diff --git a/NEWS.md b/NEWS.md
index 931db0ad1081f..62007e0e04bc9 100644
--- a/NEWS.md
+++ b/NEWS.md
@@ -102,6 +102,7 @@ Standard library changes
 
 * The `@test_broken` macro (or `@test` with `broken=true`) now complains if the test expression returns a
   non-boolean value in the same way as a non-broken test. ([#47804])
+* When a call to `@test` fails or errors inside a function, a larger stacktrace is now printed such that the location of the test within a `@testset` can be retrieved ([#49451])
 
 #### Dates
 
diff --git a/stdlib/Test/src/Test.jl b/stdlib/Test/src/Test.jl
index 0253b5a42520c..48b37ef8047fe 100644
--- a/stdlib/Test/src/Test.jl
+++ b/stdlib/Test/src/Test.jl
@@ -47,23 +47,56 @@ const FAIL_FAST = Ref{Bool}(false)
 
 # Backtrace utility functions
 function ip_has_file_and_func(ip, file, funcs)
-    return any(fr -> (string(fr.file) == file && fr.func in funcs), StackTraces.lookup(ip))
+    return any(fr -> (in_file(fr, file) && fr.func in funcs), StackTraces.lookup(ip))
 end
+in_file(frame, file) = string(frame.file) == file
 
-function scrub_backtrace(bt)
+function test_location(bt, file_ts, file_t)
+    if (isnothing(file_ts) || isnothing(file_t))
+        return macrocall_location(bt, something(file_ts, @__FILE__))
+    else
+        return test_callsite(bt, file_ts, file_t)
+    end
+end
+
+function test_callsite(bt, file_ts, file_t)
+    # We avoid duplicate calls to `StackTraces.lookup`, as it is an expensive call.
+    # For that, we retrieve locations from lower to higher stack elements
+    # and only traverse parts of the backtrace which we haven't traversed before.
+    # The order will always be <internal functions> -> `@test` -> `@testset`.
+    internal = macrocall_location(bt, @__FILE__)::Int
+    test = internal - 1 + findfirst(ip -> any(frame -> in_file(frame, file_t), StackTraces.lookup(ip)), @view bt[internal:end])::Int
+    testset = test - 1 + macrocall_location(@view(bt[test:end]), file_ts)::Int
+
+    # If stacktrace locations differ, include frames until the `@testset` appears.
+    test != testset && return testset
+    # `@test` and `@testset` occurred at the same stacktrace location.
+    # This may happen if `@test` occurred directly in scope of the testset,
+    # or if `@test` occurred in a function that has been inlined in the testset.
+    frames = StackTraces.lookup(bt[testset])
+    outer_frame = findfirst(frame -> in_file(frame, file_ts) && frame.func == Symbol("macro expansion"), frames)::Int
+    # The `@test` call occurred directly in scope of a `@testset`.
+    # The __source__ from `@test` will be printed in the test message upon failure.
+    # There is no need to include more frames, but always include at least the internal macrocall location in the stacktrace.
+    in_file(frames[outer_frame], file_t) && return internal
+    # The `@test` call was inlined, so we still need to include the callsite.
+    return testset
+end
+
+macrocall_location(bt, file) = findfirst(ip -> ip_has_file_and_func(ip, file, (Symbol("macro expansion"),)), bt)
+
+function scrub_backtrace(bt, file_ts, file_t)
     do_test_ind = findfirst(ip -> ip_has_file_and_func(ip, @__FILE__, (:do_test, :do_test_throws)), bt)
     if do_test_ind !== nothing && length(bt) > do_test_ind
         bt = bt[do_test_ind + 1:end]
     end
-    name_ind = findfirst(ip -> ip_has_file_and_func(ip, @__FILE__, (Symbol("macro expansion"),)), bt)
-    if name_ind !== nothing && length(bt) != 0
-        bt = bt[1:name_ind]
-    end
+    stop_at = test_location(bt, file_ts, file_t)
+    !isnothing(stop_at) && !isempty(bt) && return bt[1:stop_at]
     return bt
 end
 
-function scrub_exc_stack(stack)
-    return Any[ (x[1], scrub_backtrace(x[2]::Vector{Union{Ptr{Nothing},Base.InterpreterIP}})) for x in stack ]
+function scrub_exc_stack(stack, file_ts, file_t)
+    return Any[ (x[1], scrub_backtrace(x[2]::Vector{Union{Ptr{Nothing},Base.InterpreterIP}}, file_ts, file_t)) for x in stack ]
 end
 
