diff --git a/src/components/InlineMarkdown.svelte b/src/components/InlineMarkdown.svelte
index 878bd005b..5ea4b5b0b 100644
--- a/src/components/InlineMarkdown.svelte
+++ b/src/components/InlineMarkdown.svelte
@@ -3,6 +3,7 @@
 
   import markdown from "@app/lib/markdown";
   import { twemoji } from "@app/lib/utils";
+  import { activeUnloadedRouteStore } from "@app/lib/router";
   import { Renderer } from "@app/lib/markdown";
 
   export let content: string;
@@ -13,7 +14,9 @@
   const render = (content: string): string =>
     dompurify.sanitize(
       markdown.parseInline(content, {
-        renderer: new Renderer(undefined, stripEmphasizedStyling),
+        renderer: new Renderer($activeUnloadedRouteStore, {
+          stripEmphasizedStyling,
+        }),
       }) as string,
     );
 </script>
diff --git a/src/components/Markdown.svelte b/src/components/Markdown.svelte
index 3e1920339..8383f8d5e 100644
--- a/src/components/Markdown.svelte
+++ b/src/components/Markdown.svelte
@@ -11,6 +11,7 @@
   import ErrorModal from "@app/modals/ErrorModal.svelte";
   import markdown from "@app/lib/markdown";
   import { Renderer } from "@app/lib/markdown";
+  import { activeUnloadedRouteStore } from "@app/lib/router";
   import { highlight } from "@app/lib/syntax";
   import {
     isUrl,
@@ -22,8 +23,6 @@
   import { mimes } from "@app/lib/file";
 
   export let content: string;
-  // If present, resolve all relative links with respect to this URL
-  export let linkBaseUrl: string | undefined = undefined;
   export let path: string = "/";
   export let rawPath: string;
   // If present, means we are in a preview context,
@@ -63,7 +62,7 @@
   }
 
   /**
-   * Do internal navigation on for clicks on anchor elements if possible
+   * Do internal navigation for clicks on anchor elements if possible
    */
   function navigateInternalOnAnchor(event: MouseEvent) {
     if (router.useDefaultNavigation(event)) {
@@ -94,7 +93,9 @@
   function render(content: string): string {
     return dompurify.sanitize(
       markdown.parse(content, {
-        renderer: new Renderer(linkBaseUrl, false),
+        renderer: new Renderer($activeUnloadedRouteStore, {
+          stripEmphasizedStyling: false,
+        }),
         breaks,
       }) as string,
     );
diff --git a/src/lib/markdown.ts b/src/lib/markdown.ts
index a7c13b103..371ee581b 100644
--- a/src/lib/markdown.ts
+++ b/src/lib/markdown.ts
@@ -1,4 +1,5 @@
 import type { Tokens } from "marked";
+import type { Route } from "@app/lib/router";
 
 import dompurify from "dompurify";
 import katexMarkedExtension from "marked-katex-extension";
@@ -6,6 +7,8 @@ import markedLinkifyIt from "marked-linkify-it";
 import { Marked, Renderer as BaseRenderer } from "marked";
 
 import emojis from "@app/lib/emojis";
+import { routeToPath } from "@app/lib/router";
+import { canonicalize, isUrl } from "@app/lib/utils";
 
 dompurify.setConfig({
   // eslint-disable-next-line @typescript-eslint/naming-convention
@@ -101,16 +104,19 @@ const anchorMarkedExtension = {
 };
 
 export class Renderer extends BaseRenderer {
-  #baseUrl: string | undefined;
+  #route: Route;
   #stripEmphasizedStyling: boolean | undefined;
 
