diff --git a/HOCON.md b/HOCON.md
index 82221b0f..dc3dcd64 100644
--- a/HOCON.md
+++ b/HOCON.md
@@ -1095,6 +1095,11 @@ Implementations need not support files, Java resources, or URLs;
 and they need not support particular URL protocols. However, if
 they do support them they should do so as described above.
 
+Note that at present, if `url()`/`file()`/`classpath()` are
+specified, the included items are NOT interpreted relative to the
+including items. Relative-to-including-file paths only work with
+the heuristic `include "foo.conf"`. This may change in the future.
+
 ### Conversion of numerically-indexed objects to arrays
 
 In some file formats and contexts, such as Java properties files,
diff --git a/config/src/main/java/com/typesafe/config/impl/Parseable.java b/config/src/main/java/com/typesafe/config/impl/Parseable.java
index 684d8f95..68d2c6f1 100644
--- a/config/src/main/java/com/typesafe/config/impl/Parseable.java
+++ b/config/src/main/java/com/typesafe/config/impl/Parseable.java
@@ -594,8 +594,10 @@ public abstract class Parseable implements ConfigParseable {
             if (sibling == null)
                 return null;
             if (sibling.exists()) {
+                trace(sibling + " exists, so loading it as a file");
                 return newFile(sibling, options().setOriginDescription(null));
             } else {
+                trace(sibling + " does not exist, so trying it as a classpath resource");
                 return super.relativeTo(filename);
             }
         }
diff --git a/config/src/main/java/com/typesafe/config/impl/SimpleIncludeContext.java b/config/src/main/java/com/typesafe/config/impl/SimpleIncludeContext.java
index 9920ef0e..73ef3004 100644
--- a/config/src/main/java/com/typesafe/config/impl/SimpleIncludeContext.java
+++ b/config/src/main/java/com/typesafe/config/impl/SimpleIncludeContext.java
@@ -24,6 +24,8 @@ class SimpleIncludeContext implements ConfigIncludeContext {
 
     @Override
     public ConfigParseable relativeTo(String filename) {
+        if (ConfigImpl.traceLoadsEnabled())
+            ConfigImpl.trace("Looking for '" + filename + "' relative to " + parseable);
         if (parseable != null)
             return parseable.relativeTo(filename);
         else
diff --git a/config/src/test/resources/file-include.conf b/config/src/test/resources/file-include.conf
new file mode 100644
index 00000000..36d4efea
--- /dev/null
+++ b/config/src/test/resources/file-include.conf
@@ -0,0 +1,5 @@
+base=41
+# included without file() in a subdir
+include "subdir/foo.conf"
+# included using file() in a subdir
+include file("subdir/baz.conf")
diff --git a/config/src/test/resources/subdir/bar-file.conf b/config/src/test/resources/subdir/bar-file.conf
new file mode 100644
index 00000000..cd2058d8
--- /dev/null
+++ b/config/src/test/resources/subdir/bar-file.conf
@@ -0,0 +1 @@
+bar-file=44
diff --git a/config/src/test/resources/subdir/bar.conf b/config/src/test/resources/subdir/bar.conf
new file mode 100644
index 00000000..567e6b4d
--- /dev/null
+++ b/config/src/test/resources/subdir/bar.conf
@@ -0,0 +1 @@
+bar=43
diff --git a/config/src/test/resources/subdir/baz.conf b/config/src/test/resources/subdir/baz.conf
new file mode 100644
index 00000000..dc9b6f51
--- /dev/null
+++ b/config/src/test/resources/subdir/baz.conf
@@ -0,0 +1 @@
+baz=45
diff --git a/config/src/test/resources/subdir/foo.conf b/config/src/test/resources/subdir/foo.conf
new file mode 100644
index 00000000..e75cf7bb
--- /dev/null
+++ b/config/src/test/resources/subdir/foo.conf
@@ -0,0 +1,5 @@
+foo=42
+# included without file()
+include "bar.conf"
+# included using file()
+include file("bar-file.conf")
diff --git a/config/src/test/scala/com/typesafe/config/impl/PublicApiTest.scala b/config/src/test/scala/com/typesafe/config/impl/PublicApiTest.scala
index 98f86f16..0150d271 100644
--- a/config/src/test/scala/com/typesafe/config/impl/PublicApiTest.scala
+++ b/config/src/test/scala/com/typesafe/config/impl/PublicApiTest.scala
@@ -1039,4 +1039,22 @@ include "onclasspath"
             assertEquals(42, conf.getInt("onclasspath"))
         }
     }
+
+    @Test
+    def fileIncludeStatements(): Unit = {
+        val file = resourceFile("file-include.conf")
+        val conf = ConfigFactory.parseFile(file)
+        assertEquals("got file-include.conf", 41, conf.getInt("base"))
+        assertEquals("got subdir/foo.conf", 42, conf.getInt("foo"))
+        assertEquals("got bar.conf", 43, conf.getInt("bar"))
+
+        // these two do not work right now, because we do not
+        // treat the filename as relative to the including file
+        // if file() is specified, so `include file("bar-file.conf")`
+        // fails.
+        //assertEquals("got bar-file.conf", 44, conf.getInt("bar-file"))
+        //assertEquals("got subdir/baz.conf", 45, conf.getInt("baz"))
+        assertFalse("did not get bar-file.conf", conf.hasPath("bar-file"))
+        assertFalse("did not get subdir/baz.conf", conf.hasPath("baz"))
+    }
 }