diff --git a/slug.go b/slug.go
index 09d8fbe..53c4579 100644
--- a/slug.go
+++ b/slug.go
@@ -158,6 +158,12 @@ func (p *Packer) Pack(src string, w io.Writer) (*Meta, error) {
 		ignoreRules = parseIgnoreFile(src)
 	}
 
+	// Ensure the source path provided is absolute
+	src, err = filepath.Abs(src)
+	if err != nil {
+		return nil, fmt.Errorf("failed to read absolute path for source: %w", err)
+	}
+
 	// Walk the tree of files.
 	err = filepath.Walk(src, p.packWalkFn(src, src, src, tarW, meta, ignoreRules))
 	if err != nil {
@@ -264,7 +270,7 @@ func (p *Packer) packWalkFn(root, src, dst string, tarW *tar.Writer, meta *Meta,
 			// If the target is a directory we can recurse into the target
 			// directory by calling the packWalkFn with updated arguments.
 			if resolved.info.IsDir() {
-				return filepath.Walk(resolved.absTarget, p.packWalkFn(root, resolved.target, path, tarW, meta, ignoreRules))
+				return filepath.Walk(resolved.absTarget, p.packWalkFn(root, resolved.absTarget, path, tarW, meta, ignoreRules))
 			}
 
 			// Dereference this symlink by updating the header with the target file
diff --git a/slug_test.go b/slug_test.go
index 44b6878..5a1eb9d 100644
--- a/slug_test.go
+++ b/slug_test.go
@@ -55,6 +55,43 @@ func TestPack_rootIsSymlink(t *testing.T) {
 	}
 }
 
+func TestPack_absoluteSrcRelativeSymlinks(t *testing.T) {
+	var path string
+	var err error
+
+	// In instances we run within CI, we want to fetch
+	// the absolute path where our test is located
+	if workDir, ok := os.LookupEnv("GITHUB_WORKSPACE"); ok {
+		path = workDir
+	} else {
+		path, err = os.Getwd()
+		if err != nil {
+			t.Fatalf("could not determine the working dir: %v", err)
+		}
+	}
+
+	// One last check, if this variable is empty we'll error
+	// since we need the absolute path for the source
+	if path == "" {
+		t.Fatal("Home directory could not be determined")
+	}
+
+	path = filepath.Join(path, "testdata/archive-dir-absolute/dev")
+	slug := bytes.NewBuffer(nil)
+	_, err = Pack(path, slug, true)
+	if err != nil {
+		// We simply want to ensure paths can be resolved while
+		// traversing the source directory
+		t.Fatalf("err: %v", err)
+	}
+
+	// Cannot pack without dereferencing
+	_, err = Pack(path, slug, false)
+	if !strings.HasPrefix(err.Error(), "illegal slug error:") {
+		t.Fatalf("expected illegal slug error, got %q", err)
+	}
+}
+
 func TestPackWithoutIgnoring(t *testing.T) {
 	slug := bytes.NewBuffer(nil)
 
@@ -1057,7 +1094,8 @@ func assertArchiveFixture(t *testing.T, slug *bytes.Buffer, got *Meta) {
 
 	tarR := tar.NewReader(gzipR)
 	var (
-		symFound            bool
+		sym1Found           bool
+		sym2Found           bool
 		externalTargetFound bool
 		fileList            []string
 		slugSize            int64
@@ -1084,25 +1122,35 @@ func assertArchiveFixture(t *testing.T, slug *bytes.Buffer, got *Meta) {
 			if hdr.Linkname != "../bar.txt" {
 				t.Fatalf("expect target of '../bar.txt', got %q", hdr.Linkname)
 			}
-			symFound = true
+			sym1Found = true
 		}
 
-		if hdr.Name == "example.tf" {
+		if hdr.Name == "sub2/bar.txt" {
 			if hdr.Typeflag != tar.TypeSymlink {
-				t.Fatalf("expected symlink file 'example.tf'")
+				t.Fatalf("expect symlink for file 'sub2/bar.txt'")
+			}
+			if hdr.Linkname != "../sub/bar.txt" {
+				t.Fatalf("expect target of '../sub/bar.txt', got %q", hdr.Linkname)
+			}
+			sym2Found = true
+		}
+
+		if hdr.Name == "example.tf" {
+			if hdr.Typeflag != tar.TypeReg {
+				t.Fatalf("expected symlink to be dereferenced 'example.tf'")
 			}
 			externalTargetFound = true
 		}
 	}
 
 	// Make sure we saw and handled a symlink
-	if !symFound {
-		t.Fatal("expected to find symlink")
+	if !sym1Found || !sym2Found {
+		t.Fatal("expected to find two symlinks")
 	}
 
