diff --git a/packages/core/src/__tests__/walk.test.ts b/packages/core/src/__tests__/walk.test.ts
index fef6b41301..7e8c57b537 100644
--- a/packages/core/src/__tests__/walk.test.ts
+++ b/packages/core/src/__tests__/walk.test.ts
@@ -1676,6 +1676,67 @@ describe('context.resolve', () => {
       }),
     });
   });
+
+  it('should use source location derived from resolved schema $id IRI', async () => {
+    const testRuleSet: Oas3RuleSet = {
+      test: vi.fn(() => {
+        return {
+          Schema: vi.fn((schema, { resolve }) => {
+            if (schema.properties?.value?.$ref) {
+              const { location, node } = resolve(schema.properties.value);
+              expect(node).toMatchObject({
+                $id: 'https://example.com/schemas/shared.yaml',
+                type: 'object',
+              });
+              expect(location?.pointer).toEqual('#/');
+              expect(location?.source.absoluteRef).toEqual(
+                'https://example.com/schemas/shared.yaml'
+              );
+            }
+          }),
+        };
+      }),
+    };
+
+    const document = parseYamlToDocument(
+      outdent`
+        openapi: 3.2.0
+        info:
+          title: test
+          version: 1.0.0
+        paths: {}
+        components:
+          schemas:
+            Canonical:
+              $id: 'https://example.com/schemas/shared.yaml'
+              type: object
+            Holder:
+              type: object
+              properties:
+                value:
+                  $ref: '#/components/schemas/Canonical'
+      `,
+      'foobar.yaml'
+    );
+
+    await lintDocument({
+      externalRefResolver: new BaseResolver(),
+      document,
+      config: await createConfig({
+        plugins: [
+          {
+            id: 'test',
+            rules: {
+              oas3: testRuleSet,
+            },
+          },
+        ],
+        rules: {
+          'test/test': 'error',
+        },
+      }),
+    });
+  });
 });
 
 describe('type extensions', () => {
diff --git a/packages/core/src/ref-utils.ts b/packages/core/src/ref-utils.ts
index 03e4e64d24..1a91879c7c 100644
--- a/packages/core/src/ref-utils.ts
+++ b/packages/core/src/ref-utils.ts
@@ -19,6 +19,10 @@ export function isExternalValue(node: unknown) {
   return isPlainObject(node) && typeof node.externalValue === 'string';
 }
 
+export function hasSchemaId(node: unknown): node is { $id: string } {
+  return isPlainObject(node) && typeof node.$id === 'string';
+}
+
 export class Location {
   constructor(
     public source: Source,
@@ -111,6 +115,13 @@ export function resolvePath(base: string, relative: string): string {
   return path.resolve(base, relative);
 }
 
+export function resolveSchemaId(baseAbsoluteRef: string, schemaId: string) {
+  if (isAbsoluteUrl(schemaId) || path.isAbsolute(schemaId)) {
+    return schemaId;
+  }
+  return resolvePath(getDir(baseAbsoluteRef), schemaId);
+}
+
 export function isMappingRef(mapping: string) {
   // TODO: proper detection of mapping refs
   return (
diff --git a/packages/core/src/resolve.ts b/packages/core/src/resolve.ts
index 3a9f25e106..1db1fa4b37 100644
--- a/packages/core/src/resolve.ts
+++ b/packages/core/src/resolve.ts
@@ -13,6 +13,7 @@ import {
   isAbsoluteUrl,
   isAnchor,
   isExternalValue,
+  hasSchemaId,
 } from './ref-utils.js';
 import { isNamedType, SpecExtension, type NormalizedNodeType } from './types/index.js';
 import type { OasRef } from './typings/openapi.js';
@@ -251,6 +252,23 @@ export async function resolveDocument(opts: {
         return;
       }
 
