diff --git a/packages/gatsby-remark-copy-linked-files/README.md b/packages/gatsby-remark-copy-linked-files/README.md
index 5f18d3d3cad30..c66655039a532 100644
--- a/packages/gatsby-remark-copy-linked-files/README.md
+++ b/packages/gatsby-remark-copy-linked-files/README.md
@@ -1,6 +1,6 @@
 # gatsby-remark-copy-linked-files
 
-Copies local files linked to/from Markdown (`.md|.markdown`) files to the root directory (i.e., `public` folder).
+Copies local files linked to/from Markdown (`.md|.markdown`) files to the `public` folder.
 
 **A sample markdown file:**
 
@@ -16,96 +16,93 @@ Hey everyone, I just made a sweet PDF with lots of interesting stuff in it.
 
 **When you build your site:**
 
-The `my-awesome-pdf.pdf` file will be copied to the root directory (i.e., `public/some-really-long-contenthash/my-awesome-pdf.pdf`) and the generated HTML page will be modified to point to it.
+The `my-awesome-pdf.pdf` file will be copied to the `public` folder (i.e., `public/some-really-long-contenthash/my-awesome-pdf.pdf`) and the generated HTML page will be modified to point to it.
 
 > **Note**: The `my-awesome-pdf.pdf` file should be in the same directory as the markdown file.
 
----
-
-## Install plugin
+## Installation
 
-`npm install gatsby-remark-copy-linked-files`
+```shell
+npm install gatsby-remark-copy-linked-files
+```
 
-## Add plugin to Gatsby Config
+## Configuration
 
-**Default settings:**
+### Default settings
 
 Add `gatsby-remark-copy-linked-files` plugin as a plugin to [`gatsby-transformer-remark`](https://www.gatsbyjs.com/plugins/gatsby-transformer-remark/):
 
-```javascript
-// In your gatsby-config.js
-
-// add plugin by name only
-plugins: [
-  {
-    resolve: `gatsby-transformer-remark`,
-    options: {
-      plugins: [`gatsby-remark-copy-linked-files`],
+```js:title=gatsby-config.js
+module.exports = {
+  plugins: [
+    {
+      resolve: `gatsby-transformer-remark`,
+      options: {
+        plugins: [`gatsby-remark-copy-linked-files`],
+      },
     },
-  },
-]
+  ],
+}
 ```
 
-**Custom settings:**
-
-```js
-// In your gatsby-config.js
-
-// add plugin by name and options
-plugins: [
-  {
-    resolve: `gatsby-transformer-remark`,
-    options: {
-      plugins: [
-        {
-          resolve: `gatsby-remark-copy-linked-files`,
-          options: {
-            destinationDir: `path/to/dir`,
-            ignoreFileExtensions: [`png`, `jpg`, `jpeg`, `bmp`, `tiff`],
+### Custom settings
+
+```js:title=gatsby-config.js
+module.exports = {
+  plugins: [
+    {
+      resolve: `gatsby-transformer-remark`,
+      options: {
+        plugins: [
+          {
+            resolve: `gatsby-remark-copy-linked-files`,
+            options: {
+              destinationDir: `path/to/dir`,
+              ignoreFileExtensions: [`png`, `jpg`, `jpeg`, `bmp`, `tiff`],
+            },
           },
-        },
-      ],
+        ],
+      },
     },
-  },
-]
+  ],
+}
 ```
 
----
-
-## Custom set where to copy the files using `destinationDir`
+## Option: `destinationDir`
 
-By default, all files will be copied to the root directory (i.e., `public` folder) in the following format: `contentHash/fileName.ext`.
+By default, all files will be copied to the root of the `public` folder in the following format: `contentHash/fileName.ext`.
 
-> For example, `[Download it now](my-awesome-pdf.pdf)` will copy the file `my-awesome-pdf.pdf` to something like `public/2a0039f3a61f4510f41678438e4c863a/my-awesome-pdf.pdf`
+For example, `[Download it now](my-awesome-pdf.pdf)` will copy the file `my-awesome-pdf.pdf` to something like `public/2a0039f3a61f4510f41678438e4c863a/my-awesome-pdf.pdf`
 
 ### Simple usage
 
 To change this, set `destinationDir` to a path of your own choosing (i.e., `path/to/dir`).
 