-	// Make sure we saw and handled a nested symlink
+	// Make sure we saw and handled a dereferenced symlink
 	if !externalTargetFound {
-		t.Fatal("expected to find nested symlink")
+		t.Fatal("expected to find dereferenced symlink")
 	}
 
 	// Make sure the .git directory is ignored
diff --git a/testdata/archive-dir-absolute/_common/extra-files/bar.sh b/testdata/archive-dir-absolute/_common/extra-files/bar.sh
new file mode 100644
index 0000000..5b0e87e
--- /dev/null
+++ b/testdata/archive-dir-absolute/_common/extra-files/bar.sh
@@ -0,0 +1,2 @@
+#!/usr/bin/env bash
+echo "bar"
diff --git a/testdata/archive-dir-absolute/_common/extra-files/foo.sh b/testdata/archive-dir-absolute/_common/extra-files/foo.sh
new file mode 100644
index 0000000..af85c95
--- /dev/null
+++ b/testdata/archive-dir-absolute/_common/extra-files/foo.sh
@@ -0,0 +1,2 @@
+#!/usr/bin/env bash
+echo "foo"
diff --git a/testdata/archive-dir-absolute/_common/locals.tf b/testdata/archive-dir-absolute/_common/locals.tf
new file mode 100644
index 0000000..7324c9d
--- /dev/null
+++ b/testdata/archive-dir-absolute/_common/locals.tf
@@ -0,0 +1,3 @@
+locals {
+  app = "service-01"
+}
diff --git a/testdata/archive-dir-absolute/_common/output.tf b/testdata/archive-dir-absolute/_common/output.tf
new file mode 100644
index 0000000..94e8f35
--- /dev/null
+++ b/testdata/archive-dir-absolute/_common/output.tf
@@ -0,0 +1,7 @@
+locals {
+    files = fileset("${path.module}/extra-files", "*.sh")
+}
+
+output "scripts" {
+    value = local.files
+}
diff --git a/testdata/archive-dir-absolute/_common/versions.tf b/testdata/archive-dir-absolute/_common/versions.tf
new file mode 100644
index 0000000..c509258
--- /dev/null
+++ b/testdata/archive-dir-absolute/_common/versions.tf
@@ -0,0 +1,3 @@
+terraform {
+  required_version = "~> 1.2"
+}
diff --git a/testdata/archive-dir-absolute/dev/backend.tf b/testdata/archive-dir-absolute/dev/backend.tf
new file mode 100644
index 0000000..3e1c863
--- /dev/null
+++ b/testdata/archive-dir-absolute/dev/backend.tf
@@ -0,0 +1,10 @@
+terraform {
+  remote "backend" {
+    hostname     = "foobar.terraform.io"
+    organization = "hashicorp"
+
+    workspaces {
+      name = "dev-service-02"
+    }
+  }
+}
diff --git a/testdata/archive-dir-absolute/dev/extra-files b/testdata/archive-dir-absolute/dev/extra-files
new file mode 120000
index 0000000..6773dc5
--- /dev/null
+++ b/testdata/archive-dir-absolute/dev/extra-files
@@ -0,0 +1 @@
+../_common/extra-files
\ No newline at end of file
diff --git a/testdata/archive-dir-absolute/dev/locals.tf b/testdata/archive-dir-absolute/dev/locals.tf
new file mode 120000
index 0000000..173668c
--- /dev/null
+++ b/testdata/archive-dir-absolute/dev/locals.tf
@@ -0,0 +1 @@
+../_common/locals.tf
\ No newline at end of file
diff --git a/testdata/archive-dir-absolute/dev/output.tf b/testdata/archive-dir-absolute/dev/output.tf
new file mode 120000
index 0000000..d597fae
--- /dev/null
+++ b/testdata/archive-dir-absolute/dev/output.tf
@@ -0,0 +1 @@
+../_common/output.tf
\ No newline at end of file
diff --git a/testdata/archive-dir-absolute/dev/variables.tf b/testdata/archive-dir-absolute/dev/variables.tf
new file mode 100644
index 0000000..ec9ce9d
--- /dev/null
+++ b/testdata/archive-dir-absolute/dev/variables.tf
@@ -0,0 +1,4 @@
+locals {
+  env    = "dev"
+  region = "us-east-2"
+}
diff --git a/testdata/archive-dir-absolute/dev/versions.tf b/testdata/archive-dir-absolute/dev/versions.tf
new file mode 120000
index 0000000..08a39e4
--- /dev/null
+++ b/testdata/archive-dir-absolute/dev/versions.tf
@@ -0,0 +1 @@
+../_common/versions.tf
\ No newline at end of file