+      const normalizedNodeId = hasSchemaId(node)
+        ? externalRefResolver.resolveExternalRef(rootNodeDocument.source.absoluteRef, node.$id)
+        : undefined;
+
+      if (normalizedNodeId && normalizedNodeId !== nodeAbsoluteRef && node !== rootNode) {
+        const nestedDocument = {
+          source: new Source(
+            normalizedNodeId,
+            rootNodeDocument.source.body,
+            rootNodeDocument.source.mimeType
+          ),
+          parsed: node,
+        };
+        resolveRefsInParallel(node, nestedDocument, '', type);
+        return;
+      }
+
       const nodeId = `${type.name}::${nodeAbsoluteRef}`;
       if (seenNodes.has(nodeId)) {
         return;
diff --git a/packages/core/src/walk.ts b/packages/core/src/walk.ts
index 2e80eea4f7..1c74134c0f 100644
--- a/packages/core/src/walk.ts
+++ b/packages/core/src/walk.ts
@@ -1,8 +1,8 @@
 import type { Config, RuleSeverity } from './config/index.js';
 import { YamlParseError } from './errors/yaml-parse-error.js';
 import type { SpecVersion } from './oas-types.js';
-import { Location, isRef } from './ref-utils.js';
-import type { ResolveError, Source, ResolvedRefMap, Document } from './resolve.js';
+import { Location, isRef, resolveSchemaId, hasSchemaId } from './ref-utils.js';
+import { Source, type ResolveError, type ResolvedRefMap, type Document } from './resolve.js';
 import { isNamedType, SpecExtension, type NormalizedNodeType } from './types/index.js';
 import type { Referenced } from './typings/openapi.js';
 import { getOwn } from './utils/get-own.js';
@@ -151,7 +151,7 @@ export function walkDocument<T extends BaseVisitor>(opts: {
     key: string | number
   ) {
     const resolve: ResolveFn = (ref, from = currentLocation.source.absoluteRef) => {
-      if (!isRef(ref)) return { location, node: ref };
+      if (!isRef(ref)) return { location: currentLocation, node: ref };
       const refId = makeRefId(from, ref.$ref);
       const resolvedRef = resolvedRefMap.get(refId);
       if (!resolvedRef) {
@@ -163,7 +163,16 @@ export function walkDocument<T extends BaseVisitor>(opts: {
 
       const { resolved, node, document, nodePointer, error } = resolvedRef;
       const newLocation = resolved
-        ? new Location(document!.source, nodePointer!)
+        ? hasSchemaId(node)
+          ? new Location(
+              new Source(
+                resolveSchemaId(document!.source.absoluteRef, node.$id),
+                document!.source.body,
+                document!.source.mimeType
+              ),
+              '#/'
+            )
+          : new Location(document!.source, nodePointer!)
         : error instanceof YamlParseError
           ? new Location(error.source, '')
           : undefined;
@@ -172,7 +181,16 @@ export function walkDocument<T extends BaseVisitor>(opts: {
     };
 
