diff --git a/src/lib.rs b/src/lib.rs
index 9c996a1..8654a67 100644
--- a/src/lib.rs
+++ b/src/lib.rs
@@ -124,6 +124,16 @@ impl Context {
             .expect("Context not initialized properly, file_tree is empty")
     }
 
+    /// Return the path of the root file.
+    ///
+    /// Typically this will yield the same element as `current_file`, but when a note is embedded
+    /// within another note, this will return the outer-most note.
+    fn root_file(&self) -> &PathBuf {
+        self.file_tree
+            .first()
+            .expect("Context not initialized properly, file_tree is empty")
+    }
+
     /// Return the note depth (nesting level) for this context.
     fn note_depth(&self) -> usize {
         self.file_tree.len()
@@ -440,10 +450,13 @@ impl<'a> Exporter<'a> {
             ];
         }
         let target_file = target_file.unwrap();
+        // We use root_file() rather than current_file() here to make sure links are always
+        // relative to the outer-most note, which is the note which this content is inserted into
+        // in case of embedded notes.
         let rel_link = diff_paths(
             target_file,
             &context
-                .current_file()
+                .root_file()
                 .parent()
                 .expect("obsidian content files should always have a parent"),
         )
diff --git a/tests/testdata/expected/main-samples/embeds-note-in-subdir.md b/tests/testdata/expected/main-samples/embeds-note-in-subdir.md
new file mode 100644
index 0000000..360dd7e
--- /dev/null
+++ b/tests/testdata/expected/main-samples/embeds-note-in-subdir.md
@@ -0,0 +1,3 @@
+This note embeds `subdir/note-in-subdir.md`:
+
+This note in `subdir/` links back to [pure-markdown-examples](pure-markdown-examples.md).
diff --git a/tests/testdata/input/main-samples/embeds-note-in-subdir.md b/tests/testdata/input/main-samples/embeds-note-in-subdir.md
new file mode 100644
index 0000000..f9e6c0f
--- /dev/null
+++ b/tests/testdata/input/main-samples/embeds-note-in-subdir.md
@@ -0,0 +1,3 @@
+This note embeds `subdir/note-in-subdir.md`:
+
+![[note-in-subdir]]
diff --git a/tests/testdata/input/main-samples/subdir/note-in-subdir.md b/tests/testdata/input/main-samples/subdir/note-in-subdir.md
new file mode 100644
index 0000000..233e7fa
--- /dev/null
+++ b/tests/testdata/input/main-samples/subdir/note-in-subdir.md
@@ -0,0 +1 @@
+This note in `subdir/` links back to [[pure-markdown-examples]].