diff --git a/search/files.go b/search/files.go
index c5c19714..9d415107 100644
--- a/search/files.go
+++ b/search/files.go
@@ -64,7 +64,7 @@ func readFileLines(path string) ([]string, error) {
 	return lines, nil
 }
 
-func readFiles(ctx context.Context, files chan<- file, workspace string) error {
+func readFiles(ctx context.Context, files chan<- file, workspace, subdirectory string) error {
 	defer close(files)
 	ignoreFiles := []string{".gitignore", ".ignore", ".ldignore"}
 	allIgnores := newIgnore(workspace, ignoreFiles)
@@ -108,9 +108,20 @@ func readFiles(ctx context.Context, files chan<- file, workspace string) error {
 			return nil
 		}
 
-		files <- file{path: strings.TrimPrefix(path, workspace+"/"), lines: lines}
+		resolvedPath := resolvePath(path, workspace, subdirectory)
+
+		files <- file{path: resolvedPath, lines: lines}
 		return nil
 	}
 
 	return filepath.Walk(workspace, readFile)
 }
+
+func resolvePath(path, workspace, subdirectory string) string {
+	dir := workspace
+	if subdirectory != "" {
+		dir = strings.TrimSuffix(workspace, "/"+subdirectory)
+	}
+
+	return strings.TrimPrefix(path, dir+"/")
+}
diff --git a/search/files_test.go b/search/files_test.go
index 0b2ea2b0..2694256c 100644
--- a/search/files_test.go
+++ b/search/files_test.go
@@ -11,7 +11,7 @@ import (
 func Test_readFiles(t *testing.T) {
 	t.Run("don't ignore .github by default", func(t *testing.T) {
 		files := make(chan file, 8)
-		err := readFiles(context.Background(), files, "testdata/include-github-files")
+		err := readFiles(context.Background(), files, "testdata/include-github-files", "")
 		require.NoError(t, err)
 		got := []file{}
 		for file := range files {
@@ -33,25 +33,72 @@ func Test_readFiles(t *testing.T) {
 	})
 
 	t.Run("explicitly ignore .github files", func(t *testing.T) {
-		files := make(chan file, 8)
-		err := readFiles(context.Background(), files, "testdata/exclude-github-files")
-		require.NoError(t, err)
-		got := []file{}
-		for file := range files {
-			got = append(got, file)
-			switch file.path {
-			case "fileWithNoRefs":
-				assert.Equal(t, []string{"fileWithNoRefs"}, file.lines)
-			case "fileWithRefs":
-				assert.Equal(t, testFile.lines, file.lines)
-			case "ignoredFiles/included":
-				assert.Equal(t, []string{"IGNORED BUT INCLUDED"}, file.lines)
-			case "symlink":
-				assert.Fail(t, "Should not read symlink contents")
-			default:
-				assert.Fail(t, "Read unexpected file", file)
+		t.Run("without subdirectory option", func(t *testing.T) {
+			files := make(chan file, 8)
+			err := readFiles(context.Background(), files, "testdata/exclude-github-files", "")
+			require.NoError(t, err)
+			got := []file{}
+			for file := range files {
+				got = append(got, file)
+				switch file.path {
+				case "fileWithNoRefs":
+					assert.Equal(t, []string{"fileWithNoRefs"}, file.lines)
+				case "fileWithRefs":
+					assert.Equal(t, testFile.lines, file.lines)
+				case "subdir/fileWithNoRefs":
+					assert.Equal(t, []string{"nope"}, file.lines)
+				case "subdir/fileWithRefs":
+					assert.Equal(t, testFileWithSubdir.lines, file.lines)
+				case "ignoredFiles/included":
+					assert.Equal(t, []string{"IGNORED BUT INCLUDED"}, file.lines)
+				case "symlink":
+					assert.Fail(t, "Should not read symlink contents")
+				default:
+					assert.Fail(t, "Read unexpected file", file)
+				}
 			}
-		}
-		assert.Len(t, got, 3, "Expected 3 valid files to have been found")
+			assert.Len(t, got, 5, "Expected 5 valid files to have been found")
+		})
+
+		t.Run("with subdirectory option", func(t *testing.T) {
+			files := make(chan file, 8)
+			err := readFiles(context.Background(), files, "testdata/exclude-github-files/subdir", "subdir")
+			require.NoError(t, err)
+			got := []file{}
+			for file := range files {
+				got = append(got, file)
+				switch file.path {
+				case "subdir/fileWithNoRefs":
+					assert.Equal(t, []string{"nope"}, file.lines)
+				case "subdir/fileWithRefs":
+					assert.Equal(t, testFileWithSubdir.lines, file.lines)
+				default:
+					assert.Fail(t, "Read unexpected file", file)
+				}
+			}
+			assert.Len(t, got, 2, "Expected 2 valid files to have been found")
+		})
 	})
 }
+
+func Test_resolvePath(t *testing.T) {
+	testCases := []struct{ name, path, workspace, subdirectory, expectedPath string }{{
+		name:         "with subdirectory",
+		path:         "/path/to/workspace/subdirectory/internal/file.txt",
+		workspace:    "/path/to/workspace",
+		subdirectory: "subdirectory",
+		expectedPath: "subdirectory/internal/file.txt",
+	}, {
+		name:         "without subdirectory",
+		path:         "/path/to/workspace/file.txt",
+		workspace:    "/path/to/workspace",
+		subdirectory: "",
+		expectedPath: "file.txt",
+	}}
+
+	for _, tc := range testCases {
+		t.Run(tc.name, func(t *testing.T) {
+			require.Equal(t, tc.expectedPath, resolvePath(tc.path, tc.workspace, tc.subdirectory))
+		})
+	}
+}
diff --git a/search/scan.go b/search/scan.go
index 165e7886..ea349f8f 100644
--- a/search/scan.go
+++ b/search/scan.go
@@ -19,7 +19,7 @@ func Scan(opts options.Options, repoParams ld.RepoParams, dir string) (Matcher,
 		searchDir = filepath.Join(dir, opts.Subdirectory)
 	}
 
