diff --git a/src/appDiscovery.ts b/src/appDiscovery.ts
index 3c4b2c0..69c7f18 100644
--- a/src/appDiscovery.ts
+++ b/src/appDiscovery.ts
@@ -80,35 +80,49 @@ async function findAllFastAPIFiles(
 async function parsePyprojectForEntryPoint(
   folderUri: vscode.Uri,
 ): Promise<EntryPoint | null> {
-  const pyprojectUri = vscode.Uri.joinPath(folderUri, "pyproject.toml")
+  const pyprojectTomlFiles = await vscode.workspace.findFiles(
+    new vscode.RelativePattern(folderUri, "**/pyproject.toml"),
+    new vscode.RelativePattern(
+      folderUri,
+      "**/{.venv,venv,__pycache__,node_modules,.git,tests,test}/**",
+    ),
+  )
 
-  if (!(await vscodeFileSystem.exists(pyprojectUri.toString()))) {
+  if (pyprojectTomlFiles.length === 0) {
     return null
   }
 
-  try {
-    const document = await vscode.workspace.openTextDocument(pyprojectUri)
-    const contents = toml.parse(document.getText()) as Record<string, unknown>
+  pyprojectTomlFiles.sort(
+    (a, b) => a.path.split("/").length - b.path.split("/").length,
+  )
 
-    const entrypoint = (contents.tool as Record<string, unknown> | undefined)
-      ?.fastapi as Record<string, unknown> | undefined
-    const entrypointValue = entrypoint?.entrypoint as string | undefined
+  for (const fileUri of pyprojectTomlFiles) {
+    try {
+      const document = await vscode.workspace.openTextDocument(fileUri)
+      const contents = toml.parse(document.getText()) as Record<string, unknown>
 
-    if (!entrypointValue) {
-      return null
-    }
+      const entrypoint = (contents.tool as Record<string, unknown> | undefined)
+        ?.fastapi as Record<string, unknown> | undefined
+      const entrypointValue = entrypoint?.entrypoint as string | undefined
 
-    const { relativePath, variableName } =
-      parseEntrypointString(entrypointValue)
-    const fullUri = vscode.Uri.joinPath(folderUri, relativePath)
+      if (!entrypointValue) {
+        continue
+      }
 
-    return (await vscodeFileSystem.exists(fullUri.toString()))
-      ? { filePath: fullUri.toString(), variableName }
-      : null
-  } catch {
-    // Invalid TOML syntax - silently fall back to auto-detection
-    return null
+      const { relativePath, variableName } =
+        parseEntrypointString(entrypointValue)
+      const dirUri = vscode.Uri.joinPath(fileUri, "..")
+      const fullUri = vscode.Uri.joinPath(dirUri, relativePath)
+
+      return (await vscodeFileSystem.exists(fullUri.toString()))
+        ? { filePath: fullUri.toString(), variableName }
+        : null
+    } catch {
+      // Invalid TOML syntax - silently fall back to next file
+    }
   }
+
+  return null
 }
 
 /**
diff --git a/src/core/pathUtils.ts b/src/core/pathUtils.ts
index e139ba6..59afa50 100644
--- a/src/core/pathUtils.ts
+++ b/src/core/pathUtils.ts
@@ -140,9 +140,8 @@ export function pathMatchesPathOperation(
 }
 
 /**
- * Finds the Python project root by walking up from the entry file
- * until we find a directory without __init__.py (or hit the workspace root).
- * This is the directory from which absolute imports are resolved.
+ * Finds the Python project root (the directory from which absolute imports
+ * are resolved) by walking up from the entry file toward the workspace root.
  */
 export async function findProjectRoot(
   entryUri: string,
@@ -154,12 +153,24 @@ export async function findProjectRoot(
 ): Promise<string> {
   let dirUri = uriDirname(entryUri)
 
-  // If the entry file's directory doesn't have __init__.py, it's a top-level script
+  // No __init__.py — could be a namespace package. Walk up toward the
+  // workspace root to find a pyproject.toml; if found, that directory is
+  // the Python project root. Otherwise fall back to the entry dir.
   if (!(await fs.exists(fs.joinPath(dirUri, "__init__.py")))) {
+    let searchDir = dirUri
+    while (isWithinDirectory(searchDir, workspaceRootUri)) {
+      if (await fs.exists(fs.joinPath(searchDir, "pyproject.toml"))) {
+        return searchDir
+      }
+      if (uriPath(searchDir) === uriPath(workspaceRootUri)) break
+      searchDir = uriDirname(searchDir)
+    }
     return dirUri
   }
 
