diff --git a/src/core/components/files.js b/src/core/components/files.js
index 4c66d954e0..57f4393d1b 100644
--- a/src/core/components/files.js
+++ b/src/core/components/files.js
@@ -131,22 +131,53 @@ module.exports = function files (self) {
       throw new Error('You must supply an ipfsPath')
     }
 
+    let bestMatch = { depth: -1 }
+
     ipfsPath = normalizePath(ipfsPath)
     const pathComponents = ipfsPath.split('/')
+    const prePath = normalizePath(pathComponents.slice(0, 1).join('/'))
     const restPath = normalizePath(pathComponents.slice(1).join('/'))
-    const filterFile = (file) => (restPath && file.path === restPath) || (file.path === ipfsPath)
+    const filterFile = (file) => {
+      // Save off best match to provide a better error message if file
+      // isn't found.
+      if (file.path === ipfsPath.substring(0, file.path.length)) {
+        if (file.depth > bestMatch.depth) {
+          bestMatch = file
+        }
+      }
+
+      return (restPath && file.path === restPath) || (file.path === ipfsPath)
+    }
 
     const d = deferred.source()
 
     pull(
-      exporter(ipfsPath, self._ipld),
+      exporter(prePath, self._ipld),
       pull.collect((err, files) => {
         if (err) { return d.abort(err) }
-        if (files && files.length > 1) {
+        if (files) {
           files = files.filter(filterFile)
         }
         if (!files || !files.length) {
-          return d.abort(new Error('No such file'))
+          // File used as directory
+          if (bestMatch.type === 'file') {
+            const path = bestMatch.path.substring(0, bestMatch.path.length - bestMatch.name.length - 1)
+            return d.abort(new Error(
+              `"${bestMatch.name}" is a file not a directory under ${path}`
+            ))
+          }
+
+          const link = pathComponents[bestMatch.depth + 1]
+
+          // Missing directory
+          if (bestMatch.depth < pathComponents.length - 2) {
+            return d.abort(new Error(
+              `no directory named "${link}" under ${bestMatch.path}`
+            ))
+          }
+
+          // Missing file
+          return d.abort(new Error(`no file named "${link}" under ${bestMatch.path}`))
         }
 
         const file = files[0]
diff --git a/test/cli/files.js b/test/cli/files.js
index 2e9fec39b5..0c1e2a8af1 100644
--- a/test/cli/files.js
+++ b/test/cli/files.js
@@ -319,10 +319,47 @@ describe('files', () => runOnAndOff((thing) => {
   })
 
   it('cat non-existent file', () => {
-    return ipfs('cat QmPZ9gcCEpqKTo6aq61g2nXGUhM4iCL3ewB6LDXZCtioEB/dummy')
+    return ipfs('cat QmUhUuiTKkkK8J6JZ9zmj8iNHPuNfGYcszgRumzhHBxEEU/dummy')
       .then(() => expect.fail(0, 1, 'Should have thrown an error'))
       .catch((err) => {
+        const message = err.stderr.match(/^Error:(?: Failed to cat file: Error:)? (.*)$/m)[1]
         expect(err).to.exist()
+        expect(message).to.eql(
+          'no file named "dummy" under QmUhUuiTKkkK8J6JZ9zmj8iNHPuNfGYcszgRumzhHBxEEU'
+        )
+      })
+  })
+
+  it('cat specifies missing directory in a nested link', () => {
+    return ipfs('cat QmYmW4HiZhotsoSqnv2o1oUusvkRM8b9RweBoH7ao5nki2/init-docs/docs/wrong-dir/dummy')
+      .then(() => expect.fail(0, 1, 'Should have thrown an error'))
+      .catch((err) => {
+        const message = err.stderr.match(/^Error:(?: Failed to cat file: Error:)? (.*)$/m)[1]
+        expect(message).to.eql(
+          'no directory named "wrong-dir" under QmYmW4HiZhotsoSqnv2o1oUusvkRM8b9RweBoH7ao5nki2/init-docs/docs'
+        )
+      })
+  })
+
+  it('cat specifies missing file in a nested link', () => {
+    return ipfs('cat QmYmW4HiZhotsoSqnv2o1oUusvkRM8b9RweBoH7ao5nki2/init-docs/docs/dummy')
+      .then(() => expect.fail(0, 1, 'Should have thrown an error'))
+      .catch((err) => {
+        const message = err.stderr.match(/^Error:(?: Failed to cat file: Error:)? (.*)$/m)[1]
+        expect(message).to.eql(
+          'no file named "dummy" under QmYmW4HiZhotsoSqnv2o1oUusvkRM8b9RweBoH7ao5nki2/init-docs/docs'
+        )
+      })
+  })
+
+  it('cat specifies a link is not a directory', () => {
+    return ipfs('cat QmYmW4HiZhotsoSqnv2o1oUusvkRM8b9RweBoH7ao5nki2/init-docs/docs/index/dummy')
+      .then(() => expect.fail(0, 1, 'Should have thrown an error'))
+      .catch((err) => {
+        const message = err.stderr.match(/^Error:(?: Failed to cat file: Error:)? (.*)$/m)[1]
+        expect(message).to.eql(
+          '"index" is a file not a directory under QmYmW4HiZhotsoSqnv2o1oUusvkRM8b9RweBoH7ao5nki2/init-docs/docs'
+        )
       })
   })