diff --git a/doc/manual/src/release-notes/rl-next.md b/doc/manual/src/release-notes/rl-next.md
index a516887b1..f51969ced 100644
--- a/doc/manual/src/release-notes/rl-next.md
+++ b/doc/manual/src/release-notes/rl-next.md
@@ -1,5 +1,6 @@
 # Release X.Y (202?-??-??)
 
+* The Nix cli now searches for a flake.nix up until the root of the current git repository or a filesystem boundary rather than just in the current directory
 * The TOML parser used by `builtins.fromTOML` has been replaced by [a
   more compliant one](https://github.com/ToruNiina/toml11).
 * Added `:st`/`:show-trace` commands to nix repl, which are used to
diff --git a/src/libexpr/flake/flakeref.cc b/src/libexpr/flake/flakeref.cc
index c3b74e0fe..930ed9ccd 100644
--- a/src/libexpr/flake/flakeref.cc
+++ b/src/libexpr/flake/flakeref.cc
@@ -122,6 +122,28 @@ std::pair<FlakeRef, std::string> parseFlakeRefWithFragment(
 
             if (isFlake) {
 
+                if (!allowMissing && !pathExists(path + "/flake.nix")){
+                    notice("path '%s' does not contain a 'flake.nix', searching up",path);
+
+                    // Save device to detect filesystem boundary
+                    dev_t device = lstat(path).st_dev;
+                    bool found = false;
+                    while (path != "/") {
+                        if (pathExists(path + "/flake.nix")) {
+                            found = true;
+                            break;
+                        } else if (pathExists(path + "/.git"))
+                            throw Error("path '%s' is not part of a flake (neither it nor its parent directories contain a 'flake.nix' file)", path);
+                        else {
+                            if (lstat(path).st_dev != device)
+                                throw Error("unable to find a flake before encountering filesystem boundary at '%s'", path);
+                        }
+                        path = dirOf(path);
+                    }
+                    if (!found)
+                        throw BadURL("could not find a flake.nix file");
+                }
+
                 if (!S_ISDIR(lstat(path).st_mode))
                     throw BadURL("path '%s' is not a flake (because it's not a directory)", path);
 
diff --git a/src/nix/flake.md b/src/nix/flake.md
index 3b5812a0a..a8436bcaa 100644
--- a/src/nix/flake.md
+++ b/src/nix/flake.md
@@ -137,15 +137,6 @@ Currently the `type` attribute can be one of the following:
   *path* must be a directory in the file system containing a file
   named `flake.nix`.
 