     const rawLocation = location;
-    let currentLocation = location;
+    let currentLocation = hasSchemaId(node)
+      ? new Location(
+          new Source(
+            resolveSchemaId(location.source.absoluteRef, node.$id),
+            location.source.body,
+            location.source.mimeType
+          ),
+          '#/'
+        )
+      : location;
     const nodeIsRef = isRef(node);
     const { node: resolvedNode, location: resolvedLocation, error } = resolve(node);
     const enteredContexts: Set<VisitorLevelContext> = new Set();
diff --git a/tests/e2e/lint/lint.test.ts b/tests/e2e/lint/lint.test.ts
index 6806f62a7f..dd3444a9b2 100644
--- a/tests/e2e/lint/lint.test.ts
+++ b/tests/e2e/lint/lint.test.ts
@@ -109,4 +109,24 @@ describe('lint', () => {
     const result = getCommandOutput(args, {});
     await expect(cleanupOutput(result)).toMatchFileSnapshot(join(testPath, 'snapshot_2.txt'));
   });
+
+  test('lint nested root $id with local $defs refs', async () => {
+    const dirName = 'nested-id-ref-resolution';
+    const testPath = join(__dirname, `${dirName}`);
+
+    const args = getParams(indexEntryPoint, ['lint', 'openapi.yaml']);
+
+    const result = getCommandOutput(args, { testPath });
+    await expect(cleanupOutput(result)).toMatchFileSnapshot(join(testPath, 'snapshot.txt'));
+  });
+
+  test('lint relative $id IRI ref resolution', async () => {
+    const dirName = 'relative-id-ref-resolution';
+    const testPath = join(__dirname, `${dirName}`);
+
+    const args = getParams(indexEntryPoint, ['lint', 'openapi.yaml']);
+
+    const result = getCommandOutput(args, { testPath });
+    await expect(cleanupOutput(result)).toMatchFileSnapshot(join(testPath, 'snapshot.txt'));
+  });
 });
diff --git a/tests/e2e/lint/nested-id-ref-resolution/openapi.yaml b/tests/e2e/lint/nested-id-ref-resolution/openapi.yaml
new file mode 100644
index 0000000000..9824701690
--- /dev/null
+++ b/tests/e2e/lint/nested-id-ref-resolution/openapi.yaml
@@ -0,0 +1,39 @@
+openapi: 3.2.0
+info:
+  title: nested-id-ref-resolution
+  version: 1.0.0
+paths:
+  /userData:
+    get:
+      operationId: getUserData
+      responses:
+        '200':
+          description: OK
+          content:
+            application/json:
+              schema:
+                $ref: '#/components/schemas/userData'
+
+components:
+  schemas:
+    userData:
+      $id: 'https://api.example.com/classroom/userData'
+      type: array
+      items:
+        type: object
+        properties:
+          completedChallenges:
+            type: array
+            items:
+              $ref: '#/$defs/Challenge'
+      $defs:
+        Challenge:
+          type: object
+          properties:
+            files:
+              type: array
+              unevaluatedItems: false
+              items:
+                $ref: '#/$defs/File'
+        File:
+          type: string
diff --git a/tests/e2e/lint/nested-id-ref-resolution/redocly.yaml b/tests/e2e/lint/nested-id-ref-resolution/redocly.yaml
new file mode 100644
index 0000000000..4b2d4a8886
--- /dev/null
+++ b/tests/e2e/lint/nested-id-ref-resolution/redocly.yaml
@@ -0,0 +1,7 @@
+apis:
+  main:
+    root: ./openapi.yaml
+
+rules:
+  no-unresolved-refs: error
+  no-unused-components: error
diff --git a/tests/e2e/lint/nested-id-ref-resolution/snapshot.txt b/tests/e2e/lint/nested-id-ref-resolution/snapshot.txt
new file mode 100644
index 0000000000..51d6b3745b
--- /dev/null
+++ b/tests/e2e/lint/nested-id-ref-resolution/snapshot.txt
@@ -0,0 +1,6 @@
+
+validating openapi.yaml using lint rules for api 'main'...
+openapi.yaml: validated in <test>ms
+
+Woohoo! Your API description is valid. 🎉
+
diff --git a/tests/e2e/lint/relative-id-ref-resolution/openapi.yaml b/tests/e2e/lint/relative-id-ref-resolution/openapi.yaml
new file mode 100644
index 0000000000..38870d2afa
--- /dev/null
+++ b/tests/e2e/lint/relative-id-ref-resolution/openapi.yaml
@@ -0,0 +1,25 @@
+openapi: 3.1.0
+info:
+  title: relative-id-ref-resolution
+  version: 1.0.0
+paths:
+  /wrapper:
+    get:
+      operationId: getWrapper
+      responses:
+        '200':
+          description: OK
+          content:
+            application/json:
+              schema:
+                $ref: '#/components/schemas/Wrapper'
+
+components:
+  schemas:
+    Wrapper:
+      $id: 'schemas/Wrapper.yaml'
+      type: object
+      properties:
+        embedded:
+          $id: 'nested/child.yaml'
+          $ref: 'sibling.yaml'
diff --git a/tests/e2e/lint/relative-id-ref-resolution/redocly.yaml b/tests/e2e/lint/relative-id-ref-resolution/redocly.yaml
new file mode 100644
index 0000000000..4b2d4a8886
--- /dev/null
+++ b/tests/e2e/lint/relative-id-ref-resolution/redocly.yaml
@@ -0,0 +1,7 @@
+apis:
+  main:
+    root: ./openapi.yaml
+
+rules:
+  no-unresolved-refs: error
+  no-unused-components: error
diff --git a/tests/e2e/lint/relative-id-ref-resolution/schemas/nested/sibling.yaml b/tests/e2e/lint/relative-id-ref-resolution/schemas/nested/sibling.yaml
new file mode 100644
index 0000000000..5c21d88b9e
--- /dev/null
+++ b/tests/e2e/lint/relative-id-ref-resolution/schemas/nested/sibling.yaml
@@ -0,0 +1 @@
+type: string
diff --git a/tests/e2e/lint/relative-id-ref-resolution/snapshot.txt b/tests/e2e/lint/relative-id-ref-resolution/snapshot.txt
new file mode 100644
index 0000000000..51d6b3745b
--- /dev/null
+++ b/tests/e2e/lint/relative-id-ref-resolution/snapshot.txt
@@ -0,0 +1,6 @@
+
+validating openapi.yaml using lint rules for api 'main'...
+openapi.yaml: validated in <test>ms
+
+Woohoo! Your API description is valid. 🎉
+