 # define most of the test infrastructure without type specialization
@@ -185,7 +218,7 @@ struct Error <: Result
 
     function Error(test_type::Symbol, orig_expr, value, bt, source::LineNumberNode)
         if test_type === :test_error
-            bt = scrub_exc_stack(bt)
+            bt = scrub_exc_stack(bt, nothing, extract_file(source))
         end
         if test_type === :test_error || test_type === :nontest_error
             bt_str = try # try the latest world for this, since we might have eval'd new code for show
@@ -1013,8 +1046,9 @@ mutable struct DefaultTestSet <: AbstractTestSet
     time_start::Float64
     time_end::Union{Float64,Nothing}
     failfast::Bool
+    file::Union{String,Nothing}
 end
-function DefaultTestSet(desc::AbstractString; verbose::Bool = false, showtiming::Bool = true, failfast::Union{Nothing,Bool} = nothing)
+function DefaultTestSet(desc::AbstractString; verbose::Bool = false, showtiming::Bool = true, failfast::Union{Nothing,Bool} = nothing, source = nothing)
     if isnothing(failfast)
         # pass failfast state into child testsets
         parent_ts = get_testset()
@@ -1024,8 +1058,11 @@ function DefaultTestSet(desc::AbstractString; verbose::Bool = false, showtiming:
             failfast = false
         end
     end
-    return DefaultTestSet(String(desc)::String, [], 0, false, verbose, showtiming, time(), nothing, failfast)
+    return DefaultTestSet(String(desc)::String, [], 0, false, verbose, showtiming, time(), nothing, failfast, extract_file(source))
 end
+extract_file(source::LineNumberNode) = extract_file(source.file)
+extract_file(file::Symbol) = string(file)
+extract_file(::Nothing) = nothing
 
 struct FailFastError <: Exception end
 
@@ -1043,7 +1080,7 @@ function record(ts::DefaultTestSet, t::Union{Fail, Error}; print_result::Bool=TE
         if !(t isa Error) || t.test_type !== :test_interrupted
             print(t)
             if !isa(t, Error) # if not gets printed in the show method
-                Base.show_backtrace(stdout, scrub_backtrace(backtrace()))
+                Base.show_backtrace(stdout, scrub_backtrace(backtrace(), ts.file, extract_file(t.source)))
             end
             println()
         end
@@ -1489,7 +1526,11 @@ function testset_beginend_call(args, tests, source)
     ex = quote
         _check_testset($testsettype, $(QuoteNode(testsettype.args[1])))
         local ret
-        local ts = $(testsettype)($desc; $options...)
+        local ts = if ($testsettype === $DefaultTestSet) && $(isa(source, LineNumberNode))
+            $(testsettype)($desc; source=$(QuoteNode(source.file)), $options...)
+        else
+            $(testsettype)($desc; $options...)
+        end
         push_testset(ts)
         # we reproduce the logic of guardseed, but this function
         # cannot be used as it changes slightly the semantic of @testset,
@@ -1585,7 +1626,11 @@ function testset_forloop(args, testloop, source)
             copy!(RNG, tmprng)
 
         end
-        ts = $(testsettype)($desc; $options...)
+        ts = if ($testsettype === $DefaultTestSet) && $(isa(source, LineNumberNode))
+            $(testsettype)($desc; source=$(QuoteNode(source.file)), $options...)
+        else
+            $(testsettype)($desc; $options...)
+        end
         push_testset(ts)
         first_iteration = false
         try
diff --git a/stdlib/Test/test/runtests.jl b/stdlib/Test/test/runtests.jl
index ac643e0ccfca2..0388e2107e098 100644
--- a/stdlib/Test/test/runtests.jl
+++ b/stdlib/Test/test/runtests.jl
@@ -722,6 +722,115 @@ end
     rm(f; force=true)
 end
 
