diff --git a/src/goImport.ts b/src/goImport.ts
index 2568dad38..804b778d6 100644
--- a/src/goImport.ts
+++ b/src/goImport.ts
@@ -9,31 +9,91 @@ import vscode = require('vscode');
 import cp = require('child_process');
 import { getBinPath } from './goPath';
 import { parseFilePrelude } from './util';
-import { promptForMissingTool } from './goInstallTools';
 import { documentSymbols } from './goOutline';
+import { promptForMissingTool, isVendorSupported } from './goInstallTools';
+import path = require('path');
 
 export function listPackages(excludeImportedPkgs: boolean = false): Thenable<string[]> {
 	let importsPromise = excludeImportedPkgs && vscode.window.activeTextEditor ? getImports(vscode.window.activeTextEditor.document.fileName) : Promise.resolve([]);
-	let pkgsPromise = new Promise<string[]>((resolve, reject) => {
+	let vendorSupportPromise = isVendorSupported();
+	let goPkgsPromise = new Promise<string[]>((resolve, reject) => {
 		cp.execFile(getBinPath('gopkgs'), [], (err, stdout, stderr) => {
 			if (err && (<any>err).code === 'ENOENT') {
 				promptForMissingTool('gopkgs');
 				return reject();
 			}
 			let lines = stdout.toString().split('\n');
-			let sortedlines = lines.sort().slice(1); // Drop the empty entry from the final '\n'
-			return resolve(sortedlines);
+			if (lines[lines.length - 1] === '') {
+				// Drop the empty entry from the final '\n'
+				lines.pop();
+			}
+			return resolve(lines);
 		});
 	});
 
-	return Promise.all<string[]>([importsPromise, pkgsPromise]).then(values => {
-		let imports = values[0];
-		let pkgs = values[1];
-		if (imports.length === 0) {
-			return pkgs;
-		}
-		return pkgs.filter(element => {
-			return imports.indexOf(element) === -1;
+	return vendorSupportPromise.then((vendorSupport: boolean) => {
+		return Promise.all<string[]>([goPkgsPromise, importsPromise]).then(values => {
+			let pkgs = values[0];
+			let importedPkgs = values [1];
+
+			if (!vendorSupport) {
+				if (importedPkgs.length > 0) {
+					pkgs = pkgs.filter(element => {
+						return importedPkgs.indexOf(element) === -1;
+					});
+				}
+				return pkgs.sort();
+			}
+
+			let currentFileDirPath = path.dirname(vscode.window.activeTextEditor.document.fileName);
+			let workspaces: string[] = process.env['GOPATH'].split(path.delimiter);
+			let currentWorkspace = path.join(workspaces[0], 'src');
+
+			// Workaround for issue in https://github.com/Microsoft/vscode/issues/9448#issuecomment-244804026
+			if (process.platform === 'win32') {
+				currentFileDirPath = currentFileDirPath.substr(0, 1).toUpperCase() + currentFileDirPath.substr(1);
+			}
+
+			// In case of multiple workspaces, find current workspace by checking if current file is
+			// under any of the workspaces in $GOPATH
+			for (let i = 1; i < workspaces.length; i++) {
+				let possibleCurrentWorkspace = path.join(workspaces[i], 'src');
+				if (currentFileDirPath.startsWith(possibleCurrentWorkspace)) {
+					// In case of nested workspaces, (example: both /Users/me and /Users/me/src/a/b/c are in $GOPATH)
+					// both parent & child workspace in the nested workspaces pair can make it inside the above if block
+					// Therefore, the below check will take longer (more specific to current file) of the two
+					if (possibleCurrentWorkspace.length > currentWorkspace.length) {
+						currentWorkspace = possibleCurrentWorkspace;
+					}
+				}
+			}
+
+			let pkgSet = new Set<string>();
+			pkgs.forEach(pkg => {
+				if (!pkg || importedPkgs.indexOf(pkg) > -1) {
+					return;
+				}
+
+				let magicVendorString = '/vendor/';
+				let vendorIndex = pkg.indexOf(magicVendorString);
+
+				// Check if current file and the vendor pkg belong to the same root project
+				// If yes, then vendor pkg can be replaced with its relative path to the "vendor" folder
+				if (vendorIndex > 0) {
+					let rootProjectForVendorPkg = path.join(currentWorkspace, pkg.substr(0, vendorIndex));
+					let relativePathForVendorPkg = pkg.substring(vendorIndex + magicVendorString.length);
+
+					if (relativePathForVendorPkg && currentFileDirPath.startsWith(rootProjectForVendorPkg)) {
+						pkgSet.add(relativePathForVendorPkg);
+						return;
+					}
+				}
+
+				// pkg is not a vendor project or is a vendor project not belonging to current project
+				pkgSet.add(pkg);
+			});
+
+			return Array.from(pkgSet).sort();
 		});
 	});
 }
diff --git a/src/goInstallTools.ts b/src/goInstallTools.ts
index 1c44f69e1..80bd2f7b2 100644
--- a/src/goInstallTools.ts
+++ b/src/goInstallTools.ts
@@ -20,6 +20,7 @@ interface SemVersion {
 }
 
