diff --git a/.changeset/gorgeous-clocks-leave.md b/.changeset/gorgeous-clocks-leave.md
new file mode 100644
index 000000000..de81c9106
--- /dev/null
+++ b/.changeset/gorgeous-clocks-leave.md
@@ -0,0 +1,5 @@
+---
+'astro': patch
+---
+
+Updates Astro.resolve to return project-relative paths
diff --git a/packages/astro/src/runtime/server/index.ts b/packages/astro/src/runtime/server/index.ts
index 07acb0ba0..010474b2b 100644
--- a/packages/astro/src/runtime/server/index.ts
+++ b/packages/astro/src/runtime/server/index.ts
@@ -2,6 +2,7 @@ import type { AstroComponentMetadata, Renderer } from '../../@types/astro';
 import type { AstroGlobalPartial, SSRResult, SSRElement } from '../../@types/astro';
 
 import shorthash from 'shorthash';
+import { pathToFileURL } from 'url';
 import { extractDirectives, generateHydrateScript } from './hydration.js';
 import { serializeListValue } from './util.js';
 export { createMetadata } from './metadata.js';
@@ -286,15 +287,22 @@ function createFetchContentFn(url: URL) {
 
 // This is used to create the top-level Astro global; the one that you can use
 // Inside of getStaticPaths.
-export function createAstro(fileURLStr: string, site: string): AstroGlobalPartial {
+export function createAstro(fileURLStr: string, site: string, projectRootStr: string): AstroGlobalPartial {
   const url = new URL(fileURLStr);
+  const projectRoot = projectRootStr === '.' ? pathToFileURL(process.cwd()) : new URL(projectRootStr);
   const fetchContent = createFetchContentFn(url);
   return {
     site: new URL(site),
     fetchContent,
     // INVESTIGATE is there a use-case for multi args?
     resolve(...segments: string[]) {
-      return segments.reduce((u, segment) => new URL(segment, u), url).pathname;
+      let resolved = segments.reduce((u, segment) => new URL(segment, u), url).pathname;
+      // When inside of project root, remove the leading path so you are
+      // left with only `/src/images/tower.png`
+      if (resolved.startsWith(projectRoot.pathname)) {
+        resolved = '/' + resolved.substr(projectRoot.pathname.length);
+      }
+      return resolved;
     },
   };
 }
diff --git a/packages/astro/src/vite-plugin-astro/index.ts b/packages/astro/src/vite-plugin-astro/index.ts
index 6f6ebef78..6ec16db2f 100644
--- a/packages/astro/src/vite-plugin-astro/index.ts
+++ b/packages/astro/src/vite-plugin-astro/index.ts
@@ -57,6 +57,7 @@ export default function astro({ config, devServer }: AstroPluginOptions): vite.P
         // result passed to esbuild, but also available in the catch handler.
         tsResult = await transform(source, {
           as: isPage ? 'document' : 'fragment',
+          projectRoot: config.projectRoot.toString(),
           site: config.buildOptions.site,
           sourcefile: id,
           sourcemap: 'both',
diff --git a/packages/astro/src/vite-plugin-build-html/index.ts b/packages/astro/src/vite-plugin-build-html/index.ts
index cabc5e0bd..7650c0224 100644
--- a/packages/astro/src/vite-plugin-build-html/index.ts
+++ b/packages/astro/src/vite-plugin-build-html/index.ts
@@ -69,6 +69,7 @@ export function rollupPluginAstroBuildHTML(options: PluginOptions): VitePlugin {
       for (const [component, pageData] of Object.entries(allPages)) {
         const [renderers, mod] = pageData.preload;
 
+        // Hydrated components are statically identified.
         for (const path of mod.$$metadata.getAllHydratedComponentPaths()) {
           jsInput.add(path);
         }
@@ -138,6 +139,9 @@ export function rollupPluginAstroBuildHTML(options: PluginOptions): VitePlugin {
               const src = getAttribute(node, 'src');
               if (src?.startsWith(srcRoot) && !astroAssetMap.has(src)) {
                 astroAssetMap.set(src, fs.readFile(new URL(`file://${src}`)));
+              } else if (src?.startsWith(srcRootWeb) && !astroAssetMap.has(src)) {
+                const resolved = new URL('.' + src, astroConfig.projectRoot);
+                astroAssetMap.set(src, fs.readFile(resolved));
               }
             }
 
@@ -146,6 +150,9 @@ export function rollupPluginAstroBuildHTML(options: PluginOptions): VitePlugin {
               for (const { url } of candidates) {
                 if (url.startsWith(srcRoot) && !astroAssetMap.has(url)) {
                   astroAssetMap.set(url, fs.readFile(new URL(`file://${url}`)));
+                } else if (url.startsWith(srcRootWeb) && !astroAssetMap.has(url)) {
+                  const resolved = new URL('.' + url, astroConfig.projectRoot);
+                  astroAssetMap.set(url, fs.readFile(resolved));
                 }
               }
             }
@@ -347,7 +354,11 @@ export function rollupPluginAstroBuildHTML(options: PluginOptions): VitePlugin {
             }
             remove(script);
           } else if (isInSrcDirectory(script, 'src', srcRoot, srcRootWeb)) {
-            const src = getAttribute(script, 'src');
+            let src = getAttribute(script, 'src');
+            // If this is projectRoot relative, get the fullpath to match the facadeId.
+            if (src?.startsWith(srcRootWeb)) {
+              src = new URL('.' + src, astroConfig.projectRoot).pathname;
+            }
             // On windows the facadeId doesn't start with / but does not Unix :/
             if (src && (facadeIdMap.has(src) || facadeIdMap.has(src.substr(1)))) {
               const assetRootPath = '/' + (facadeIdMap.get(src) || facadeIdMap.get(src.substr(1)));
diff --git a/packages/astro/src/vite-plugin-markdown/index.ts b/packages/astro/src/vite-plugin-markdown/index.ts
index b3494e126..0d868a7cd 100644
--- a/packages/astro/src/vite-plugin-markdown/index.ts
+++ b/packages/astro/src/vite-plugin-markdown/index.ts
@@ -52,7 +52,13 @@ ${setup}`.trim();
         }
 
         // Transform from `.astro` to valid `.ts`
-        let { code: tsResult } = await transform(astroResult, { sourcefile: id, sourcemap: 'inline', internalURL: 'astro/internal' });
+        let { code: tsResult } = await transform(astroResult, {
+          projectRoot: config.projectRoot.toString(),
+          site: config.buildOptions.site,
+          sourcefile: id,
+          sourcemap: 'inline',
+          internalURL: 'astro/internal',
+        });
 
         tsResult = `\nexport const metadata = ${JSON.stringify(metadata)};
 export const frontmatter = ${JSON.stringify(content)};