diff --git a/packages/babel-core/src/transformation/file/options/build-config-chain.js b/packages/babel-core/src/transformation/file/options/build-config-chain.js
index 0c847f8672..f9b43e3a6b 100644
--- a/packages/babel-core/src/transformation/file/options/build-config-chain.js
+++ b/packages/babel-core/src/transformation/file/options/build-config-chain.js
@@ -95,7 +95,8 @@ class ConfigChainBuilder {
     if (lines.length) {
       this.mergeConfig({
         options: { ignore: lines },
-        loc
+        alias: loc,
+        dirname: path.dirname(loc)
       });
     }
   }
diff --git a/packages/babel-core/test/config-chain.js b/packages/babel-core/test/config-chain.js
new file mode 100644
index 0000000000..7c85714f82
--- /dev/null
+++ b/packages/babel-core/test/config-chain.js
@@ -0,0 +1,101 @@
+var assert = require("assert");
+var path = require("path");
+var buildConfigChain = require("../lib/transformation/file/options/build-config-chain");
+
+function fixture() {
+  var args = [__dirname, "fixtures", "config"];
+  for (var i = 0; i < arguments.length; i ++) {
+    args.push(arguments[i]);
+  }
+  return path.join.apply(path, args);
+}
+
+suite("evaluation", function () {
+  test("dir1", function () {
+    var chain = buildConfigChain({
+      filename: fixture("dir1", "src.js")
+    });
+
+    var expected = [
+      {
+        options: {
+          plugins: [
+            "extended"
+          ]
+        },
+        alias: fixture("extended.babelrc.json"),
+        loc: fixture("extended.babelrc.json"),
+        dirname: fixture()
+      },
+      {
+        options: {
+          plugins: [
+            "root"
+          ]
+        },
+        alias: fixture(".babelrc"),
+        loc: fixture(".babelrc"),
+        dirname: fixture()
+      },
+      {
+        options: {
+          ignore: [
+            "root-ignore"
+          ]
+        },
+        alias: fixture(".babelignore"),
+        loc: fixture(".babelignore"),
+        dirname: fixture()
+      },
+      {
+        options: {
+          filename: fixture("dir1", "src.js")
+        },
+        alias: "base",
+        loc: "base",
+        dirname: fixture("dir1")
+      }
+    ];
+
+    assert.deepEqual(chain, expected);
+  });
+
+  test("dir2", function () {
+    var chain = buildConfigChain({
+      filename: fixture("dir2", "src.js")
+    });
+
+    var expected = [
+      {
+        options: {
+          plugins: [
+            "dir2"
+          ]
+        },
+        alias: fixture("dir2", ".babelrc"),
+        loc: fixture("dir2", ".babelrc"),
+        dirname: fixture("dir2")
+      },
+      {
+        options: {
+          ignore: [
+            "root-ignore"
+          ]
+        },
+        alias: fixture(".babelignore"),
+        loc: fixture(".babelignore"),
+        dirname: fixture()
+      },
+      {
+        options: {
+          filename: fixture("dir2", "src.js")
+        },
+        alias: "base",
+        loc: "base",
+        dirname: fixture("dir2")
+      }
+    ];
+
+    assert.deepEqual(chain, expected);
+  });
+});
diff --git a/packages/babel-core/test/fixtures/config/.babelignore b/packages/babel-core/test/fixtures/config/.babelignore
new file mode 100644
index 0000000000..054b9bf2d3
--- /dev/null
+++ b/packages/babel-core/test/fixtures/config/.babelignore
@@ -0,0 +1 @@
+root-ignore
diff --git a/packages/babel-core/test/fixtures/config/.babelrc b/packages/babel-core/test/fixtures/config/.babelrc
new file mode 100644
index 0000000000..3dc5d1fa19
--- /dev/null
+++ b/packages/babel-core/test/fixtures/config/.babelrc
@@ -0,0 +1,4 @@
+{
+  "plugins": ["root"],
+  "extends": "./extended.babelrc.json"
+}
diff --git a/packages/babel-core/test/fixtures/config/dir1/src.js b/packages/babel-core/test/fixtures/config/dir1/src.js
new file mode 100644
index 0000000000..8b1a393741
--- /dev/null
+++ b/packages/babel-core/test/fixtures/config/dir1/src.js
@@ -0,0 +1 @@
+// empty
diff --git a/packages/babel-core/test/fixtures/config/dir2/.babelrc b/packages/babel-core/test/fixtures/config/dir2/.babelrc
new file mode 100644
index 0000000000..bb094e669b
--- /dev/null
+++ b/packages/babel-core/test/fixtures/config/dir2/.babelrc
@@ -0,0 +1,5 @@
+{
+  "plugins": [
+    "dir2"
+  ]
+}
diff --git a/packages/babel-core/test/fixtures/config/dir2/src.js b/packages/babel-core/test/fixtures/config/dir2/src.js
new file mode 100644
index 0000000000..8b1a393741
--- /dev/null
+++ b/packages/babel-core/test/fixtures/config/dir2/src.js
@@ -0,0 +1 @@
+// empty
diff --git a/packages/babel-core/test/fixtures/config/extended.babelrc.json b/packages/babel-core/test/fixtures/config/extended.babelrc.json
new file mode 100644
index 0000000000..6996c6d74e
--- /dev/null
+++ b/packages/babel-core/test/fixtures/config/extended.babelrc.json
@@ -0,0 +1,5 @@
+{
+  "plugins": [
+    "extended"
+  ]
+}