diff --git a/apps/common/lib/lexical/ast.ex b/apps/common/lib/lexical/ast.ex
index 85027d308..2a47e09c5 100644
--- a/apps/common/lib/lexical/ast.ex
+++ b/apps/common/lib/lexical/ast.ex
@@ -463,17 +463,18 @@ defmodule Lexical.Ast do
     |> expand_aliases(document, quoted_document, position)
   end
 
-  def expand_aliases(
-        [first | rest] = segments,
-        %Document{} = document,
-        quoted_document,
-        %Position{} = position
-      ) do
+  def expand_aliases(segments, %Document{} = document, quoted_document, %Position{} = position)
+      when is_list(segments) do
     with {:ok, aliases_mapping} <- Aliases.at(document, quoted_document, position),
-         {:ok, resolved} <- Map.fetch(aliases_mapping, first) do
-      {:ok, Module.concat([resolved | rest])}
+         {:ok, resolved} <- resolve_alias(segments, aliases_mapping) do
+      {:ok, Module.concat(resolved)}
     else
-      _ -> {:ok, Module.concat(segments)}
+      _ ->
+        if Enum.all?(segments, &is_atom/1) do
+          {:ok, Module.concat(segments)}
+        else
+          :error
+        end
     end
   end
 
@@ -482,7 +483,39 @@ defmodule Lexical.Ast do
     :error
   end
 
+  # Expands aliases given the rules in the special form
+  # https://hexdocs.pm/elixir/1.13.4/Kernel.SpecialForms.html#__aliases__/1
+  def reify_alias(current_module, [:"Elixir" | _] = reified) do
+    [current_module | reified]
+  end
+
+  def reify_alias(current_module, [:__MODULE__ | rest]) do
+    [current_module | rest]
+  end
+
+  def reify_alias(current_module, [atom | _rest] = reified) when is_atom(atom) do
+    [current_module | reified]
+  end
+
+  def reify_alias(current_module, [unreified | rest]) do
+    env = %Macro.Env{module: current_module}
+    reified = Macro.expand(unreified, env)
+
+    [reified | rest]
+  end
+
   # private
+  defp resolve_alias([first | _] = segments, aliases_mapping) when is_tuple(first) do
+    with {:ok, current_module} <- Map.fetch(aliases_mapping, :__MODULE__) do
+      {:ok, reify_alias(current_module, segments)}
+    end
+  end
+
+  defp resolve_alias([first | rest], aliases_mapping) do
+    with {:ok, resolved} <- Map.fetch(aliases_mapping, first) do
+      {:ok, [resolved | rest]}
+    end
+  end
 
   defp do_string_to_quoted(string) when is_binary(string) do
     Code.string_to_quoted(string,
diff --git a/apps/common/lib/lexical/ast/aliases.ex b/apps/common/lib/lexical/ast/aliases.ex
index 5b1765e69..e05184bf4 100644
--- a/apps/common/lib/lexical/ast/aliases.ex
+++ b/apps/common/lib/lexical/ast/aliases.ex
@@ -71,6 +71,7 @@ defmodule Lexical.Ast.Aliases do
   end
 
   defmodule Reducer do
+    alias Lexical.Ast
     defstruct scopes: []
 
     def new do
@@ -106,7 +107,7 @@ defmodule Lexical.Ast.Aliases do
             module_name
 
           current_module ->
-            Module.split(current_module) ++ module_name
+            Ast.reify_alias(current_module, module_name)
         end
 
