diff --git a/Documentation/Configuration File.md b/Documentation/Configuration File.md
index 6fd133ff..d19dcca0 100644
--- a/Documentation/Configuration File.md	
+++ b/Documentation/Configuration File.md	
@@ -15,7 +15,7 @@ The structure of the file is currently not guaranteed to be stable. Options may
 
 - `swiftPM`: Dictionary with the following keys, defining options for SwiftPM workspaces
   - `configuration: "debug"|"release"`: The configuration to build the project for during background indexing and the configuration whose build folder should be used for Swift modules if background indexing is disabled. Equivalent to SwiftPM's `--configuration` option.
-  - `scratchPath: string`: Build artifacts directory path. If nil, the build system may choose a default value. Equivalent to SwiftPM's `--scratch-path` option.
+  - `scratchPath: string`: Build artifacts directory path. If nil, the build system may choose a default value. This path can be specified as a relative path, which will be interpreted relative to the project root. Equivalent to SwiftPM's `--scratch-path` option.
   - `swiftSDKsDirectory: string`: Equivalent to SwiftPM's `--swift-sdks-path` option
   - `swiftSDK: string`: Equivalent to SwiftPM's `--swift-sdk` option
   - `triple: string`: Equivalent to SwiftPM's `--triple` option
diff --git a/Sources/BuildSystemIntegration/SwiftPMBuildSystem.swift b/Sources/BuildSystemIntegration/SwiftPMBuildSystem.swift
index 6f58cdfc..69c993fa 100644
--- a/Sources/BuildSystemIntegration/SwiftPMBuildSystem.swift
+++ b/Sources/BuildSystemIntegration/SwiftPMBuildSystem.swift
@@ -324,7 +324,7 @@ package actor SwiftPMBuildSystem: BuiltInBuildSystem {
     if options.backgroundIndexingOrDefault {
       location.scratchDirectory = AbsolutePath(projectRoot.appending(components: ".build", "index-build"))
     } else if let scratchDirectory = options.swiftPMOrDefault.scratchPath,
-      let scratchDirectoryPath = try? AbsolutePath(validating: scratchDirectory)
+      let scratchDirectoryPath = try? AbsolutePath(validating: scratchDirectory, relativeTo: AbsolutePath(projectRoot))
     {
       location.scratchDirectory = scratchDirectoryPath
     }
diff --git a/Tests/BuildSystemIntegrationTests/SwiftPMBuildSystemTests.swift b/Tests/BuildSystemIntegrationTests/SwiftPMBuildSystemTests.swift
index 4764d84f..fa4efb0f 100644
--- a/Tests/BuildSystemIntegrationTests/SwiftPMBuildSystemTests.swift
+++ b/Tests/BuildSystemIntegrationTests/SwiftPMBuildSystemTests.swift
@@ -90,6 +90,43 @@ final class SwiftPMBuildSystemTests: XCTestCase {
     }
   }
 
+  func testRelativeScratchPath() async throws {
+    try await withTestScratchDir { tempDir in
+      try localFileSystem.createFiles(
+        root: tempDir,
+        files: [
+          "pkg/Sources/lib/a.swift": "",
+          "pkg/Package.swift": """
+          // swift-tools-version:4.2
+          import PackageDescription
+          let package = Package(
+            name: "a",
+            targets: [.target(name: "lib")]
+          )
+          """,
+        ]
+      )
+      let packageRoot = tempDir.appending(component: "pkg")
+      let options = SourceKitLSPOptions(
+        swiftPM: .init(
+          scratchPath: "non_default_relative_build_path"
+        ),
+        backgroundIndexing: false
+      )
+      let swiftpmBuildSystem = try await SwiftPMBuildSystem(
+        projectRoot: packageRoot,
+        toolchainRegistry: .forTesting,
+        options: options,
+        connectionToSourceKitLSP: LocalConnection(receiverName: "dummy"),
+        testHooks: SwiftPMTestHooks()
+      )
+
+      let dataPath = await swiftpmBuildSystem.destinationBuildParameters.dataPath
+      let expectedScratchPath = packageRoot.appending(component: try XCTUnwrap(options.swiftPMOrDefault.scratchPath))
+      XCTAssertTrue(AbsolutePath(dataPath).isDescendant(of: expectedScratchPath))
+    }
+  }
+
   func testBasicSwiftArgs() async throws {
     try await SkipUnless.swiftpmStoresModulesInSubdirectory()
     try await withTestScratchDir { tempDir in