bdl
+	EOF
+
+	test-tool bundle-uri parse-key-values in >actual 2>err &&
+	test_must_be_empty err &&
+	test_cmp_config_output expect actual
+'
+
+test_expect_success 'bundle_uri_parse_line(): relative URIs and parent paths' '
+	cat >in <<-\EOF &&
+	bundle.one.uri=bundle.bdl
+	bundle.two.uri=../bundle.bdl
+	bundle.three.uri=../../bundle.bdl
+	EOF
+
+	cat >expect <<-\EOF &&
+	[bundle]
+		version = 1
+		mode = all
+	[bundle "one"]
+		uri = <uri>/bundle.bdl
+	[bundle "two"]
+		uri = bundle.bdl
+	[bundle "three"]
+		uri = <uri>/../bundle.bdl
+	EOF
+
+	# TODO: We would prefer if parsing a bundle list would not cause
+	# a die() and instead would give a warning and allow the rest of
+	# a Git command to continue. This test_must_fail is necessary for
+	# now until the interface for relative_url() allows for reporting
+	# an error instead of die()ing.
+	test_must_fail test-tool bundle-uri parse-key-values in >actual 2>err &&
+	grep "fatal: cannot strip one component off url" err
+'
+
 test_expect_success 'bundle_uri_parse_line() parsing edge cases: empty key or value' '
 	cat >in <<-\EOF &&
 	=bogus-value
@@ -136,6 +188,36 @@ test_expect_success 'parse config format: just URIs' '
 	test_cmp_config_output expect actual
 '
 
+test_expect_success 'parse config format: relative URIs' '
+	cat >in <<-\EOF &&
+	[bundle]
+		version = 1
+		mode = all
+	[bundle "one"]
+		uri = bundle.bdl
+	[bundle "two"]
+		uri = ../bundle.bdl
+	[bundle "three"]
+		uri = sub/dir/bundle.bdl
+	EOF
+
+	cat >expect <<-\EOF &&
+	[bundle]
+		version = 1
+		mode = all
+	[bundle "one"]
+		uri = <uri>/bundle.bdl
+	[bundle "two"]
+		uri = bundle.bdl
+	[bundle "three"]
+		uri = <uri>/sub/dir/bundle.bdl
+	EOF
+
+	test-tool bundle-uri parse-config in >actual 2>err &&
+	test_must_be_empty err &&
+	test_cmp_config_output expect actual
+'
+
 test_expect_success 'parse config format edge cases: empty key or value' '
 	cat >in1 <<-\EOF &&
 	= bogus-value
diff --git a/transport.c b/transport.c
index 97d395e10a3..957dca4923c 100644
--- a/transport.c
+++ b/transport.c
@@ -1539,6 +1539,9 @@ int transport_get_remote_bundle_uri(struct transport *transport)
 	    (git_config_get_bool("transfer.bundleuri", &value) || !value))
 		return 0;
 
+	if (!transport->bundles->baseURI)
+		transport->bundles->baseURI = xstrdup(transport->url);
+
 	if (!vtable->get_bundle_uri)
 		return error(_("bundle-uri operation not supported by protocol"));
 
