diff --git a/autoload/ale/path.vim b/autoload/ale/path.vim
index 5595416859..078fee9753 100644
--- a/autoload/ale/path.vim
+++ b/autoload/ale/path.vim
@@ -62,6 +62,36 @@ function! ale#path#FindNearestDirectory(buffer, directory_name) abort
     return ''
 endfunction
 
+" Given a buffer and a filename, find the nearest file or directory by
+" searching upwards through the paths relative to the given buffer.
+function! ale#path#FindNearestFileOrDirectory(buffer, filename) abort
+    let l:buffer_filename = fnamemodify(bufname(a:buffer), ':p')
+    let l:buffer_filename = fnameescape(l:buffer_filename)
+
+    let l:relative_path_file = findfile(a:filename, l:buffer_filename . ';')
+    let l:relative_path_dir = finddir(a:filename, l:buffer_filename . ';')
+
+    " If we find both a file and directory, choose the shorter response by
+    " making the longer one empty instead.
+    if !empty(l:relative_path_file) && !empty(l:relative_path_dir)
+        if strlen(l:relative_path_file) > strlen(l:relative_path_dir)
+            let l:relative_path_dir = ''
+        else
+            let l:relative_path_file = ''
+        endif
+    endif
+
+    if !empty(l:relative_path_file)
+        return fnamemodify(l:relative_path_file, ':p')
+    endif
+
+    if !empty(l:relative_path_dir)
+        return fnamemodify(l:relative_path_dir, ':p')
+    endif
+
+    return ''
+endfunction
+
 " Given a buffer, a string to search for, and a global fallback for when
 " the search fails, look for a file in parent paths, and if that fails,
 " use the global fallback path instead.
diff --git a/test/test-files/top/needle_dir/needle b/test/test-files/top/needle_dir/needle
new file mode 100644
index 0000000000..e69de29bb2
diff --git a/test/test-files/top/needle_dir/target/needle/.gitkeep b/test/test-files/top/needle_dir/target/needle/.gitkeep
new file mode 100644
index 0000000000..e69de29bb2
diff --git a/test/test-files/top/needle_dir/target/query/buffer.txt b/test/test-files/top/needle_dir/target/query/buffer.txt
new file mode 100644
index 0000000000..e69de29bb2
diff --git a/test/test-files/top/needle_file/needle/.gitkeep b/test/test-files/top/needle_file/needle/.gitkeep
new file mode 100644
index 0000000000..e69de29bb2
diff --git a/test/test-files/top/needle_file/target/needle b/test/test-files/top/needle_file/target/needle
new file mode 100644
index 0000000000..e69de29bb2
diff --git a/test/test-files/top/needle_file/target/query/buffer.txt b/test/test-files/top/needle_file/target/query/buffer.txt
new file mode 100644
index 0000000000..e69de29bb2
diff --git a/test/test_nearest_file_search.vader b/test/test_find_nearest_file.vader
similarity index 100%
rename from test/test_nearest_file_search.vader
rename to test/test_find_nearest_file.vader
diff --git a/test/test_find_nearest_file_or_directory.vader b/test/test_find_nearest_file_or_directory.vader
new file mode 100644
index 0000000000..fd5e1c30c2
--- /dev/null
+++ b/test/test_find_nearest_file_or_directory.vader
@@ -0,0 +1,22 @@
+Before:
+  call ale#test#SetDirectory('/testplugin/test')
+
+After:
+  call ale#test#RestoreDirectory()
+
+Execute(We should find a directory when searching and it is closer):
+  call ale#test#SetFilename('test-files/top/needle_dir/target/query/buffer.txt')
+
+  AssertEqual
+  \ ale#path#Simplify(expand('%:p:h:h:h:h:h:h') . '/test-files/top/needle_dir/target/needle/'),
+  \ ale#path#FindNearestFileOrDirectory(bufnr('%'), 'needle')
+
+Execute(We should find a file when searching and it is closer):
+  call ale#test#SetFilename('test-files/top/needle_file/target/query/buffer.txt')
+
+  AssertEqual
+  \ ale#path#Simplify(expand('%:p:h:h:h:h:h:h') . '/test-files/top/needle_file/target/needle'),
+  \ ale#path#FindNearestFileOrDirectory(bufnr('%'), 'needle')
+
+Execute(We shouldn't find anything for files which don't match):
+  AssertEqual '', ale#path#FindNearestFileOrDirectory(bufnr('%'), 'cantfindthis')