diff --git a/manifest.go b/manifest.go
index c871357..509ed9f 100644
--- a/manifest.go
+++ b/manifest.go
@@ -59,6 +59,32 @@ func (f ManifestFile) parse() (manifest, error) {
 }
 
 func (m manifest) path(s string) (string, error) {
+	r, err := m.pathExact(s)
+	if err == nil || err == ErrEmpty {
+		return r, err
+	}
+	// If path references a runfile that lies under a directory that itself is a
+	// runfile, then only the directory is listed in the manifest. Look up all
+	// prefixes of path in the manifest.
+	prefixEnd := len(s)
+	for {
+		prefixEnd = strings.LastIndex(s[0:prefixEnd-1], "/")
+		if prefixEnd == -1 {
+			break
+		}
+		prefixMatch, err := m.pathExact(s[0:prefixEnd])
+		if err == ErrEmpty {
+			return "", ErrEmpty
+		}
+		if err == nil {
+			suffixPathSegments := strings.Split(s[prefixEnd+1:], "/")
+			return filepath.Join(append([]string{prefixMatch}, suffixPathSegments...)...), nil
+		}
+	}
+	return "", os.ErrNotExist
+}
+
+func (m manifest) pathExact(s string) (string, error) {
 	r, ok := m[s]
 	if !ok {
 		return "", os.ErrNotExist
diff --git a/runfiles_test.go b/runfiles_test.go
index 1aba1e7..4ccc9cd 100644
--- a/runfiles_test.go
+++ b/runfiles_test.go
@@ -19,6 +19,7 @@ import (
 	"fmt"
 	"os"
 	"os/exec"
+	"path"
 	"path/filepath"
 	"testing"
 
@@ -101,3 +102,31 @@ func TestRunfiles_empty(t *testing.T) {
 		t.Errorf("Path for empty file: got error %q, want something that wraps %q", got, want)
 	}
 }
+
+var manifestWithDirTestCases = map[string]string {
+	"foo/dir": "path/to/foo/dir",
+	"foo/dir/file": path.Join("path/to/foo/dir", "file"),
+	"foo/dir/deeply/nested/file": path.Join("path/to/foo/dir", "deeply", "nested", "file"),
+}
+
+func TestRunfiles_manifestWithDir(t *testing.T) {
+	dir := t.TempDir()
+	manifest := filepath.Join(dir, "manifest")
+	if err := os.WriteFile(manifest, []byte("foo/dir path/to/foo/dir\n"), 0600); err != nil {
+		t.Fatal(err)
+	}
+	r, err := runfiles.New(runfiles.ManifestFile(manifest), runfiles.ProgramName("/invalid"), runfiles.Directory("/invalid"))
+	if err != nil {
+		t.Fatal(err)
+	}
+	for rlocation, want := range manifestWithDirTestCases {
+		got, err := r.Path(rlocation)
+		if err != nil {
+			t.Errorf("Path for %q: got unexpected error %q", rlocation, err)
+			continue
+		}
+		if got != want {
+			t.Errorf("Path for %q: got %q, want %q", rlocation, got, want)
+		}
+	}
+}