diff --git a/CHANGELOG.md b/CHANGELOG.md
index 9220b1e..47f94f3 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -3,6 +3,13 @@
 All notable changes to this project will be documented in this file.
 See [Conventional Commits](https://conventionalcommits.org) for commit guidelines.
 
+## 1.2.0 (2023-08-28)
+
+### Features
+
+- import files based on the current directory - thanks [linhe0x0](https://github.com/linhe0x0)
+- more unit tests — thanks [Kristoffer Nordström](https://github.com/42tte)
+
 ## 1.1.0 (2023-08-10)
 
 ### Features
diff --git a/index.js b/index.js
index 9f34edf..ce597e1 100644
--- a/index.js
+++ b/index.js
@@ -1,3 +1,4 @@
+const path = require("path");
 const { readFileSync } = require("fs");
 const resolve = require("resolve");
 
@@ -21,9 +22,15 @@ module.exports = () => {
           .replace(/['"]?\s*(\))?$/, "");
 
         let replacement;
+
+        let basedir = process.cwd();
+        if (node.source && node.source.input && node.source.input.file) {
+          basedir = path.dirname(node.source.input.file);
+        }
+
         try {
           let resolvedPath = resolve.sync(id, {
-            basedir: process.cwd(),
+            basedir,
             extensions: [".css"],
             moduleDirectory: ["web_modules", "node_modules"],
             packageFilter: (pkg) => {
diff --git a/test/index.test.js b/test/index.test.js
index f707e9e..d595ba7 100644
--- a/test/index.test.js
+++ b/test/index.test.js
@@ -1,3 +1,4 @@
+let path = require("path");
 let { test } = require("uvu");
 let { equal, match } = require("uvu/assert");
 let postcss = require("postcss");
@@ -6,9 +7,9 @@ let nestedImport = require("../");
 
 // -----------------------------------------------------------------------------
 
-async function run(input, output, opts) {
+async function run(input, output, opts, from) {
   let result = await postcss([nestedImport(opts)]).process(input, {
-    from: undefined
+    from
   });
   equal(result.css, output);
   equal(result.warnings().length, 0);
@@ -204,4 +205,23 @@ test("10 - package.json filter style, main & index", async () => {
   );
 });
 
+test("11 - import based on current directory", async () => {
+  await run(
+    `@media (prefers-color-scheme: light) {
+  :root:not([data-theme='dark']) {
+    @nested-import './mocks/colors1.css';
+  }
+}`,
+    `@media (prefers-color-scheme: light) {
+  :root:not([data-theme='dark']) {
+    h1 {
+  color: red;
+}
+  }
+}`,
+    undefined,
+    path.join(__dirname, "app.css")
+  );
+});
+
 test.run();