diff --git a/src/lightning_app/CHANGELOG.md b/src/lightning_app/CHANGELOG.md
index b08c7edae7bf7..8a0ebf06bc97b 100644
--- a/src/lightning_app/CHANGELOG.md
+++ b/src/lightning_app/CHANGELOG.md
@@ -37,6 +37,8 @@ The format is based on [Keep a Changelog](http://keepachangelog.com/en/1.0.0/).
 - The `params` argument in `TracerPythonScript.run` no longer prepends `--` automatically to parameters ([#15518](https://github.com/Lightning-AI/lightning/pull/15518))
 
 
+- Changed the root directory of the app (which gets uploaded) to be the folder containing the app file, rather than any parent folder containing a `.lightning` file ([#15654](https://github.com/Lightning-AI/lightning/pull/15654))
+
 
 ### Deprecated
 
diff --git a/src/lightning_app/runners/cloud.py b/src/lightning_app/runners/cloud.py
index c551c1c76ec57..074b864c367a2 100644
--- a/src/lightning_app/runners/cloud.py
+++ b/src/lightning_app/runners/cloud.py
@@ -63,7 +63,7 @@
 from lightning_app.utilities.cloud import _get_project
 from lightning_app.utilities.dependency_caching import get_hash
 from lightning_app.utilities.load_app import _prettifiy_exception, load_app_from_file
-from lightning_app.utilities.packaging.app_config import AppConfig, find_config_file
+from lightning_app.utilities.packaging.app_config import _get_config_file, AppConfig
 from lightning_app.utilities.packaging.lightning_utils import _prepare_lightning_wheels_and_requirements
 from lightning_app.utilities.secrets import _names_to_ids
 
@@ -95,9 +95,9 @@ def dispatch(
 
         # TODO: verify lightning version
         # _verify_lightning_version()
-        config_file = find_config_file(self.entrypoint_file)
-        app_config = AppConfig.load_from_file(config_file) if config_file else AppConfig()
-        root = config_file.parent if config_file else Path(self.entrypoint_file).absolute().parent
+        config_file = _get_config_file(self.entrypoint_file)
+        app_config = AppConfig.load_from_file(config_file) if config_file.exists() else AppConfig()
+        root = Path(self.entrypoint_file).absolute().parent
         cleanup_handle = _prepare_lightning_wheels_and_requirements(root)
         self.app._update_index_file()
         repo = LocalSourceCodeDir(path=root)
diff --git a/src/lightning_app/utilities/packaging/app_config.py b/src/lightning_app/utilities/packaging/app_config.py
index 59d05debc088c..c3e44159ffb4e 100644
--- a/src/lightning_app/utilities/packaging/app_config.py
+++ b/src/lightning_app/utilities/packaging/app_config.py
@@ -28,7 +28,7 @@ def save_to_file(self, path: Union[str, pathlib.Path]) -> None:
 
     def save_to_dir(self, directory: Union[str, pathlib.Path]) -> None:
         """Save the configuration to a file '.lightning' to the given folder in YAML format."""
-        self.save_to_file(pathlib.Path(directory, _APP_CONFIG_FILENAME))
+        self.save_to_file(_get_config_file(directory))
 
     @classmethod
     def load_from_file(cls, path: Union[str, pathlib.Path]) -> "AppConfig":
@@ -47,22 +47,14 @@ def load_from_dir(cls, directory: Union[str, pathlib.Path]) -> "AppConfig":
         return cls.load_from_file(pathlib.Path(directory, _APP_CONFIG_FILENAME))
 
 
-def find_config_file(source_path: pathlib.Path = pathlib.Path.cwd()) -> Optional[pathlib.Path]:
-    """Search for the Lightning app config file '.lightning' at the given source path.
-
-    Relative to the given path, it will search for the '.lightning' config file by going up the directory structure
-    until found. Returns ``None`` if no config file is found in any of the parent directories.
+def _get_config_file(source_path: Union[str, pathlib.Path]) -> pathlib.Path:
+    """Get the Lightning app config file '.lightning' at the given source path.
 
     Args:
-        source_path: A path to a folder or a file. The search for the config file will start relative to this path.
+        source_path: A path to a folder or a file.
     """
     source_path = pathlib.Path(source_path).absolute()
     if source_path.is_file():
         source_path = source_path.parent
 
-    candidate = pathlib.Path(source_path / _APP_CONFIG_FILENAME)
-    if candidate.is_file():
-        return candidate
-
-    if source_path.parents:
-        return find_config_file(source_path.parent)
+    return pathlib.Path(source_path / _APP_CONFIG_FILENAME)
diff --git a/tests/tests_app/utilities/packaging/test_app_config.py b/tests/tests_app/utilities/packaging/test_app_config.py
index 2666f0a769ace..60da494a47fb8 100644
--- a/tests/tests_app/utilities/packaging/test_app_config.py
+++ b/tests/tests_app/utilities/packaging/test_app_config.py
@@ -1,6 +1,6 @@
 import pathlib
 
-from lightning_app.utilities.packaging.app_config import AppConfig, find_config_file
+from lightning_app.utilities.packaging.app_config import _get_config_file, AppConfig
 
 
 def _make_empty_config_file(folder):
@@ -10,24 +10,12 @@ def _make_empty_config_file(folder):
     return file
 
 
-def test_find_config_file(tmpdir, monkeypatch):
-    monkeypatch.chdir(pathlib.Path("/"))
-    assert find_config_file() is None
-
-    monkeypatch.chdir(pathlib.Path.home())
-    assert find_config_file() is None
-
+def test_get_config_file(tmpdir):
     _ = _make_empty_config_file(tmpdir)
-    config_file1 = _make_empty_config_file(tmpdir / "a" / "b")
-
-    assert find_config_file(tmpdir) == pathlib.Path(tmpdir, ".lightning")
-    assert find_config_file(config_file1) == pathlib.Path(tmpdir, "a", "b", ".lightning")
-    assert find_config_file(pathlib.Path(tmpdir, "a")) == pathlib.Path(tmpdir, ".lightning")
+    config_file1 = _make_empty_config_file(tmpdir)
 
-    # the config must be a file, a folder of the same name gets ignored
-    fake_config_folder = pathlib.Path(tmpdir, "fake", ".lightning")
-    fake_config_folder.mkdir(parents=True)
-    assert find_config_file(tmpdir) == pathlib.Path(tmpdir, ".lightning")
+    assert _get_config_file(tmpdir) == pathlib.Path(tmpdir, ".lightning")
+    assert _get_config_file(config_file1) == pathlib.Path(tmpdir, ".lightning")
 
 
 def test_app_config_save_load(tmpdir):