       current_module_alias =
diff --git a/apps/common/lib/lexical/ast/module.ex b/apps/common/lib/lexical/ast/module.ex
index fe37c1d2e..20948809a 100644
--- a/apps/common/lib/lexical/ast/module.ex
+++ b/apps/common/lib/lexical/ast/module.ex
@@ -6,8 +6,26 @@ defmodule Lexical.Ast.Module do
   @doc """
   Formats a module name as a string.
   """
-  @spec name(module()) :: String.t()
-  def name(module) when is_atom(module) do
-    module |> to_string() |> String.replace_prefix("Elixir.", "")
+  @spec name(module() | Macro.t() | String.t()) :: String.t()
+  def name([{:__MODULE__, _, _} | rest]) do
+    [__MODULE__ | rest]
+    |> Module.concat()
+    |> name()
+  end
+
+  def name(module_name) when is_list(module_name) do
+    module_name
+    |> Module.concat()
+    |> name()
+  end
+
+  def name(module_name) when is_binary(module_name) do
+    module_name
+  end
+
+  def name(module_name) when is_atom(module_name) do
+    module_name
+    |> inspect()
+    |> name()
   end
 end
diff --git a/apps/common/test/lexical/ast/aliases_test.exs b/apps/common/test/lexical/ast/aliases_test.exs
index f5d49b648..4dff32b3e 100644
--- a/apps/common/test/lexical/ast/aliases_test.exs
+++ b/apps/common/test/lexical/ast/aliases_test.exs
@@ -205,6 +205,20 @@ defmodule Lexical.Ast.AliasesTest do
       assert aliases[:Child] == Grandparent.Parent.Child
       assert aliases[:__MODULE__] == Grandparent.Parent.Child
     end
+
+    test "with a child that has an explicit parent" do
+      {:ok, aliases} =
+        ~q[
+          defmodule Parent do
+            defmodule __MODULE__.Child do
+              |
+            end
+          end
+        ]
+        |> aliases_at_cursor()
+
+      assert aliases[:__MODULE__] == Parent.Child
+    end
   end
 
   describe "alias scopes" do
diff --git a/apps/common/test/lexical/ast_test.exs b/apps/common/test/lexical/ast_test.exs
index a8030b1be..23f12ec05 100644
--- a/apps/common/test/lexical/ast_test.exs
+++ b/apps/common/test/lexical/ast_test.exs
@@ -255,6 +255,23 @@ defmodule Lexical.AstTest do
     end
   end
 
+  describe "expand_aliases/4" do
+    test "works with __MODULE__ aliases" do
+      {position, document} =
+        ~q[
+          defmodule Parent do
+            defmodule __MODULE__.Child do
+              |
+            end
+          end
+        ]
+        |> pop_cursor(as: :document)
+
+      assert {:ok, Parent.Child} =
+               Ast.expand_aliases([quote(do: __MODULE__), nil], document, position)
+    end
+  end
+
   defp ast(s) do
     case Ast.from(s) do
       {:ok, {:__block__, _, [node]}} -> node
diff --git a/apps/remote_control/lib/lexical/remote_control/search/indexer/extractors/module.ex b/apps/remote_control/lib/lexical/remote_control/search/indexer/extractors/module.ex
index a72e4ef00..504edf3b7 100644
--- a/apps/remote_control/lib/lexical/remote_control/search/indexer/extractors/module.ex
+++ b/apps/remote_control/lib/lexical/remote_control/search/indexer/extractors/module.ex
@@ -152,7 +152,7 @@ defmodule Lexical.RemoteControl.Search.Indexer.Extractors.Module do
   defp to_range(%Document{} = document, module_name, {line, column}) do
     module_length =
       module_name
-      |> module_name()
+      |> Ast.Module.name()
       |> String.length()
 
     Range.new(
@@ -160,20 +160,4 @@ defmodule Lexical.RemoteControl.Search.Indexer.Extractors.Module do
       Position.new(document, line, column + module_length)
     )
   end
-
-  defp module_name(module_name) when is_list(module_name) do
-    module_name
-    |> Module.concat()
-    |> module_name()
-  end
-
-  defp module_name(module_name) when is_binary(module_name) do
-    module_name
-  end
-
-  defp module_name(module_name) when is_atom(module_name) do
-    module_name
-    |> inspect()
-    |> module_name()
-  end
 end
diff --git a/apps/remote_control/test/lexical/remote_control/search/indexer/source_test.exs b/apps/remote_control/test/lexical/remote_control/search/indexer/source_test.exs
index ea7601ac6..59ccbad85 100644
--- a/apps/remote_control/test/lexical/remote_control/search/indexer/source_test.exs
+++ b/apps/remote_control/test/lexical/remote_control/search/indexer/source_test.exs
@@ -387,5 +387,24 @@ defmodule Lexical.RemoteControl.Search.Indexer.SourceTest do
       assert child_alias.subtype == :reference
       assert child_alias.subject == Something.Else.Other
     end
+
+    test "works with __MODULE__" do
+      {:ok, [parent, child], _} =
+        ~q[
+          defmodule Parent do
+            defmodule __MODULE__.Child do
+            end
+          end
+        ]
+        |> index()
+
+      assert parent.parent == :root
+      assert parent.type == :module
+      assert parent.subtype == :definition
+
+      assert child.parent == parent.ref
+      assert child.type == :module
+      assert child.subtype == :definition
+    end
   end
 end