diff --git a/mesonbuild/wrap/wrap.py b/mesonbuild/wrap/wrap.py
index 86dd74ec4..10aa1b80e 100644
--- a/mesonbuild/wrap/wrap.py
+++ b/mesonbuild/wrap/wrap.py
@@ -346,10 +346,13 @@ class Resolver:
         self.directory = self.wrap.directory
 
         if self.wrap.has_wrap:
-            # We have a .wrap file, source code will be placed into main
-            # project's subproject_dir even if the wrap file comes from another
-            # subproject.
-            self.dirname = os.path.join(self.subdir_root, self.directory)
+            # We have a .wrap file, use directory relative to the location of
+            # the wrap file if it exists, otherwise source code will be placed
+            # into main project's subproject_dir even if the wrap file comes
+            # from another subproject.
+            self.dirname = os.path.join(os.path.dirname(self.wrap.filename), self.wrap.directory)
+            if not os.path.exists(self.dirname):
+                self.dirname = os.path.join(self.subdir_root, self.directory)
             # Check if the wrap comes from the main project.
             main_fname = os.path.join(self.subdir_root, self.wrap.basename)
             if self.wrap.filename != main_fname:
diff --git a/test cases/common/254 subsubproject inplace/meson.build b/test cases/common/254 subsubproject inplace/meson.build
new file mode 100644
index 000000000..26a421b32
--- /dev/null
+++ b/test cases/common/254 subsubproject inplace/meson.build	
@@ -0,0 +1,3 @@
+project('main')
+
+subproject('sub')
diff --git a/test cases/common/254 subsubproject inplace/subprojects/sub/meson.build b/test cases/common/254 subsubproject inplace/subprojects/sub/meson.build
new file mode 100644
index 000000000..5e33d2193
--- /dev/null
+++ b/test cases/common/254 subsubproject inplace/subprojects/sub/meson.build	
@@ -0,0 +1,3 @@
+project('sub')
+
+subproject('subsub')
diff --git a/test cases/common/254 subsubproject inplace/subprojects/sub/subprojects/subsub-1.0/meson.build b/test cases/common/254 subsubproject inplace/subprojects/sub/subprojects/subsub-1.0/meson.build
new file mode 100644
index 000000000..7807a1bae
--- /dev/null
+++ b/test cases/common/254 subsubproject inplace/subprojects/sub/subprojects/subsub-1.0/meson.build	
@@ -0,0 +1 @@
+project('subsub')
diff --git a/test cases/common/254 subsubproject inplace/subprojects/sub/subprojects/subsub.wrap b/test cases/common/254 subsubproject inplace/subprojects/sub/subprojects/subsub.wrap
new file mode 100644
index 000000000..bf398525a
--- /dev/null
+++ b/test cases/common/254 subsubproject inplace/subprojects/sub/subprojects/subsub.wrap	
@@ -0,0 +1,2 @@
+[wrap-file]
+directory = subsub-1.0