diff --git a/README.md b/README.md
index 00c654d..3ed74f5 100644
--- a/README.md
+++ b/README.md
@@ -83,7 +83,7 @@ The conventional name for the configuration file is `install.conf.yaml`.
 - link:
     ~/.dotfiles: ''
     ~/.tmux.conf: tmux.conf
-    ~/.vim: vim/
+    ~/.vim: vim
     ~/.vimrc: vimrc
 
 - shell:
@@ -104,7 +104,7 @@ The conventional name for this file is `install.conf.json`.
         "link": {
             "~/.dotfiles": "",
             "~/.tmux.conf": "tmux.conf",
-            "~/.vim": "vim/",
+            "~/.vim": "vim",
             "~/.vimrc": "vimrc"
         }
     },
@@ -147,7 +147,7 @@ files if necessary. Environment variables in paths are automatically expanded.
 
 Link commands are specified as a dictionary mapping targets to source
 locations. Source locations are specified relative to the base directory (that
-is specified when running the installer). Source directory names should contain
+is specified when running the installer). Directory names should *not* contain
 a trailing "/" character.
 
 Link commands support an (optional) extended configuration. In this type of
@@ -155,8 +155,9 @@ configuration, instead of specifying source locations directly, targets are
 mapped to extended configuration dictionaries. These dictionaries map `path` to
 the source path, specify `create` as `true` if the parent directory should be
 created if necessary, specify `relink` as `true` if incorrect symbolic links
-should be automatically overwritten, and specify `force` as `true` if the file
-or directory should be forcibly linked.
+should be automatically overwritten, specify `force` as `true` if the file or
+directory should be forcibly linked, and specify `relative` as `true` if the
+symbolic link should have a relative path.
 
 #### Example
 
@@ -164,8 +165,8 @@ or directory should be forcibly linked.
 - link:
     ~/.config/terminator:
       create: true
-      path: config/terminator/
-    ~/.vim: vim/
+      path: config/terminator
+    ~/.vim: vim
     ~/.vimrc:
       relink: true
       path: vimrc
diff --git a/plugins/link.py b/plugins/link.py
index 429158d..3bb5686 100644
--- a/plugins/link.py
+++ b/plugins/link.py
@@ -23,6 +23,7 @@ class Link(dotbot.Plugin):
             if isinstance(source, dict):
                 # extended config
                 path = source['path']
+                relative = source.get('relative', False)
                 force = source.get('force', False)
                 relink = source.get('relink', False)
                 create = source.get('create', False)
@@ -33,8 +34,9 @@ class Link(dotbot.Plugin):
                 elif relink:
                     success &= self._delete(path, destination, force=False)
             else:
+                relative = False
                 path = source
-            success &= self._link(path, destination)
+            success &= self._link(path, destination, relative)
         if success:
             self._log.info('All links have been set up')
         else:
@@ -101,7 +103,7 @@ class Link(dotbot.Plugin):
                     self._log.lowinfo('Removing %s' % path)
         return success
 
-    def _link(self, source, link_name):
+    def _link(self, source, link_name, relative):
         '''
         Links link_name to source.
 
@@ -115,7 +117,11 @@ class Link(dotbot.Plugin):
                 (link_name, self._link_destination(link_name)))
         elif not self._exists(link_name) and self._exists(source):
             try:
-                os.symlink(source, os.path.expanduser(link_name))
+                destination = os.path.expanduser(link_name)
+                if relative:
+                    destination_dir = os.path.dirname(destination)
+                    source = os.path.relpath(source, destination_dir)
+                os.symlink(source, destination)
             except OSError:
                 self._log.warning('Linking failed %s -> %s' % (link_name, source))
             else:
diff --git a/test/tests/link-relative.bash b/test/tests/link-relative.bash
new file mode 100644
index 0000000..ac55c17
--- /dev/null
+++ b/test/tests/link-relative.bash
@@ -0,0 +1,36 @@
+test_description='relative linking works'
+. '../test-lib.bash'
+
+test_expect_success 'setup' '
+echo "apple" > ${DOTFILES}/f &&
+mkdir ${DOTFILES}/d &&
+echo "grape" > ${DOTFILES}/d/e
+'
+
+test_expect_success 'run' '
+run_dotbot <<EOF
+- link:
+    ~/.f:
+      path: f
+    ~/.frel:
+      path: f
+      relative: true
+    ~/nested/.frel:
+      path: f
+      create: true
+      relative: true
+    ~/.d:
+      path: d
+      relative: true
+EOF
+'
+
+test_expect_success 'test' '
+grep "apple" ~/.f &&
+grep "apple" ~/.frel &&
+[[ "$(readlink ~/.f)" == "$(readlink -f dotfiles/f)" ]] &&
+[[ "$(readlink ~/.frel)" == "dotfiles/f" ]] &&
+[[ "$(readlink ~/nested/.frel)" == "../dotfiles/f" ]] &&
+grep "grape" ~/.d/e &&
+[[ "$(readlink ~/.d)" == "dotfiles/d" ]]
+'