diff --git a/Sources/SwiftFormat/Utilities/FileIterator.swift b/Sources/SwiftFormat/Utilities/FileIterator.swift
index bd3a2c0f0..9d1a1d2cf 100644
--- a/Sources/SwiftFormat/Utilities/FileIterator.swift
+++ b/Sources/SwiftFormat/Utilities/FileIterator.swift
@@ -79,7 +79,7 @@ public struct FileIterator: Sequence, IteratorProtocol {
           else {
             break
           }
-          next = URL(fileURLWithPath: destination)
+          next = URL(fileURLWithPath: destination, relativeTo: next)
           fallthrough
 
         case .typeDirectory:
@@ -97,12 +97,12 @@ public struct FileIterator: Sequence, IteratorProtocol {
           output = next
         }
       }
-      if let out = output, visited.contains(out.absoluteURL.standardized.path) {
+      if let out = output, visited.contains(out.standardizedFileURL.path) {
         output = nil
       }
     }
     if let out = output {
-      visited.insert(out.absoluteURL.standardized.path)
+      visited.insert(out.standardizedFileURL.path)
     }
     return output
   }
@@ -135,7 +135,7 @@ public struct FileIterator: Sequence, IteratorProtocol {
         else {
           break
         }
-        path = destination
+        path = URL(fileURLWithPath: destination, relativeTo: item).path
         fallthrough
 
       case .typeRegular:
diff --git a/Tests/SwiftFormatTests/Utilities/FileIteratorTests.swift b/Tests/SwiftFormatTests/Utilities/FileIteratorTests.swift
index 965c90fe3..691e568c6 100644
--- a/Tests/SwiftFormatTests/Utilities/FileIteratorTests.swift
+++ b/Tests/SwiftFormatTests/Utilities/FileIteratorTests.swift
@@ -18,6 +18,7 @@ final class FileIteratorTests: XCTestCase {
     try touch("project/.hidden.swift")
     try touch("project/.build/generated.swift")
     try symlink("project/link.swift", to: "project/.hidden.swift")
+    try symlink("project/rellink.swift", relativeTo: ".hidden.swift")
   }
 
   override func tearDownWithError() throws {
@@ -55,7 +56,10 @@ final class FileIteratorTests: XCTestCase {
     // passed to the iterator. This is meant to avoid situations where a symlink could be hidden by
     // shell expansion; for example, if the user writes `swift-format --no-follow-symlinks *`, if
     // the current directory contains a symlink, they would probably *not* expect it to be followed.
-    let seen = allFilesSeen(iteratingOver: [tmpURL("project/link.swift")], followSymlinks: false)
+    let seen = allFilesSeen(
+      iteratingOver: [tmpURL("project/link.swift"), tmpURL("project/rellink.swift")],
+      followSymlinks: false
+    )
     XCTAssertTrue(seen.isEmpty)
   }
 }
@@ -81,7 +85,7 @@ extension FileIteratorTests {
     }
   }
 
-  /// Create a symlink between files or directories in the test's temporary space.
+  /// Create a absolute symlink between files or directories in the test's temporary space.
   private func symlink(_ source: String, to target: String) throws {
     try FileManager.default.createSymbolicLink(
       at: tmpURL(source),
@@ -89,6 +93,14 @@ extension FileIteratorTests {
     )
   }
 
+  /// Create a relative symlink between files or directories in the test's temporary space.
+  private func symlink(_ source: String, relativeTo target: String) throws {
+    try FileManager.default.createSymbolicLink(
+      atPath: tmpURL(source).path,
+      withDestinationPath: target
+    )
+  }
+
   /// Computes the list of all files seen by using `FileIterator` to iterate over the given URLs.
   private func allFilesSeen(iteratingOver urls: [URL], followSymlinks: Bool) -> [String] {
     let iterator = FileIterator(urls: urls, followSymlinks: followSymlinks)