diff --git a/examples/tests/stacks/mixins/stage/test2.yaml b/examples/tests/stacks/mixins/stage/test2.yaml
new file mode 100644
index 000000000..0ad7c63dc
--- /dev/null
+++ b/examples/tests/stacks/mixins/stage/test2.yaml
@@ -0,0 +1,8 @@
+# yaml-language-server: $schema=https://atmos.tools/schemas/atmos/atmos-manifest/1.0/atmos-manifest.json
+
+vars:
+  stage: test-2
+
+settings:
+  config:
+    is_prod: false
diff --git a/examples/tests/stacks/orgs/cp/tenant1/test2/_defaults.yaml b/examples/tests/stacks/orgs/cp/tenant1/test2/_defaults.yaml
new file mode 100644
index 000000000..d32ce9f16
--- /dev/null
+++ b/examples/tests/stacks/orgs/cp/tenant1/test2/_defaults.yaml
@@ -0,0 +1,5 @@
+# yaml-language-server: $schema=https://atmos.tools/schemas/atmos/atmos-manifest/1.0/atmos-manifest.json
+
+import:
+  - mixins/stage/test2
+  - ../_defaults # validate relative paths
diff --git a/examples/tests/stacks/orgs/cp/tenant1/test2/us-east-2.yaml b/examples/tests/stacks/orgs/cp/tenant1/test2/us-east-2.yaml
new file mode 100644
index 000000000..8c42471da
--- /dev/null
+++ b/examples/tests/stacks/orgs/cp/tenant1/test2/us-east-2.yaml
@@ -0,0 +1,5 @@
+# yaml-language-server: $schema=https://atmos.tools/schemas/atmos/atmos-manifest/1.0/atmos-manifest.json
+
+import:
+  - mixins/region/us-east-2
+  - ./_defaults # validate relative paths
diff --git a/examples/tests/stacks/orgs/cp/tenant1/test2/us-west-1.yaml b/examples/tests/stacks/orgs/cp/tenant1/test2/us-west-1.yaml
new file mode 100644
index 000000000..c1e3b3864
--- /dev/null
+++ b/examples/tests/stacks/orgs/cp/tenant1/test2/us-west-1.yaml
@@ -0,0 +1,5 @@
+# yaml-language-server: $schema=https://atmos.tools/schemas/atmos/atmos-manifest/1.0/atmos-manifest.json
+
+import:
+  - path: mixins/region/us-west-1
+  - path: ./_defaults # validate relative paths using the `path` field
diff --git a/internal/exec/stack_processor_utils.go b/internal/exec/stack_processor_utils.go
index d2b9cd9ce..adc022a05 100644
--- a/internal/exec/stack_processor_utils.go
+++ b/internal/exec/stack_processor_utils.go
@@ -1743,11 +1743,29 @@ func FindComponentDependenciesLegacy(
 	return unique, nil
 }
 
+// resolveRelativePath checks if a path is relative to the current directory and if so,
+// resolves it relative to the current file's directory
+func resolveRelativePath(path string, currentFilePath string) string {
+	if path == "" {
+		return path
+	}
+
+	// Check if the path starts with "." or ".."
+	firstElement := filepath.Clean(strings.Split(path, string(filepath.Separator))[0])
+	if firstElement == "." || firstElement == ".." {
+		// Join the current local path with the current stack file path
+		baseDir := filepath.Dir(currentFilePath)
+		result := filepath.Clean(filepath.Join(baseDir, path))
+		return result
+	}
+	return path
+}
+
 // ProcessImportSection processes the `import` section in stack manifests
-// The `import` section` can be of the following types:
-// 1. list of `StackImport` structs
-// 2. list of strings
-// 3. List of strings and `StackImport` structs in the same file
+// The `import` section can contain:
+// 1. Project-relative paths (e.g. "mixins/region/us-east-2")
+// 2. Paths relative to the current stack file (e.g. "./_defaults")
+// 3. StackImport structs containing either of the above path types (e.g. "path: mixins/region/us-east-2")
 func ProcessImportSection(stackMap map[string]any, filePath string) ([]schema.StackImport, error) {
 	stackImports, ok := stackMap[cfg.ImportSectionName]
 
@@ -1773,6 +1791,7 @@ func ProcessImportSection(stackMap map[string]any, filePath string) ([]schema.St
 		var importObj schema.StackImport
 		err := mapstructure.Decode(imp, &importObj)
 		if err == nil {
+			importObj.Path = resolveRelativePath(importObj.Path, filePath)
 			result = append(result, importObj)
 			continue
 		}
@@ -1786,6 +1805,7 @@ func ProcessImportSection(stackMap map[string]any, filePath string) ([]schema.St
 			return nil, fmt.Errorf("invalid empty import in the file '%s'", filePath)
 		}
 
+		s = resolveRelativePath(s, filePath)
 		result = append(result, schema.StackImport{Path: s})
 	}
 
diff --git a/pkg/stack/stack_processor_test.go b/pkg/stack/stack_processor_test.go
index e7c39d26d..4c5745cba 100644
--- a/pkg/stack/stack_processor_test.go
+++ b/pkg/stack/stack_processor_test.go
@@ -19,6 +19,8 @@ func TestStackProcessor(t *testing.T) {
 		"../../examples/tests/stacks/orgs/cp/tenant1/prod/us-east-2.yaml",
 		"../../examples/tests/stacks/orgs/cp/tenant1/staging/us-east-2.yaml",
 		"../../examples/tests/stacks/orgs/cp/tenant1/test1/us-east-2.yaml",
+		"../../examples/tests/stacks/orgs/cp/tenant1/test2/us-east-2.yaml",
+		"../../examples/tests/stacks/orgs/cp/tenant1/test2/us-west-1.yaml",
 	}
 
 	processStackDeps := true
@@ -50,15 +52,16 @@ func TestStackProcessor(t *testing.T) {
 	)
 
 	assert.Nil(t, err)
-	assert.Equal(t, 4, len(listResult))
-	assert.Equal(t, 4, len(mapResult))
+	assert.Equal(t, 6, len(listResult))
+	assert.Equal(t, 6, len(mapResult))
 
 	mapResultKeys := u.StringKeysFromMap(mapResult)
 	assert.Equal(t, "orgs/cp/tenant1/dev/us-east-2", mapResultKeys[0])
 	assert.Equal(t, "orgs/cp/tenant1/prod/us-east-2", mapResultKeys[1])
 	assert.Equal(t, "orgs/cp/tenant1/staging/us-east-2", mapResultKeys[2])
 	assert.Equal(t, "orgs/cp/tenant1/test1/us-east-2", mapResultKeys[3])
-
+	assert.Equal(t, "orgs/cp/tenant1/test2/us-east-2", mapResultKeys[4])
+	assert.Equal(t, "orgs/cp/tenant1/test2/us-west-1", mapResultKeys[5])
 	mapConfig1, err := u.UnmarshalYAML[schema.AtmosSectionMapType](listResult[0])
 	assert.Nil(t, err)