diff --git a/src/libexpr/eval.cc b/src/libexpr/eval.cc
index 419b377ba..a8bfa7711 100644
--- a/src/libexpr/eval.cc
+++ b/src/libexpr/eval.cc
@@ -1580,7 +1580,6 @@ void ExprConcatStrings::eval(EvalState & state, Env & env, Value & v)
            and none of the strings are allowed to have contexts. */
         if (first) {
             firstType = vTmp.type();
-            first = false;
         }
 
         if (firstType == nInt) {
@@ -1601,7 +1600,12 @@ void ExprConcatStrings::eval(EvalState & state, Env & env, Value & v)
             } else
                 throwEvalError(pos, "cannot add %1% to a float", showType(vTmp));
         } else
-            s << state.coerceToString(pos, vTmp, context, false, firstType == nString);
+            /* skip canonization of first path, which would only be not
+            canonized in the first place if it's coming from a ./${foo} type
+            path */
+            s << state.coerceToString(pos, vTmp, context, false, firstType == nString, !first);
+
+        first = false;
     }
 
     if (firstType == nInt)
@@ -1790,7 +1794,7 @@ std::optional<string> EvalState::tryAttrsToString(const Pos & pos, Value & v,
 }
 
 string EvalState::coerceToString(const Pos & pos, Value & v, PathSet & context,
-    bool coerceMore, bool copyToStore)
+    bool coerceMore, bool copyToStore, bool canonizePath)
 {
     forceValue(v, pos);
 
@@ -1802,7 +1806,7 @@ string EvalState::coerceToString(const Pos & pos, Value & v, PathSet & context,
     }
 
     if (v.type() == nPath) {
-        Path path(canonPath(v.path));
+        Path path(canonizePath ? canonPath(v.path) : v.path);
         return copyToStore ? copyPathToStore(context, path) : path;
     }
 
diff --git a/src/libexpr/eval.hh b/src/libexpr/eval.hh
index 47db8b2ba..ad6fb7ff4 100644
--- a/src/libexpr/eval.hh
+++ b/src/libexpr/eval.hh
@@ -217,7 +217,8 @@ public:
        booleans and lists to a string.  If `copyToStore' is set,
        referenced paths are copied to the Nix store as a side effect. */
     string coerceToString(const Pos & pos, Value & v, PathSet & context,
-        bool coerceMore = false, bool copyToStore = true);
+        bool coerceMore = false, bool copyToStore = true,
+        bool canonizePath = true);
 
     string copyPathToStore(PathSet & context, const Path & path);
 
diff --git a/src/libexpr/lexer.l b/src/libexpr/lexer.l
index 27975dc9e..8ad6a1957 100644
--- a/src/libexpr/lexer.l
+++ b/src/libexpr/lexer.l
@@ -9,6 +9,9 @@
 %s DEFAULT
 %x STRING
 %x IND_STRING
+%x INPATH
+%x INPATH_SLASH
+%x PATH_START
 
 
 %{
@@ -97,9 +100,12 @@ ANY         .|\n
 ID          [a-zA-Z\_][a-zA-Z0-9\_\'\-]*
 INT         [0-9]+
 FLOAT       (([1-9][0-9]*\.[0-9]*)|(0?\.[0-9]+))([Ee][+-]?[0-9]+)?
-PATH        [a-zA-Z0-9\.\_\-\+]*(\/[a-zA-Z0-9\.\_\-\+]+)+\/?
-HPATH       \~(\/[a-zA-Z0-9\.\_\-\+]+)+\/?
-SPATH       \<[a-zA-Z0-9\.\_\-\+]+(\/[a-zA-Z0-9\.\_\-\+]+)*\>
+PATH_CHAR   [a-zA-Z0-9\.\_\-\+]
+PATH        {PATH_CHAR}*(\/{PATH_CHAR}+)+\/?
+PATH_SEG    {PATH_CHAR}*\/
+HPATH       \~(\/{PATH_CHAR}+)+\/?
+HPATH_START \~\/
+SPATH       \<{PATH_CHAR}+(\/{PATH_CHAR}+)*\>
 URI         [a-zA-Z][a-zA-Z0-9\+\-\.]*\:[a-zA-Z0-9\%\/\?\:\@\&\=\+\$\,\-\_\.\!\~\*\']+
 
 
@@ -200,17 +206,73 @@ or          { return OR_KW; }
                    return IND_STR;
                  }
 