   /**
    * If `baseUrl` is provided, all hrefs attributes in anchor tags, except those
    * starting with `#`, are resolved with respect to `baseUrl`
    */
-  constructor(baseUrl: string | undefined, stripEmphasizedStyling: boolean) {
+  constructor(
+    activeUnloadedRoute: Route,
+    { stripEmphasizedStyling }: { stripEmphasizedStyling: boolean },
+  ) {
     super();
-    this.#baseUrl = baseUrl;
+    this.#route = activeUnloadedRoute;
     this.#stripEmphasizedStyling = stripEmphasizedStyling;
   }
   // Overwrites the rendering of heading tokens.
@@ -139,15 +145,17 @@ export class Renderer extends BaseRenderer {
     if (href.startsWith("#")) {
       // By lowercasing we avoid casing mismatches, between headings and links.
       return `<a ${title ? `title="${title}"` : ""} href="${href.toLowerCase()}">${text}</a>`;
-    } else {
-      try {
-        href = new URL(href, this.#baseUrl).href;
-      } catch {
-        // Use original href value
-      }
-
-      return `<a ${title ? `title="${title}"` : ""} href="${href}">${text}</a>`;
     }
+
+    if ("path" in this.#route && this.#route.path && !isUrl(href)) {
+      href = routeToPath({
+        ...this.#route,
+        path: canonicalize(href, this.#route.path),
+        route: undefined,
+      });
+    }
+
+    return `<a ${title ? `title="${title}"` : ""} href="${href}">${text}</a>`;
   }
 }
 
diff --git a/src/lib/utils.ts b/src/lib/utils.ts
index e77fdda98..8ed5d8bd1 100644
--- a/src/lib/utils.ts
+++ b/src/lib/utils.ts
@@ -115,19 +115,23 @@ export function formatPublicExplorer(
     .replace("$path", fullPath.replace(`/nodes/${host}/${rid}`, ""));
 }
 
-// Takes a path, eg. "../images/image.png", and a base from where to start resolving, e.g. "static/images/index.html".
-// Returns the resolved path.
+// Takes a path, eg. "../images/image.png", and a base from where to start
+// resolving, e.g. "static/images/index.html". Returns the resolved path.
 export function canonicalize(
   path: string,
   base: string,
   origin = document.location.origin,
 ): string {
-  path = path.replace(/^\//, ""); // Remove leading slash
-  const finalPath = base
-    .split("/")
-    .slice(0, -1) // Remove file name.
-    .concat([path]) // Add image file path.
-    .join("/");
+  let finalPath: string | undefined;
+  if (path.startsWith("/")) {
+    finalPath = new URL(path, origin).pathname;
+  } else {
+    finalPath = base
+      .split("/")
+      .slice(0, -1) // Remove file name.
+      .concat([path]) // Add image file path.
+      .join("/");
+  }
 
   // URL is used to resolve relative paths, eg. `../../assets/image.png`.
   const url = new URL(finalPath, origin);
diff --git a/src/views/projects/Source.svelte b/src/views/projects/Source.svelte
index 810d4909d..750a2fd21 100644
--- a/src/views/projects/Source.svelte
+++ b/src/views/projects/Source.svelte
@@ -179,11 +179,9 @@
       <div class="column-right">
         {#if blobResult.ok}
           <BlobComponent
+            {path}
             {baseUrl}
             projectId={project.id}
-            {peer}
-            {revision}
-            {path}
             blob={blobResult.blob}
             highlighted={blobResult.highlighted}
             rawPath={rawPath(tree.lastCommit.id)} />
diff --git a/src/views/projects/Source/Blob.svelte b/src/views/projects/Source/Blob.svelte
index 71aefb473..8eb6868c0 100644
--- a/src/views/projects/Source/Blob.svelte
+++ b/src/views/projects/Source/Blob.svelte
@@ -7,7 +7,6 @@
   import * as Syntax from "@app/lib/syntax";
   import { isImagePath, isMarkdownPath, isSvgPath } from "@app/lib/utils";
   import { lineNumbersGutter } from "@app/lib/syntax";
-  import { routeToPath } from "@app/lib/router";
 
   import Button from "@app/components/Button.svelte";
   import CommitButton from "@app/views/projects/components/CommitButton.svelte";
@@ -20,8 +19,6 @@
 
   export let baseUrl: BaseUrl;
   export let projectId: string;
-  export let peer: string | undefined;
-  export let revision: string | undefined;
   export let path: string;
   export let blob: Blob;
   export let highlighted: Syntax.Root | undefined;
@@ -53,31 +50,6 @@
   $: enablePreview = isMarkdown || isSvg;
   $: preview = enablePreview && selectedLineId === undefined;
 
