diff --git a/main/src/main/scala/sbt/internal/Load.scala b/main/src/main/scala/sbt/internal/Load.scala
index 02077b92f..25d91b642 100755
--- a/main/src/main/scala/sbt/internal/Load.scala
+++ b/main/src/main/scala/sbt/internal/Load.scala
@@ -596,7 +596,7 @@ private[sbt] object Load {
 
     // since base directories are resolved at this point (after 'projects'),
     //   we can compare Files instead of converting to URIs
-    def isRoot(p: Project) = p.base.getCanonicalFile() == unit.localBase.getCanonicalFile()
+    def isRoot(p: Project) = isRootPath(p.base, unit.localBase)
 
     val externals = referenced(defined).toList
     val explicitRoots = unit.definitions.builds.flatMap(_.rootProject)
@@ -688,6 +688,13 @@ private[sbt] object Load {
     }
   }
 
+  /**
+   * Returns true when value is the subproject base for root project.
+   * Note that it's often specified as file(".").
+   */
+  def isRootPath(value: File, projectBase: File): Boolean =
+    projectBase.getCanonicalFile() == IO.resolve(projectBase, value).getCanonicalFile()
+
   def resolveBase(against: File): Project => Project = {
     def resolve(f: File) = {
       val fResolved = new File(IO.directoryURI(IO.resolve(against, f)))
@@ -821,11 +828,10 @@ private[sbt] object Load {
       // TODO - As of sbt 0.13.6 we should always have a default root project from
       //        here on, so the autogenerated build aggregated can be removed from this code. ( I think)
       // We may actually want to move it back here and have different flags in loadTransitive...
-      val hasRoot = loadedProjectsRaw.projects.exists(
-        _.base.getCanonicalFile() == normBase.getCanonicalFile()
-      ) || defsScala.exists(
-        _.rootProject.isDefined
-      )
+      val hasRoot =
+        loadedProjectsRaw.projects.exists(p => isRootPath(p.base, normBase)) || defsScala.exists(
+          _.rootProject.isDefined
+        )
       val (loadedProjects, defaultBuildIfNone, keepClassFiles) =
         if (hasRoot)
           (
@@ -992,12 +998,11 @@ private[sbt] object Load {
     // load all relevant configuration files (.sbt, as .scala already exists at this point)
     def discover(base: File): DiscoveredProjects = {
       val auto =
-        if (base.getCanonicalFile() == buildBase.getCanonicalFile()) AddSettings.allDefaults
+        if isRootPath(base, buildBase) then AddSettings.allDefaults
         else AddSettings.defaultSbtFiles
 
       val extraFiles =
-        if base.getCanonicalFile() == buildBase.getCanonicalFile() && isMetaBuildContext(context)
-        then extraSbtFiles
+        if isRootPath(base, buildBase) && isMetaBuildContext(context) then extraSbtFiles
         else Nil
       discoverProjects(auto, base, extraFiles, plugins, eval, memoSettings, converter)
     }
@@ -1311,8 +1316,7 @@ private[sbt] object Load {
     val rawFiles = associatedFiles(auto)
     val loadedFiles = loadFiles(rawFiles)
     val rawProjects = loadedFiles.projects
-    val (root, nonRoot) =
-      rawProjects.partition(_.base.getCanonicalFile() == projectBase.getCanonicalFile())
+    val (root, nonRoot) = rawProjects.partition(p => isRootPath(p.base, projectBase))
     // TODO - good error message if more than one root project
     DiscoveredProjects(
       root.headOption,
diff --git a/sbt-app/src/sbt-test/project/projectref/a1/build.sbt b/sbt-app/src/sbt-test/project/projectref/a1/build.sbt
new file mode 100644
index 000000000..86b12fc9d
--- /dev/null
+++ b/sbt-app/src/sbt-test/project/projectref/a1/build.sbt
@@ -0,0 +1 @@
+val a1 = (project in file("."))
diff --git a/sbt-app/src/sbt-test/project/projectref/build.sbt b/sbt-app/src/sbt-test/project/projectref/build.sbt
new file mode 100644
index 000000000..569c777f2
--- /dev/null
+++ b/sbt-app/src/sbt-test/project/projectref/build.sbt
@@ -0,0 +1,3 @@
+// https://github.com/sbt/sbt/issues/7738
+val root = (project in file("."))
+  .dependsOn(ProjectRef(file("a1"), "a1"))
diff --git a/sbt-app/src/sbt-test/project/projectref/test b/sbt-app/src/sbt-test/project/projectref/test
new file mode 100644
index 000000000..44f00a9cc
--- /dev/null
+++ b/sbt-app/src/sbt-test/project/projectref/test
@@ -0,0 +1 @@
+> projects