diff --git a/monai/bundle/config_parser.py b/monai/bundle/config_parser.py
index a9107a10e9..d899cfcb08 100644
--- a/monai/bundle/config_parser.py
+++ b/monai/bundle/config_parser.py
@@ -13,7 +13,7 @@
 import re
 from copy import deepcopy
 from pathlib import Path
-from typing import Any, Dict, Optional, Sequence, Tuple, Union
+from typing import Any, Dict, Optional, Sequence, Set, Tuple, Union
 
 from monai.bundle.config_item import ComponentLocator, ConfigComponent, ConfigExpression, ConfigItem
 from monai.bundle.reference_resolver import ReferenceResolver
@@ -253,7 +253,7 @@ def read_config(self, f: Union[PathLike, Sequence[PathLike], Dict], **kwargs):
         content.update(self.load_config_files(f, **kwargs))
         self.set(config=content)
 
-    def _do_resolve(self, config: Any, id: str = ""):
+    def _do_resolve(self, config: Any, id: str = "", waiting_list: Optional[Set[str]] = None):
         """
         Recursively resolve `self.config` to replace the relative ids with absolute ids, for example,
         `@##A` means `A` in the upper level. and replace the macro tokens with target content,
@@ -266,18 +266,32 @@ def _do_resolve(self, config: Any, id: str = ""):
                 go one level further into the nested structures.
                 Use digits indexing from "0" for list or other strings for dict.
                 For example: ``"xform#5"``, ``"net#channels"``. ``""`` indicates the entire ``self.config``.
+            waiting_list: set of macro replacement ids pending to be resolved.
+                It's used to detect circular references such as:
+                `{"A": {"dep": "%B"}, "B": {"dep": "%A"}}`.
 
         """
+        if waiting_list is None:
+            waiting_list = set()
         if isinstance(config, (dict, list)):
             for k, v in enumerate(config) if isinstance(config, list) else config.items():
                 sub_id = f"{id}{ID_SEP_KEY}{k}" if id != "" else k
-                config[k] = self._do_resolve(v, sub_id)
+                config[k] = self._do_resolve(v, sub_id, waiting_list)
         if isinstance(config, str):
             config = self.resolve_relative_ids(id, config)
             if config.startswith(MACRO_KEY):
+                waiting_list.add(id)
                 path, ids = ConfigParser.split_path_id(config[len(MACRO_KEY) :])
-                parser = ConfigParser(config=self.get() if not path else ConfigParser.load_config_file(path))
-                return self._do_resolve(config=deepcopy(parser[ids]))
+                if not path:
+                    # if the target id is in the waiting list, that's circular references
+                    if ids in waiting_list:
+                        raise ValueError(f"detected circular references in macro replacement '{ids}' for id='{id}'.")
+                    parser = ConfigParser(config=self.get())
+                    config = self._do_resolve(deepcopy(parser[ids]), ids, waiting_list)
+                else:
+                    # don't support recursive macro replacement in another config file
+                    config = ConfigParser(config=ConfigParser.load_config_file(path))[ids]
+                waiting_list.discard(id)
         return config
 
     def resolve_macro_and_relative_ids(self):
diff --git a/monai/bundle/reference_resolver.py b/monai/bundle/reference_resolver.py
index f9f73c9c71..a98af82687 100644
--- a/monai/bundle/reference_resolver.py
+++ b/monai/bundle/reference_resolver.py
@@ -106,7 +106,7 @@ def _resolve_one_item(self, id: str, waiting_list: Optional[Set[str]] = None, **
             id: id name of ``ConfigItem`` to be resolved.
             waiting_list: set of ids pending to be resolved.
                 It's used to detect circular references such as:
-                `{"name": "A", "dep": "@B"}` and `{"name": "B", "dep": "@A"}`.
+                `{"A": {"dep": "@B"}, "B": {"dep": "@A"}}`.
              kwargs: keyword arguments to pass to ``_resolve_one_item()``.
                 Currently support ``instantiate`` and ``eval_expr``. Both are defaulting to True.
 
diff --git a/tests/test_config_parser.py b/tests/test_config_parser.py
index 8b1076b1f7..f7982bfe1a 100644
--- a/tests/test_config_parser.py
+++ b/tests/test_config_parser.py
@@ -9,6 +9,8 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
+import os
+import tempfile
 import unittest
 from unittest import skipUnless
 
@@ -142,6 +144,22 @@ def test_relative_id(self, config):
             if isinstance(item, dict):
                 self.assertEqual(str(item), str({"key": 1, "value1": 2, "value2": 2, "value3": [3, 4, 4, 105]}))
 
+    def test_macro_replace(self):
+        with tempfile.TemporaryDirectory() as tempdir:
+            another_file = os.path.join(tempdir, "another.json")
+            ConfigParser.export_config_file(config={"E": 4}, filepath=another_file)
+            # test relative id, recursive macro replacement, and macro in another file
+            config = {"A": {"B": 1, "C": 2}, "D": [3, "%A#B", "%#1", f"%{another_file}#E"]}
+            parser = ConfigParser(config=config)
+            parser.resolve_macro_and_relative_ids()
+            self.assertEqual(str(parser.get()), str({"A": {"B": 1, "C": 2}, "D": [3, 1, 1, 4]}))
+
+    def test_circular_macro_replace(self):
+        config = {"A": "%B", "B": {"args": [1, 2, "%A"]}}
+        parser = ConfigParser(config=config)
+        with self.assertRaises(ValueError):
+            parser.resolve_macro_and_relative_ids()
+
 
 if __name__ == "__main__":
     unittest.main()