diff --git a/CHANGELOG.md b/CHANGELOG.md
index c88517d7..67376e1a 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -11,6 +11,10 @@ A preview of the next release can be installed from
 Berlin. Save the date and/or submit your babashka/clojure-related 20 minute talk
 in the CfP!
 
+## Unreleased
+
+- [#1544](https://github.com/babashka/babashka/issues/1544): `:local/root` in script-adjacent bb.edn should resolve relative to script
+
 ## 1.3.178 (2023-04-18)
 
 - Fix regression with [#1541](https://github.com/babashka/babashka/issues/1541)
diff --git a/src/babashka/main.clj b/src/babashka/main.clj
index 7385de53..7b42d829 100644
--- a/src/babashka/main.clj
+++ b/src/babashka/main.clj
@@ -1128,30 +1128,30 @@ Use bb run --help to show this help output.
         config (:config global-opts)
         merge-deps (:merge-deps global-opts)
         abs-path #(-> % io/file .getAbsolutePath)
-        bb-edn-file (cond
-                      config (when (fs/exists? config) (abs-path config))
-                      jar (some-> [jar] cp/new-loader (cp/resource "META-INF/bb.edn") .toString)
-                      :else (if (and file (fs/exists? file))
+        config (cond
+                 config (when (fs/exists? config) (abs-path config))
+                 jar (some-> [jar] cp/new-loader (cp/resource "META-INF/bb.edn") .toString)
+                 :else (if (and file (fs/exists? file))
                               ;; file relative to bb.edn
-                              (let [rel-bb-edn (fs/file (fs/parent file) "bb.edn")]
-                                (if (fs/exists? rel-bb-edn)
-                                  (abs-path rel-bb-edn)
+                         (let [rel-bb-edn (fs/file (fs/parent file) "bb.edn")]
+                           (if (fs/exists? rel-bb-edn)
+                             (abs-path rel-bb-edn)
                                   ;; fall back to local bb.edn
-                                  (when (fs/exists? "bb.edn")
-                                    (abs-path "bb.edn"))))
+                             (when (fs/exists? "bb.edn")
+                               (abs-path "bb.edn"))))
                               ;; default to local bb.edn
-                              (when (fs/exists? "bb.edn")
-                                (abs-path "bb.edn"))))
-        bb-edn (when (or bb-edn-file merge-deps)
-                 (when bb-edn-file (System/setProperty "babashka.config" bb-edn-file))
-                 (let [raw-string (when bb-edn-file (slurp bb-edn-file))
-                       edn (when bb-edn-file (read-bb-edn raw-string))
+                         (when (fs/exists? "bb.edn")
+                           (abs-path "bb.edn"))))
+        bb-edn (when (or config merge-deps)
+                 (when config (System/setProperty "babashka.config" config))
+                 (let [raw-string (when config (slurp config))
+                       edn (when config (read-bb-edn raw-string))
                        edn (if merge-deps
                              (deps/merge-deps [edn (read-bb-edn merge-deps)])
                              edn)
                        edn (assoc edn
                                   :raw raw-string
-                                  :file bb-edn-file)
+                                  :file config)
                        edn (if-let [deps-root (or (:deps-root global-opts)
                                                   (some-> config fs/parent))]
                              (assoc edn :deps-root deps-root)
diff --git a/test-resources/adjacent_bb/bb.edn b/test-resources/adjacent_bb/bb.edn
index b489dfa7..72cb21ec 100644
--- a/test-resources/adjacent_bb/bb.edn
+++ b/test-resources/adjacent_bb/bb.edn
@@ -1 +1,2 @@
-{:deps {medley/medley {:mvn/version "1.3.0"}}}
+{:deps {medley/medley {:mvn/version "1.3.0"}
+        my-local/dep {:local/root "../local-dep"}}}
diff --git a/test-resources/adjacent_bb/medley.bb b/test-resources/adjacent_bb/medley.bb
index 745e8cf0..e0f63c78 100755
--- a/test-resources/adjacent_bb/medley.bb
+++ b/test-resources/adjacent_bb/medley.bb
@@ -1,5 +1,9 @@
 #!/usr/bin/env bb
 
+(require '[local-dep])
+
+(assert (= :foo local-dep/local-dep-var))
+
 (ns medley
   (:require [medley.core :as medley]))
 
diff --git a/test-resources/local-dep/deps.edn b/test-resources/local-dep/deps.edn
new file mode 100644
index 00000000..ccd9a316
--- /dev/null
+++ b/test-resources/local-dep/deps.edn
@@ -0,0 +1 @@
+{:paths ["src"]}
diff --git a/test-resources/local-dep/src/local_dep.clj b/test-resources/local-dep/src/local_dep.clj
new file mode 100644
index 00000000..c12396c0
--- /dev/null
+++ b/test-resources/local-dep/src/local_dep.clj
@@ -0,0 +1,3 @@
+(ns local-dep)
+
+(def local-dep-var :foo)