diff --git a/include/wine/wpp.h b/include/wine/wpp.h
index 681dca78620..fc5d5dfe239 100644
--- a/include/wine/wpp.h
+++ b/include/wine/wpp.h
@@ -29,7 +29,7 @@ extern void wpp_add_cmdline_define( const char *value );
 extern void wpp_set_debug( int lex_debug, int parser_debug, int msg_debug );
 extern void wpp_set_pedantic( int on );
 extern void wpp_add_include_path( const char *path );
-extern char *wpp_find_include( const char *name, int search );
+extern char *wpp_find_include( const char *name, const char *parent_name );
 extern int wpp_parse( const char *input, FILE *output );
 extern int wpp_parse_temp( const char *input, const char *output_base, char **output_name );
 
diff --git a/libs/wpp/ppl.l b/libs/wpp/ppl.l
index 201e718248d..e08e84c071f 100644
--- a/libs/wpp/ppl.l
+++ b/libs/wpp/ppl.l
@@ -1445,7 +1445,7 @@ void pp_do_include(char *fname, int type)
 	/* Undo the effect of the quotation */
 	fname[n-1] = '\0';
 
-	if((ppin = pp_open_include(fname+1, type, &newpath)) == NULL)
+	if((ppin = pp_open_include(fname+1, type ? pp_status.input : NULL, &newpath)) == NULL)
 		pperror("Unable to open include file %s", fname+1);
 
 	fname[n-1] = *fname;	/* Redo the quotes */
diff --git a/libs/wpp/preproc.c b/libs/wpp/preproc.c
index e00ae9feff5..6b55c06dba2 100644
--- a/libs/wpp/preproc.c
+++ b/libs/wpp/preproc.c
@@ -355,10 +355,11 @@ void wpp_add_include_path(const char *path)
 	free(cpy);
 }
 
-char *wpp_find_include(const char *name, int search)
+char *wpp_find_include(const char *name, const char *parent_name)
 {
     char *cpy;
     char *cptr;
+    char *path;
     const char *ccptr;
     int i, fd;
 
@@ -380,20 +381,28 @@ char *wpp_find_include(const char *name, int search)
     }
     *cptr = '\0';
 
-    if(search)
+    if(parent_name)
     {
-        /* Search current dir and then -I path */
-        fd = open( cpy, O_RDONLY );
+        /* Search directory of parent include and then -I path */
+        const char *p;
+
+        if ((p = strrchr( parent_name, '/' ))) p++;
+        else p = parent_name;
+        path = pp_xmalloc( (p - parent_name) + strlen(cpy) + 1 );
+        memcpy( path, parent_name, p - parent_name );
+        strcpy( path + (p - parent_name), cpy );
+        fd = open( path, O_RDONLY );
         if (fd != -1)
         {
             close( fd );
-            return cpy;
+            free( cpy );
+            return path;
         }
+        free( path );
     }
     /* Search -I path */
     for(i = 0; i < nincludepath; i++)
     {
-        char *path;
         path = pp_xmalloc(strlen(includepath[i]) + strlen(cpy) + 2);
         strcpy(path, includepath[i]);
         strcat(path, "/");
@@ -411,12 +420,12 @@ char *wpp_find_include(const char *name, int search)
     return NULL;
 }
 
-FILE *pp_open_include(const char *name, int search, char **newpath)
+FILE *pp_open_include(const char *name, const char *parent_name, char **newpath)
 {
     char *path;
     FILE *fp;
 
-    if (!(path = wpp_find_include( name, search ))) return NULL;
+    if (!(path = wpp_find_include( name, parent_name ))) return NULL;
     fp = fopen(path, "rt");
 
     if (fp)
diff --git a/libs/wpp/wpp_private.h b/libs/wpp/wpp_private.h
index fd228111a25..fe60f655a86 100644
--- a/libs/wpp/wpp_private.h
+++ b/libs/wpp/wpp_private.h
@@ -200,7 +200,7 @@ void pp_pop_define_state(void);
 pp_entry_t *pp_add_define(char *def, char *text);
 pp_entry_t *pp_add_macro(char *ident, marg_t *args[], int nargs, mtext_t *exp);
 void pp_del_define(const char *name);
-FILE *pp_open_include(const char *name, int search, char **newpath);
+FILE *pp_open_include(const char *name, const char *parent_name, char **newpath);
 void pp_push_if(pp_if_state_t s);
 void pp_next_if_state(int);
 pp_if_state_t pp_pop_if(void);
diff --git a/tools/widl/parser.l b/tools/widl/parser.l
index f4c7be2a8b4..b8035cdcd59 100644
--- a/tools/widl/parser.l
+++ b/tools/widl/parser.l
@@ -417,7 +417,7 @@ int do_import(char *fname)
 	import->next = first_import;
 	first_import = import;
 
-        if (!(path = wpp_find_include( fname, 1 )))
+        if (!(path = wpp_find_include( fname, input_name )))
             yyerror("Unable to open include file %s", fname);
 
 	import_stack[ptr].temp_name = temp_name;
diff --git a/tools/wrc/parser.y b/tools/wrc/parser.y
index 1289db8c5ed..d001ce21a88 100644
--- a/tools/wrc/parser.y
+++ b/tools/wrc/parser.y
@@ -2311,7 +2311,7 @@ static raw_data_t *load_file(string_t *filename, language_t *lang)
 	if (codepage <= 0 && filename->type != str_char)
 		yyerror("Cannot convert filename to ASCII string");
 	name = convert_string( filename, str_char, codepage );
-	if (!(path = wpp_find_include(name->str.cstr, 1)))
+	if (!(path = wpp_find_include(name->str.cstr, input_name)))
 		yyerror("Cannot open file %s", name->str.cstr);
 	if (!(fp = fopen( path, "rb" )))
 		yyerror("Cannot open file %s", name->str.cstr);