-  let linkBaseUrl: string | undefined;
-
-  $: {
-    if (!path || path === "/") {
-      // For the default root path, the `tree/<revision>` portion is omitted
-      // from the URL. This means that links cannot be resolved with respect
-      // to the current location. To work around this we provide path that
-      // results a fully expanded URL with which we can resolve all links in the
-      // Markdown.
-      linkBaseUrl = new URL(
-        routeToPath({
-          resource: "project.source",
-          project: projectId,
-          node: baseUrl,
-          peer,
-          revision,
-          path: "README.md",
-        }),
-        window.origin,
-      ).href;
-    } else {
-      linkBaseUrl = undefined;
-    }
-  }
-
   afterUpdate(() => {
     for (const item of document.getElementsByClassName("highlight")) {
       item.classList.remove("highlight");
@@ -217,7 +189,7 @@
   {:else if preview && blob.content}
     {#if isMarkdown}
       <div style:padding="2rem">
-        <Markdown {rawPath} {path} {linkBaseUrl} content={blob.content} />
+        <Markdown content={blob.content} {rawPath} {path} />
       </div>
     {:else if isSvg}
       <div style:margin="1rem 0" style:text-align="center">
diff --git a/tests/e2e/project.spec.ts b/tests/e2e/project.spec.ts
index 4f88eb7b2..dfc1bc74f 100644
--- a/tests/e2e/project.spec.ts
+++ b/tests/e2e/project.spec.ts
@@ -468,6 +468,26 @@ test("external markdown link", async ({ context, page }) => {
   await expect(newPage).toHaveURL("https://example.com");
 });
 
+test("absolute markdown link", async ({ page }) => {
+  await page.goto(`${markdownUrl}/tree/main/link-files.md`);
+  await page.getByRole("link", { name: "Absolute Link" }).click();
+  await expect(page).toHaveURL(
+    `${markdownUrl}/tree/main/relative-files/linked-file.md`,
+  );
+  await page.getByRole("link", { name: "nested file", exact: true }).click();
+  await expect(page).toHaveURL(
+    `${markdownUrl}/tree/main/relative-files/nested-file.md`,
+  );
+  await page.goBack();
+  await page.getByRole("link", { name: "nested file with" }).click();
+  await expect(page).toHaveURL(
+    `${markdownUrl}/tree/main/relative-files/nested-file.md`,
+  );
+  await page.goBack();
+  await page.getByRole("link", { name: "Back to link-files with" }).click();
+  await expect(page).toHaveURL(`${markdownUrl}/tree/main/link-files.md`);
+});
+
 test("internal file markdown link", async ({ page }) => {
   await page.goto(`${markdownUrl}/tree/main/link-files.md`);
   await page.getByRole("link", { name: "Markdown Cheatsheet" }).click();
diff --git a/tests/fixtures/repos/markdown.tar.bz2 b/tests/fixtures/repos/markdown.tar.bz2
index 99eb2ec01..a699da8f9 100644
Binary files a/tests/fixtures/repos/markdown.tar.bz2 and b/tests/fixtures/repos/markdown.tar.bz2 differ
diff --git a/tests/unit/utils.test.ts b/tests/unit/utils.test.ts
index aed88f67e..5365c7aaf 100644
--- a/tests/unit/utils.test.ts
+++ b/tests/unit/utils.test.ts
@@ -166,6 +166,12 @@ describe("Path Manipulation", () => {
       origin: "https://app.radicle.xyz",
       expected: "assets/images/tux.png",
     },
+    {
+      imagePath: "/tux.md",
+      base: "/components/assets/README.md",
+      origin: "http://localhost:3000",
+      expected: "tux.md",
+    },
     {
       imagePath: "assets/images/tux.png",
       base: "/",