+{PATH_SEG}\$\{ |
+{HPATH_START}\$\{ {
+  PUSH_STATE(PATH_START);
+  yyless(0);
+}
+
+<PATH_START>{PATH_SEG} {
+  POP_STATE();
+  PUSH_STATE(INPATH_SLASH);
+  yylval->path = strdup(yytext);
+  return PATH;
+}
+
+<PATH_START>{HPATH_START} {
+  POP_STATE();
+  PUSH_STATE(INPATH_SLASH);
+  yylval->path = strdup(yytext);
+  return HPATH;
+}
+
+{PATH} {
+  if (yytext[yyleng-1] == '/')
+    PUSH_STATE(INPATH_SLASH);
+  else
+    PUSH_STATE(INPATH);
+  yylval->path = strdup(yytext);
+  return PATH;
+}
+{HPATH} {
+  if (yytext[yyleng-1] == '/')
+    PUSH_STATE(INPATH_SLASH);
+  else
+    PUSH_STATE(INPATH);
+  yylval->path = strdup(yytext);
+  return HPATH;
+}
+
+<INPATH,INPATH_SLASH>\$\{ {
+  POP_STATE();
+  PUSH_STATE(INPATH);
+  PUSH_STATE(DEFAULT);
+  return DOLLAR_CURLY;
+}
+<INPATH,INPATH_SLASH>{PATH}|{PATH_SEG}|{PATH_CHAR}+ {
+  POP_STATE();
+  if (yytext[yyleng-1] == '/')
+      PUSH_STATE(INPATH_SLASH);
+  else
+      PUSH_STATE(INPATH);
+  yylval->e = new ExprString(data->symbols.create(string(yytext)));
+  return STR;
+}
+<INPATH>{ANY} |
+<INPATH><<EOF>> {
+  /* if we encounter a non-path character we inform the parser that the path has
+     ended with a PATH_END token and re-parse this character in the default
+     context (it may be ')', ';', or something of that sort) */
+  POP_STATE();
+  yyless(0);
+  return PATH_END;
+}
+
+<INPATH_SLASH>{ANY} |
+<INPATH_SLASH><<EOF>> {
+  throw ParseError("path has a trailing slash");
+}
 
-{PATH}      { if (yytext[yyleng-1] == '/')
-                  throw ParseError("path '%s' has a trailing slash", yytext);
-              yylval->path = strdup(yytext);
-              return PATH;
-            }
-{HPATH}     { if (yytext[yyleng-1] == '/')
-                  throw ParseError("path '%s' has a trailing slash", yytext);
-              yylval->path = strdup(yytext);
-              return HPATH;
-            }
 {SPATH}     { yylval->path = strdup(yytext); return SPATH; }
 {URI}       { yylval->uri = strdup(yytext); return URI; }
 
diff --git a/src/libexpr/parser.y b/src/libexpr/parser.y
index f948dde47..796e87cc1 100644
--- a/src/libexpr/parser.y
+++ b/src/libexpr/parser.y
@@ -290,13 +290,13 @@ void yyerror(YYLTYPE * loc, yyscan_t scanner, ParseData * data, const char * err
 %type <formal> formal
 %type <attrNames> attrs attrpath
 %type <string_parts> string_parts_interpolated ind_string_parts
-%type <e> string_parts string_attr
+%type <e> path_start string_parts string_attr
 %type <id> attr
 %token <id> ID ATTRPATH
 %token <e> STR IND_STR
 %token <n> INT
 %token <nf> FLOAT
-%token <path> PATH HPATH SPATH
+%token <path> PATH HPATH SPATH PATH_END
 %token <uri> URI
 %token IF THEN ELSE ASSERT WITH LET IN REC INHERIT EQ NEQ AND OR IMPL OR_KW
 %token DOLLAR_CURLY /* == ${ */
@@ -405,8 +405,11 @@ expr_simple
   | IND_STRING_OPEN ind_string_parts IND_STRING_CLOSE {
       $$ = stripIndentation(CUR_POS, data->symbols, *$2);
   }
-  | PATH { $$ = new ExprPath(absPath($1, data->basePath)); }
-  | HPATH { $$ = new ExprPath(getHome() + string{$1 + 1}); }
+  | path_start PATH_END { $$ = $1; }
+  | path_start string_parts_interpolated PATH_END {
+      $2->insert($2->begin(), $1);
+      $$ = new ExprConcatStrings(CUR_POS, false, $2);
+  }
   | SPATH {
       string path($1 + 1, strlen($1) - 2);
       $$ = new ExprApp(CUR_POS,
@@ -452,6 +455,20 @@ string_parts_interpolated
     }
   ;
 
+path_start
+  : PATH {
+    Path path(absPath($1, data->basePath));
+    /* add back in the trailing '/' to the first segment */
+    if ($1[strlen($1)-1] == '/')
+      path += "/";
+    $$ = new ExprPath(path);
+  }
+  | HPATH {
+    Path path(getHome() + string($1 + 1));
+    $$ = new ExprPath(path);
+  }
+  ;
+
 ind_string_parts
   : ind_string_parts IND_STR { $$ = $1; $1->push_back($2); }
   | ind_string_parts DOLLAR_CURLY expr '}' { $$ = $1; $1->push_back($3); }