+@testset "provide informative location in backtrace for test failures" begin
+    win2unix(filename) = replace(filename, "\\" => '/')
+    utils = win2unix(tempname())
+    write(utils,
+    """
+    function test_properties2(value)
+        @test isodd(value)
+    end
+    """)
+
+    included = win2unix(tempname())
+    write(included,
+    """
+    @testset "Other tests" begin
+        @test 1 + 1 == 3
+        test_properties2(2)
+    end
+    test_properties2(8)
+
+    # Test calls to `@test` and `@testset` with no file/lineno information (__source__ == nothing).
+    eval(Expr(:macrocall, Symbol("@test"), nothing, :false))
+    eval(Expr(:macrocall, Symbol("@testset"), nothing, "Testset without source", quote
+        @test false
+        @test error("failed")
+    end))
+    """)
+
+    runtests = win2unix(tempname())
+    write(runtests,
+    """
+    using Test
+
+    include("$utils")
+
+    function test_properties(value)
+        @test isodd(value)
+    end
+
+    @testset "Tests" begin
+        test_properties(8)
+        @noinline test_properties(8)
+        test_properties2(8)
+
+        include("$included")
+    end
+    """)
+    msg = read(pipeline(ignorestatus(`$(Base.julia_cmd()) --startup-file=no --color=no $runtests`), stderr=devnull), String)
+    msg = win2unix(msg)
+    regex = r"((?:Tests|Other tests|Testset without source): Test Failed (?:.|\n)*?)\n\nStacktrace:(?:.|\n)*?(?=\n(?:Tests|Other tests))"
+    failures = map(eachmatch(regex, msg)) do m
+        m = match(r"(Tests|Other tests|Testset without source): .*? at (.*?)\n  Expression: (.*)(?:.|\n)*\n+Stacktrace:\n((?:.|\n)*)", m.match)
+        (; testset = m[1], source = m[2], ex = m[3], stacktrace = m[4])
+    end
+    @test length(failures) == 8 # 8 failed tests
+    @test count(contains("Error During Test"), split(msg, '\n')) == 1 # 1 error
+    test_properties_macro_source = runtests * ":6"
+    test_properties2_macro_source = utils * ":2"
+
+    fail = failures[1]; lines = split(fail.stacktrace, '\n')
+    @test length(lines)/2 ≤ 6
+    @test fail.testset == "Tests" && fail.source == test_properties_macro_source && fail.ex == "isodd(value)"
+    @test count(contains(runtests * ":10"), lines) == 2 # @testset + test
+
+    fail = failures[2]; lines = split(fail.stacktrace, '\n')
+    @test length(lines)/2 ≤ 6
+    @test fail.testset == "Tests" && fail.source == test_properties_macro_source && fail.ex == "isodd(value)"
+    @test count(contains(runtests * ":10"), lines) == 1 # @testset
+    @test count(contains(runtests * ":11"), lines) == 1 # test
+
+    fail = failures[3]; lines = split(fail.stacktrace, '\n')
+    @test length(lines)/2 ≤ 6
+    @test fail.testset == "Tests" && fail.source == test_properties2_macro_source && fail.ex == "isodd(value)"
+    @test count(contains(runtests * ":10"), lines) == 1 # @testset
+    @test count(contains(runtests * ":12"), lines) == 1 # test
+
+    fail = failures[4]; lines = split(fail.stacktrace, '\n')
+    @test length(lines)/2 ≤ 5
+    @test fail.testset == "Other tests" && fail.source == included * ":2" && fail.ex == "1 + 1 == 3"
+    @test count(contains(included * ":2"), lines) == 2 # @testset + test
+    @test count(contains(runtests * ":10"), lines) == 0 # @testset (stop at the innermost testset)
+
+    fail = failures[5]; lines = split(fail.stacktrace, '\n')
+    @test length(lines)/2 ≤ 6
+    @test fail.testset == "Other tests" && fail.source == test_properties2_macro_source && fail.ex == "isodd(value)"
+    @test count(contains(included * ":2"), lines) == 1 # @testset
+    @test count(contains(included * ":3"), lines) == 1 # test
+    @test count(contains(runtests * ":10"), lines) == 0 # @testset (stop at the innermost testset)
+
+    fail = failures[6]; lines = split(fail.stacktrace, '\n')
+    @test length(lines)/2 ≤ 8
+    @test fail.testset == "Tests" && fail.source == test_properties2_macro_source && fail.ex == "isodd(value)"
+    @test count(contains(runtests * ":10"), lines) == 1 # @testset
+    @test count(contains(runtests * ":14"), lines) == 1 # include
+    @test count(contains(included * ":5"), lines) == 1 # test
+
+    fail = failures[7]; lines = split(fail.stacktrace, '\n')
+    @test length(lines)/2 ≤ 9
+    @test fail.testset == "Tests" && fail.source == "none:0" && fail.ex == "false"
+    @test count(contains(runtests * ":10"), lines) == 1 # @testset
+    @test count(contains(runtests * ":14"), lines) == 1 # include
+    @test count(contains(included * ":8"), lines) == 1 # test
+
+    fail = failures[8]; lines = split(fail.stacktrace, '\n')
+    @test length(lines)/2 ≤ 5
+    @test fail.testset == "Testset without source" && fail.source == included * ":10" && fail.ex == "false"
+    @test count(contains(included * ":10"), lines) == 2 # @testset + test
+    @test count(contains(runtests * ":10"), lines) == 0 # @testset (stop at the innermost testset)
+end
+
 let io = IOBuffer()
     exc = Test.TestSetException(1,2,3,4,Vector{Union{Test.Error, Test.Fail}}())
     Base.showerror(io, exc, backtrace())