 let goVersion: SemVersion = null;
+let vendorSupport: boolean = null;
 
 function getTools(): { [key: string]: string }  {
 	let goConfig = vscode.workspace.getConfiguration('go');
@@ -142,6 +143,7 @@ export function updateGoPathGoRootFromConfig() {
 
 export function setupGoPathAndOfferToInstallTools() {
 	updateGoPathGoRootFromConfig();
+	isVendorSupported();
 
 	if (!process.env['GOPATH']) {
 		let info = 'GOPATH is not set as an environment variable or via `go.gopath` setting in Code';
@@ -193,6 +195,8 @@ function getMissingTools(): Promise<string[]> {
 	});
 }
 
+
+
 export function getGoVersion(): Promise<SemVersion> {
 	if (goVersion) {
 		return Promise.resolve(goVersion);
@@ -209,4 +213,25 @@ export function getGoVersion(): Promise<SemVersion> {
 			return resolve(goVersion);
 		});
 	});
-}
\ No newline at end of file
+}
+
+export function isVendorSupported(): Promise<boolean> {
+	if (vendorSupport != null) {
+		return Promise.resolve(vendorSupport);
+	}
+	return getGoVersion().then(version => {
+		switch (version.major) {
+			case 0:
+				vendorSupport = false;
+				break;
+			case 1:
+				vendorSupport = (version.minor > 5 || (version.minor  === 5 && process.env['GO15VENDOREXPERIMENT'] === '1')) ? true : false;
+				break;
+			default:
+				vendorSupport = true;
+				break;
+		}
+		return vendorSupport;
+	});
+}
+
diff --git a/test/go.test.ts b/test/go.test.ts
index d37844de9..3c46d627a 100644
--- a/test/go.test.ts
+++ b/test/go.test.ts
@@ -19,6 +19,8 @@ import { getGoVersion } from '../src/goInstallTools';
 import { documentSymbols } from '../src/goOutline';
 import { listPackages } from '../src/goImport';
 import { generateTestCurrentFile, generateTestCurrentPackage } from '../src/goGenerateTests';
+import { getBinPath } from '../src/goPath';
+import { isVendorSupported } from '../src/goInstallTools';
 
