diff --git a/manifest.go b/manifest.go
index c871357..d135417 100644
--- a/manifest.go
+++ b/manifest.go
@@ -18,6 +18,7 @@ import (
 	"bufio"
 	"fmt"
 	"os"
+	"path"
 	"path/filepath"
 	"strings"
 )
@@ -60,13 +61,22 @@ func (f ManifestFile) parse() (manifest, error) {
 
 func (m manifest) path(s string) (string, error) {
 	r, ok := m[s]
-	if !ok {
-		return "", os.ErrNotExist
-	}
-	if r == "" {
+	if ok && r == "" {
 		return "", ErrEmpty
 	}
-	return r, nil
+	if ok {
+		return r, nil
+	}
+	// If path references a runfile that lies under a directory that itself is a
+	// runfile, then only the directory is listed in the manifest. Look up all
+	// prefixes of path in the manifest.
+	for prefix := s; prefix != ""; prefix, _ = path.Split(prefix) {
+		prefix = strings.TrimSuffix(prefix, "/")
+		if prefixMatch, ok := m[prefix]; ok {
+			return prefixMatch + strings.TrimPrefix(s, prefix), nil
+		}
+	}
+	return "", os.ErrNotExist
 }
 
 const manifestFileVar = "RUNFILES_MANIFEST_FILE"
diff --git a/runfiles_test.go b/runfiles_test.go
index 5434654..1b99365 100644
--- a/runfiles_test.go
+++ b/runfiles_test.go
@@ -101,3 +101,30 @@ func TestRunfiles_empty(t *testing.T) {
 		t.Errorf("Path for empty file: got error %q, want something that wraps %q", got, want)
 	}
 }
+
+func TestRunfiles_manifestWithDir(t *testing.T) {
+	dir := t.TempDir()
+	manifest := filepath.Join(dir, "manifest")
+	if err := os.WriteFile(manifest, []byte("foo/dir path/to/foo/dir\n"), 0600); err != nil {
+		t.Fatal(err)
+	}
+	r, err := runfiles.New(runfiles.ManifestFile(manifest))
+	if err != nil {
+		t.Fatal(err)
+	}
+	for rlocation, want := range map[string]string{
+			"foo/dir":                    "path/to/foo/dir",
+			"foo/dir/file":               "path/to/foo/dir/file",
+			"foo/dir/deeply/nested/file": "path/to/foo/dir/deeply/nested/file",
+		} {
+		t.Run(rlocation, func(t *testing.T) {
+			got, err := r.Path(rlocation)
+			if err != nil {
+				t.Fatalf("Path failed: got unexpected error %q", err)
+			}
+			if got != want {
+				t.Errorf("Path failed: got %q, want %q", got, want)
+			}
+		})
+	}
+}