-  // Walk up until we find a directory whose parent doesn't have __init__.py
+  // __init__.py is present, so this is a traditional package. Walk up until
+  // we find a directory whose parent doesn't have __init__.py — that parent
+  // is the project root (the directory Python adds to sys.path).
   while (
     isWithinDirectory(dirUri, workspaceRootUri) &&
     uriPath(dirUri) !== uriPath(workspaceRootUri)
diff --git a/src/test/core/pathUtils.test.ts b/src/test/core/pathUtils.test.ts
index d90eaa8..dcc1af8 100644
--- a/src/test/core/pathUtils.test.ts
+++ b/src/test/core/pathUtils.test.ts
@@ -195,6 +195,17 @@ suite("pathUtils", () => {
 
       assert.strictEqual(result, appRootUri)
     })
+
+    test("returns pyproject.toml dir for namespace packages in a monorepo", async () => {
+      // myapp/ has no __init__.py (namespace package), but service/ has pyproject.toml
+      const result = await findProjectRoot(
+        fixtures.monorepo.mainPy,
+        fixtures.monorepo.workspaceRoot,
+        nodeFileSystem,
+      )
+
+      assert.strictEqual(result, fixtures.monorepo.projectRoot)
+    })
   })
 
   suite("pathMatchesPathOperation", () => {
diff --git a/src/test/core/routerResolver.test.ts b/src/test/core/routerResolver.test.ts
index 7794621..41b1a63 100644
--- a/src/test/core/routerResolver.test.ts
+++ b/src/test/core/routerResolver.test.ts
@@ -1,5 +1,6 @@
 import * as assert from "node:assert"
 import { Parser } from "../../core/parser"
+import { findProjectRoot } from "../../core/pathUtils"
 import { buildRouterGraph } from "../../core/routerResolver"
 import {
   fixtures,
@@ -517,5 +518,25 @@ suite("routerResolver", () => {
         "neon router should have routes",
       )
     })
+
+    test("resolves imports in a monorepo with pyproject.toml in a subdirectory", async () => {
+      const projectRoot = await findProjectRoot(
+        fixtures.monorepo.mainPy,
+        fixtures.monorepo.workspaceRoot,
+        nodeFileSystem,
+      )
+      const result = await buildRouterGraph(
+        fixtures.monorepo.mainPy,
+        parser,
+        projectRoot,
+        nodeFileSystem,
+      )
+
+      assert.ok(result)
+      assert.strictEqual(result.type, "FastAPI")
+      assert.strictEqual(result.children.length, 1)
+      assert.strictEqual(result.children[0].router.prefix, "/users")
+      assert.ok(result.children[0].router.routes.length >= 2)
+    })
   })
 })
diff --git a/src/test/fixtures/monorepo/service/myapp/main.py b/src/test/fixtures/monorepo/service/myapp/main.py
new file mode 100644
index 0000000..28a202d
--- /dev/null
+++ b/src/test/fixtures/monorepo/service/myapp/main.py
@@ -0,0 +1,7 @@
+from fastapi import FastAPI
+
+from myapp.users.router import router as users_router
+
+app = FastAPI()
+
+app.include_router(users_router)
diff --git a/src/test/fixtures/monorepo/service/myapp/users/router.py b/src/test/fixtures/monorepo/service/myapp/users/router.py
new file mode 100644
index 0000000..36f8a70
--- /dev/null
+++ b/src/test/fixtures/monorepo/service/myapp/users/router.py
@@ -0,0 +1,13 @@
+from fastapi import APIRouter
+
+router = APIRouter(prefix="/users", tags=["users"])
+
+
+@router.get("/")
+def list_users():
+    return []
+
+
+@router.get("/{user_id}")
+def get_user(user_id: int):
+    return {"id": user_id}
diff --git a/src/test/fixtures/monorepo/service/pyproject.toml b/src/test/fixtures/monorepo/service/pyproject.toml
new file mode 100644
index 0000000..e69de29
diff --git a/src/test/testUtils.ts b/src/test/testUtils.ts
index 49ae925..6608a7d 100644
--- a/src/test/testUtils.ts
+++ b/src/test/testUtils.ts
@@ -78,6 +78,11 @@ export const fixtures = {
       join(fixturesPath, "nested-router", "app", "routes", "settings.py"),
     ),
   },
+  monorepo: {
+    workspaceRoot: uri(join(fixturesPath, "monorepo")),
+    projectRoot: uri(join(fixturesPath, "monorepo", "service")),
+    mainPy: uri(join(fixturesPath, "monorepo", "service", "myapp", "main.py")),
+  },
 }
 
 /**