diff --git a/CHANGELOG.md b/CHANGELOG.md
index 22fea78af..4a811e34e 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -2,6 +2,9 @@
 
 ## next version
 
+### Changed
+- Support for `XCConfig` project-relative includes https://github.com/xcodeswift/xcproj/pull/238 by @briantkelley
+
 ## 4.1.0
 
 ### Added
diff --git a/Sources/xcproj/XCConfig.swift b/Sources/xcproj/XCConfig.swift
index fd7bd38d1..6dda1b9d8 100644
--- a/Sources/xcproj/XCConfig.swift
+++ b/Sources/xcproj/XCConfig.swift
@@ -29,12 +29,13 @@ final public class XCConfig {
     /// Initializes the XCConfig reading the content from the file at the given path and parsing it.
     ///
     /// - Parameter path: path where the .xcconfig file is.
+    /// - Parameter projectPath: path where the .xcodeproj is, for resolving project-relative includes.
     /// - Throws: an error if the config file cannot be found or it has an invalid format.
-    public init(path: Path) throws {
+    public init(path: Path, projectPath: Path? = nil) throws {
         if !path.exists { throw XCConfigError.notFound(path: path) }
         let fileLines = try path.read().components(separatedBy: "\n")
         self.includes = fileLines
-            .flatMap(XCConfigParser.configFrom(path: path))
+            .flatMap(XCConfigParser.configFrom(path: path, projectPath: projectPath))
         var buildSettings: [String: String] = [:]
         fileLines
             .flatMap(XCConfigParser.settingFrom)
@@ -49,8 +50,9 @@ final class XCConfigParser {
     /// and returns the include path and the config that the include is pointing to.
     ///
     /// - Parameter path: path of the config file that the line belongs to.
+    /// - Parameter projectPath: path where the .xcodeproj is, for resolving project-relative includes.
     /// - Returns: function that parses the line.
-    static func configFrom(path: Path) -> (String) -> (include: Path, config: XCConfig)? {
+    static func configFrom(path: Path, projectPath: Path?) -> (String) -> (include: Path, config: XCConfig)? {
         return { line in
             return includeRegex.matches(in: line,
                                                  options: NSRegularExpression.MatchingOptions(rawValue: 0),
@@ -66,9 +68,17 @@ final class XCConfigParser {
                     let includePath: Path = Path(pathString)
                     var config: XCConfig?
                     if includePath.isRelative {
-                        config = try? XCConfig(path: path.parent() + includePath)
+                        do {
+                            // first try to load the included xcconfig relative to the current xcconfig
+                            config = try XCConfig(path: path.parent() + includePath, projectPath: projectPath)
+                        } catch (XCConfigError.notFound(_)) where projectPath != nil {
+                            // if that fails, try to load the included xcconfig relative to the project
+                            config = try? XCConfig(path: projectPath!.parent() + includePath, projectPath: projectPath)
+                        } catch {
+                            config = nil
+                        }
                     } else {
-                        config = try? XCConfig(path: includePath)
+                        config = try? XCConfig(path: includePath, projectPath: projectPath)
                     }
                     return config.map { (includePath, $0) }
                 }