-  If the directory or any of its parents is a Git repository, then
-  this is essentially equivalent to `git+file://<path>` (see below),
-  except that the `dir` parameter is derived automatically. For
-  example, if `/foo/bar` is a Git repository, then the flake reference
-  `/foo/bar/flake` is equivalent to `/foo/bar?dir=flake`.
-
-  If the directory is not inside a Git repository, then the flake
-  contents is the entire contents of *path*.
-
   *path* generally must be an absolute path. However, on the command
   line, it can be a relative path (e.g. `.` or `./foo`) which is
   interpreted as relative to the current directory. In this case, it
diff --git a/src/nix/nix.md b/src/nix/nix.md
index d10de7c01..2f54c5e2c 100644
--- a/src/nix/nix.md
+++ b/src/nix/nix.md
@@ -57,9 +57,47 @@ the Nix store. Here are the recognised types of installables:
   These have the form *flakeref*[`#`*attrpath*], where *flakeref* is a
   flake reference and *attrpath* is an optional attribute path. For
   more information on flakes, see [the `nix flake` manual
-  page](./nix3-flake.md). Flake references are most commonly a flake
-  identifier in the flake registry (e.g. `nixpkgs`) or a path
-  (e.g. `/path/to/my-flake` or `.`).
+  page](./nix3-flake.md).  Flake references are most commonly a flake
+  identifier in the flake registry (e.g. `nixpkgs`), or a raw path
+  (e.g. `/path/to/my-flake` or `.` or `../foo`), or a full URL
+  (e.g. `github:nixos/nixpkgs` or `path:.`)
+
+  When the flake reference is a raw path (a path without any URL
+  scheme), it is interpreted as a `path:` or `git+file:` url in the following
+  way:
+  
+  - If the path is within a Git repository, then the url will be of the form
+    `git+file://[GIT_REPO_ROOT]?dir=[RELATIVE_FLAKE_DIR_PATH]`
+    where `GIT_REPO_ROOT` is the path to the root of the git repository,
+    and `RELATIVE_FLAKE_DIR_PATH` is the path (relative to the directory
+    root) of the closest parent of the given path that contains a `flake.nix` within
+    the git repository.
+    If no such directory exists, then Nix will error-out.
+    
+    Note that the search will only include files indexed by git. In particular, files
+    which are matched by `.gitignore` or have never been `git add`-ed will not be
+    available in the flake. If this is undesireable, specify `path:<directory>` explicitly;
+    
+    For example, if `/foo/bar` is a git repository with the following structure:
+    ```
+    .
+    └── baz
+        ├── blah
+        │   └── file.txt
+        └── flake.nix
+    ```
+
+  Then `/foo/bar/baz/blah` will resolve to `git+file:///foo/bar?dir=baz`
+
+  - If the supplied path is not a git repository, then the url will have the form
+    `path:FLAKE_DIR_PATH` where `FLAKE_DIR_PATH` is the closest parent
+    of the supplied path that contains a `flake.nix` file (within the same file-system).
+    If no such directory exists, then Nix will error-out.
+    
+    For example, if `/foo/bar/flake.nix` exists, then `/foo/bar/baz/` will resolve to
+   `path:/foo/bar`
+
+
 
   If *attrpath* is omitted, Nix tries some default values; for most
   subcommands, the default is `defaultPackage.`*system*
diff --git a/tests/flake-searching.sh b/tests/flake-searching.sh
new file mode 100644
index 000000000..6558aff9a
--- /dev/null
+++ b/tests/flake-searching.sh
@@ -0,0 +1,45 @@
+source common.sh
+
+clearStore
+
+cp ./simple.nix ./simple.builder.sh ./config.nix $TEST_HOME
+cd $TEST_HOME
+mkdir -p foo/subdir
+echo '{ outputs = _: {}; }' > foo/flake.nix
+cat <<EOF > flake.nix
+{
+    inputs.foo.url = "$PWD/foo";
+    outputs = a: {
+       defaultPackage.$system = import ./simple.nix;
+       packages.$system.test = import ./simple.nix;
+    };
+}
+EOF
+mkdir subdir
+pushd subdir
+
+success=("" . .# .#test ../subdir ../subdir#test "$PWD")
+failure=("path:$PWD")
+
+for i in "${success[@]}"; do
+    nix build $i || fail "flake should be found by searching up directories"
+done
+
+for i in "${failure[@]}"; do
+    ! nix build $i || fail "flake should not search up directories when using 'path:'"
+done
+
+popd
+
+nix build --override-input foo . || fail "flake should search up directories when not an installable"
+
+sed "s,$PWD/foo,$PWD/foo/subdir,g" -i flake.nix
+! nix build || fail "flake should not search upwards when part of inputs"
+
+pushd subdir
+git init
+for i in "${success[@]}" "${failure[@]}"; do
+    ! nix build $i || fail "flake should not search past a git repository"
+done
+rm -rf .git
+popd
diff --git a/tests/local.mk b/tests/local.mk
index d2a46f22b..8580ecac9 100644
--- a/tests/local.mk
+++ b/tests/local.mk
@@ -47,6 +47,7 @@ nix_tests = \
   describe-stores.sh \
   flakes.sh \
   flake-local-settings.sh \
+  flake-searching.sh \
   build.sh \
   repl.sh ca/repl.sh \
   ca/build.sh \