 suite('Go Extension Tests', () => {
 	let gopath = process.env['GOPATH'];
@@ -83,17 +85,19 @@ encountered.
 		];
 		let uri = vscode.Uri.file(path.join(fixturePath, 'test.go'));
 		vscode.workspace.openTextDocument(uri).then((textDocument) => {
-			let promises = testCases.map(([position, expected]) =>
-				provider.provideCompletionItems(textDocument, position, null).then(items => {
-					let labels = items.map(x => x.label);
-					for (let entry of expected) {
-						if (labels.indexOf(entry) < 0) {
-							assert.fail('', entry, 'missing expected item in competion list');
+			return vscode.window.showTextDocument(textDocument).then(editor => {
+				let promises = testCases.map(([position, expected]) =>
+					provider.provideCompletionItems(textDocument, position, null).then(items => {
+						let labels = items.map(x => x.label);
+						for (let entry of expected) {
+							if (labels.indexOf(entry) < 0) {
+								assert.fail('', entry, 'missing expected item in competion list');
+							}
 						}
-					}
-				})
-			);
-			return Promise.all(promises);
+					})
+				);
+				return Promise.all(promises);
+			});
 		}, (err) => {
 			assert.ok(false, `error in OpenTextDocument ${err}`);
 		}).then(() => done(), done);
@@ -389,4 +393,69 @@ encountered.
 			});
 		}).then(() => done(), done);
 	});
+
+	test('Replace vendor packages with relative path', (done) => {
+		// This test needs a go project that has vendor folder and vendor packages
+		// Since the Go extension takes a dependency on the godef tool at github.com/rogpeppe/godef
+		// which has vendor packages, we are using it here to test the "replace vendor packages with relative path" feature.
+		// If the extension ever stops depending on godef tool or if godef ever stops having vendor packages, then this test
+		// will fail and will have to be replaced with any other go project with vendor packages
+
+		let vendorSupportPromise = isVendorSupported();
+		let filePath = path.join(process.env['GOPATH'], 'src', 'github.com', 'rogpeppe', 'godef', 'go', 'ast', 'ast.go');
+		let vendorPkgsFullPath = [
+			'github.com/rogpeppe/godef/vendor/9fans.net/go/acme',
+			'github.com/rogpeppe/godef/vendor/9fans.net/go/plan9',
+			'github.com/rogpeppe/godef/vendor/9fans.net/go/plan9/client'
+		];
+		let vendorPkgsRelativePath = [
+			'9fans.net/go/acme',
+			'9fans.net/go/plan9',
+			'9fans.net/go/plan9/client'
+		];
+
+		vendorSupportPromise.then((vendorSupport: boolean) => {
+			let gopkgsPromise = new Promise<string[]>((resolve, reject) => {
+				cp.execFile(getBinPath('gopkgs'), [], (err, stdout, stderr) => {
+					let pkgs = stdout.split('\n').sort().slice(1);
+					if (vendorSupport) {
+						vendorPkgsFullPath.forEach(pkg => {
+							assert.equal(pkgs.indexOf(pkg) > -1, true, `Package not found by goPkgs: ${pkg}`);
+						});
+						vendorPkgsRelativePath.forEach(pkg => {
+							assert.equal(pkgs.indexOf(pkg), -1, `Relative path to vendor package ${pkg} should not be returned by gopkgs command`);
+						});
+					}
+					return resolve(pkgs);
+				});
+			});
+
+			let listPkgPromise: Thenable<string[]> = vscode.workspace.openTextDocument(vscode.Uri.file(filePath)).then(document => {
+				return vscode.window.showTextDocument(document).then(editor => {
+					return listPackages().then(pkgs => {
+						if (vendorSupport) {
+							vendorPkgsRelativePath.forEach(pkg => {
+								assert.equal(pkgs.indexOf(pkg) > -1, true, `Relative path for vendor package ${pkg} not found`);
+							});
+							vendorPkgsFullPath.forEach(pkg => {
+								assert.equal(pkgs.indexOf(pkg), -1, `Full path for vendor package ${pkg} should be shown by listPackages method`);
+							});
+						}
+						return Promise.resolve(pkgs);
+					});
+				});
+			});
+
+			return Promise.all<string[]>([gopkgsPromise, listPkgPromise]).then((values: string[][]) => {
+				if (!vendorSupport) {
+					let originalPkgs = values[0];
+					let updatedPkgs = values[1];
+					assert.equal(originalPkgs.length, updatedPkgs.length);
+					for (let index = 0; index < originalPkgs.length; index++) {
+						assert.equal(updatedPkgs[index], originalPkgs[index]);
+					}
+				}
+			});
+		}).then(() => done(), done);
+	});
 });