-	refs, err := SearchForRefs(searchDir, matcher)
+	refs, err := SearchForRefs(searchDir, opts.Subdirectory, matcher)
 	if err != nil {
 		log.Error.Fatalf("error searching for flag key references: %s", err)
 	}
diff --git a/search/search.go b/search/search.go
index c63ec279..a8d33023 100644
--- a/search/search.go
+++ b/search/search.go
@@ -104,6 +104,7 @@ func (f file) aggregateHunksForFlag(projKey, flagKey string, matcher Matcher, li
 func (f file) toHunks(matcher Matcher) *ld.ReferenceHunksRep {
 	hunks := make([]ld.HunkRep, 0)
 	filteredMatchers := make([]ElementMatcher, 0)
+
 	for _, elementSearch := range matcher.Elements {
 		if elementSearch.Dir != "" {
 			matchDir := strings.HasPrefix(f.path, elementSearch.Dir)
@@ -192,7 +193,7 @@ func processFiles(ctx context.Context, files <-chan file, references chan<- ld.R
 	w.Wait()
 }
 
-func SearchForRefs(directory string, matcher Matcher) ([]ld.ReferenceHunksRep, error) {
+func SearchForRefs(directory, subdirectory string, matcher Matcher) ([]ld.ReferenceHunksRep, error) {
 	ctx, cancel := context.WithCancel(context.Background())
 	defer cancel()
 	files := make(chan file)
@@ -200,7 +201,7 @@ func SearchForRefs(directory string, matcher Matcher) ([]ld.ReferenceHunksRep, e
 	// Start workers to process files asynchronously as they are written to the files channel
 	go processFiles(ctx, files, references, matcher)
 
-	err := readFiles(ctx, files, directory)
+	err := readFiles(ctx, files, directory, subdirectory)
 	if err != nil {
 		return nil, err
 	}
diff --git a/search/search_test.go b/search/search_test.go
index b32f0cf7..cb6bee7e 100644
--- a/search/search_test.go
+++ b/search/search_test.go
@@ -48,6 +48,11 @@ var (
 		*withFlagKey(withAliases(makeHunkPtr(5, testFlag2Alias), testFlag2Alias), testFlagKey2),
 	}
 
+	testFileWithSubdir = file{
+		path:  "subdir/fileWithRefs",
+		lines: []string{testFlagKey, testFlagKey2},
+	}
+
 	delimitedTestFlagKey = delimit(testFlagKey, `"`)
 )
 
@@ -386,18 +391,40 @@ func Test_processFiles(t *testing.T) {
 
 func Test_SearchForRefs(t *testing.T) {
 	os.Symlink("testdata/exclude-github-files/fileWithRefs", "testdata/exclude-github-files/symlink")
-	want := []ld.ReferenceHunksRep{{Path: testFile.path}}
-	matcher := Matcher{
-		ctxLines: 0,
-	}
+
+	matcher := Matcher{ctxLines: 0}
 	matcher.Elements = append(matcher.Elements,
 		NewElementMatcher("default", "", "", []string{testFlagKey, testFlagKey2}, nil),
 	)
+
+	t.Run("without subdirectory option finds both files", func(t *testing.T) {
+		actual, err := SearchForRefs("testdata/exclude-github-files", "", matcher)
+		require.NoError(t, err)
+		require.Len(t, actual, 2)
+
+		var foundFirst, foundSecond bool
+		for _, r := range actual {
+			switch r.Path {
+			case testFile.path:
+				foundFirst = true
+			case testFileWithSubdir.path:
+				foundSecond = true
+			default:
+				t.Fatal("found unexpected file " + r.Path)
+			}
+		}
+		require.True(t, foundFirst)
+		require.True(t, foundSecond)
+	})
+
+	t.Run("with subdirectory option finds only the file in the subdirectory", func(t *testing.T) {
+		actual, err := SearchForRefs("testdata/exclude-github-files/subdir", "subdir", matcher)
+		require.NoError(t, err)
+		require.Len(t, actual, 1)
+		require.Equal(t, testFileWithSubdir.path, actual[0].Path)
+	})
+
 	t.Cleanup(func() { os.Remove("testdata/exclude-github-files/symlink") })
-	got, err := SearchForRefs("testdata/exclude-github-files", matcher)
-	require.NoError(t, err)
-	require.Len(t, got, 1)
-	require.Equal(t, want[0].Path, got[0].Path)
 }
 
 func Test_truncateLine(t *testing.T) {
diff --git a/search/testdata/exclude-github-files/subdir/fileWithNoRefs b/search/testdata/exclude-github-files/subdir/fileWithNoRefs
new file mode 100644
index 00000000..1634764a
--- /dev/null
+++ b/search/testdata/exclude-github-files/subdir/fileWithNoRefs
@@ -0,0 +1 @@
+nope
diff --git a/search/testdata/exclude-github-files/subdir/fileWithRefs b/search/testdata/exclude-github-files/subdir/fileWithRefs
new file mode 100644
index 00000000..dea5c807
--- /dev/null
+++ b/search/testdata/exclude-github-files/subdir/fileWithRefs
@@ -0,0 +1,2 @@
+someFlag
+anotherFlag