diff --git a/buildfile/src/main/scala/sbt/internal/EvaluateConfigurations.scala b/buildfile/src/main/scala/sbt/internal/EvaluateConfigurations.scala
index bab0b2e52..46c95ab17 100644
--- a/buildfile/src/main/scala/sbt/internal/EvaluateConfigurations.scala
+++ b/buildfile/src/main/scala/sbt/internal/EvaluateConfigurations.scala
@@ -172,8 +172,7 @@ private[sbt] object EvaluateConfigurations {
         val compositeProjects = definitions
           .values(loader)
           .collect { case p: CompositeProject => p }
-        // todo: resolveBase?
-        CompositeProject.expand(compositeProjects) // .map(resolveBase(file.getParentFile, _))
+        CompositeProject.expand(compositeProjects)
       }
       val loadedDslEntries = dslEntries.map(_.result.apply(loader))
       val settings = loadedDslEntries.collect { case DslEntry.ProjectSettings(s) => s }.flatten
diff --git a/buildfile/src/main/scala/sbt/internal/LoadedSbtFile.scala b/buildfile/src/main/scala/sbt/internal/LoadedSbtFile.scala
index c35d31001..7e7a12fb0 100644
--- a/buildfile/src/main/scala/sbt/internal/LoadedSbtFile.scala
+++ b/buildfile/src/main/scala/sbt/internal/LoadedSbtFile.scala
@@ -16,15 +16,15 @@ import java.nio.file.Path
  * Represents the exported contents of a .sbt file.  Currently, that includes the list of settings,
  * the values of Project vals, and the import statements for all defined vals/defs.
  */
-private[sbt] final class LoadedSbtFile(
-    val settings: Seq[Setting[?]],
-    val projects: Seq[Project],
-    val importedDefs: Seq[String],
-    val manipulations: Seq[Project => Project],
+private[sbt] final case class LoadedSbtFile(
+    settings: Seq[Setting[?]],
+    projects: Seq[Project],
+    importedDefs: Seq[String],
+    manipulations: Seq[Project => Project],
     // TODO - we may want to expose a simpler interface on top of here for the set command,
     // rather than what we have now...
-    val definitions: DefinedSbtValues,
-    val generatedFiles: Seq[Path]
+    definitions: DefinedSbtValues,
+    generatedFiles: Seq[Path]
 ) {
   // We still use merge for now.  We track originating sbt file in an alternative manner.
   def merge(o: LoadedSbtFile): LoadedSbtFile =
diff --git a/main/src/main/scala/sbt/internal/Load.scala b/main/src/main/scala/sbt/internal/Load.scala
index bc7e6c040..b77bb8c1e 100755
--- a/main/src/main/scala/sbt/internal/Load.scala
+++ b/main/src/main/scala/sbt/internal/Load.scala
@@ -30,7 +30,7 @@ import sbt.io.{ GlobFilter, IO }
 import sbt.librarymanagement.{ Configuration, Configurations, IvyPaths, Resolver, ScalaArtifacts }
 import sbt.nio.Settings
 import sbt.util.{ Logger, Show }
-import xsbti.{ FileConverter, HashedVirtualFileRef, VirtualFile }
+import xsbti.{ FileConverter, HashedVirtualFileRef, PathBasedFile, VirtualFile }
 import xsbti.compile.{ ClasspathOptionsUtil, Compilers }
 import java.io.File
 import java.net.URI
@@ -1327,13 +1327,19 @@ private[sbt] object Load {
     // TODO - We should import vals defined in other sbt files here, if we wish to
     // share.  For now, build.sbt files have their own unique namespace.
     def loadSettingsFile(src: VirtualFile): LoadedSbtFile =
-      EvaluateConfigurations.evaluateSbtFile(
+      val evaluated = EvaluateConfigurations.evaluateSbtFile(
         eval(),
         src,
         IO.readStream(src.input()).linesIterator.toList,
         loadedPlugins.detected.imports,
         0
       )(loader)
+      evaluated.copy(
+        projects = evaluated.projects.map: p =>
+          src match
+            case file: PathBasedFile => resolveBase(file.toPath.toFile.getParentFile)(p)
+            case _                   => p
+      )
     // How to merge SbtFiles we read into one thing
     def merge(ls: Seq[LoadedSbtFile]): LoadedSbtFile = ls.foldLeft(LoadedSbtFile.empty) {
       _.merge(_)
diff --git a/sbt-app/src/sbt-test/project-load/subdirectory/build.sbt b/sbt-app/src/sbt-test/project-load/subdirectory/build.sbt
new file mode 100644
index 000000000..b6f6c3313
--- /dev/null
+++ b/sbt-app/src/sbt-test/project-load/subdirectory/build.sbt
@@ -0,0 +1,10 @@
+lazy val foo = project
+
+@transient
+lazy val check = taskKey[Unit]("")
+
+scalaVersion := "3.8.3"
+LocalRootProject / check := {
+  assert((foo / Compile / scalacOptions).value == List("-Xmacro-settings:a:a"),
+    s"${(foo / Compile / scalacOptions).value}")
+}
diff --git a/sbt-app/src/sbt-test/project-load/subdirectory/changes/Good.scala b/sbt-app/src/sbt-test/project-load/subdirectory/changes/Good.scala
new file mode 100644
index 000000000..e9e05bec4
--- /dev/null
+++ b/sbt-app/src/sbt-test/project-load/subdirectory/changes/Good.scala
@@ -0,0 +1,3 @@
+package example
+
+class A
diff --git a/sbt-app/src/sbt-test/project-load/subdirectory/foo/A.scala b/sbt-app/src/sbt-test/project-load/subdirectory/foo/A.scala
new file mode 100644
index 000000000..3f008fbc0
--- /dev/null
+++ b/sbt-app/src/sbt-test/project-load/subdirectory/foo/A.scala
@@ -0,0 +1,3 @@
+package example
+
+class A("
diff --git a/sbt-app/src/sbt-test/project-load/subdirectory/foo/build.sbt b/sbt-app/src/sbt-test/project-load/subdirectory/foo/build.sbt
new file mode 100644
index 000000000..e81ae2247
--- /dev/null
+++ b/sbt-app/src/sbt-test/project-load/subdirectory/foo/build.sbt
@@ -0,0 +1,4 @@
+lazy val foo = rootProject
+  .settings(
+    Compile / scalacOptions += "-Xmacro-settings:a:a"
+  )
diff --git a/sbt-app/src/sbt-test/project-load/subdirectory/test b/sbt-app/src/sbt-test/project-load/subdirectory/test
new file mode 100644
index 000000000..6ae8ce96a
--- /dev/null
+++ b/sbt-app/src/sbt-test/project-load/subdirectory/test
@@ -0,0 +1,6 @@
+> check
+
+# check that it fails to compile a bad source
+-> compile
+$ copy-file changes/Good.scala foo/A.scala
+> compile