-```js
-// In your gatsby-config.js
-plugins: [
-  {
-    resolve: `gatsby-transformer-remark`,
-    options: {
-      plugins: [
-        {
-          resolve: "gatsby-remark-copy-linked-files",
-          options: {
-            destinationDir: "path/to/dir",
-          },
+```js:title=gatsby-config.js
+{
+  resolve: `gatsby-transformer-remark`,
+  options: {
+    plugins: [
+      {
+        resolve: "gatsby-remark-copy-linked-files",
+        options: {
+          destinationDir: "path/to/dir",
         },
-      ],
-    },
+      },
+    ],
   },
-]
+}
 ```
 
-> So now, `[Download it now](my-awesome-pdf.pdf)` will copy the file `my-awesome-pdf.pdf` to `public/path/to/dir/2a0039f3a61f4510f41678438e4c863a/my-awesome-pdf.pdf`
+So now, `[Download it now](my-awesome-pdf.pdf)` will copy the file `my-awesome-pdf.pdf` to `public/path/to/dir/2a0039f3a61f4510f41678438e4c863a/my-awesome-pdf.pdf`
 
 ### Advanced usage
 
-For more advanced control, set `destinationDir` to a function expression using properties `name` and/or `hash` to specify the path.
+For more control, set `destinationDir` to a function expression using properties `name`, `hash`, and `absolutePath` to specify the path.
+
+- `name`: The name of the file without the file extension
+- `hash`: The `internal.contentDigest` on the `File` node (guarantees a unique identifier)
+- `absolutePath`: The absolute path to the file, e.g. `/Users/your-name/example/project/src/pages/folder/my-awesome-pdf.pdf`
 
 **Examples:**
 
@@ -127,10 +124,15 @@ destinationDir: f => `${f.name}/${f.hash}`
 
 # save `my-awesome-pdf.pdf` to `public/path/to/dir/hello-my-awesome-pdf+2a0039f3a61f4510f41678438e4c863a_world.pdf`
 destinationDir: f => `path/to/dir/hello-${f.name}+${f.hash}_world`
+
+# save `src/pages/custom-folder/my-awesome-pdf.pdf` to `public/custom-folder/my-awesome-pdf.pdf`
+# Note: Import `path` to use this example https://nodejs.org/api/path.html
+destinationDir: f => `${path.dirname(path.relative(path.join(__dirname, `src`, `pages`), f.absolutePath))}/${f.name}`
 ```
 
-> **Note:** Make sure you use either `name` or `hash` property in your function expression!
-> If you don't include both `name` and `hash` properties in your function expression, `gatsby-remark-copy-linked-files` plugin will resolve the function expression to a string value and use default settings as a fallback mechanism to prevent your local files from getting copied with the same name (causing files to get overwritten).
+**Please note:** Make sure you use either `name` or `hash` property in your function expression!
+
+If you don't include both `name` and `hash` properties in your function expression, `gatsby-remark-copy-linked-files` plugin will resolve the function expression to a string value and use default settings as a fallback mechanism to prevent your local files from getting copied with the same name (causing files to get overwritten).
 
 ```js
 # Note: `my-awesome-pdf.pdf` is saved to `public/hello/2a0039f3a61f4510f41678438e4c863a/my-awesome-pdf.pdf`
@@ -140,9 +142,9 @@ destinationDir: _ => `hello`
 destinationDir: `hello`
 ```
 
-### Caveat: Error thrown if `destinationDir` points outside the root directory (i.e. `public` folder)
+### Caveat: Error thrown if `destinationDir` points outside the `public` folder
 
-> **Note:** An error will be thrown if the destination points outside the root directory (i.e. `public` folder).
+**Please note:** An error will be thrown if the destination points outside the `public` folder.
 
 **Correct:**
 
@@ -163,53 +165,44 @@ destinationDir: f => `${f.hash}`
 **Error thrown:**
 
 ```js
-# cannot save outside root directory (i.e., outside `public` folder)
+# cannot save outside `public` folder
 destinationDir: `../path/to/dir`
 destinationDir: _ => `../path/to/dir`
 destinationDir: f => `../path/to/dir/${f.name}`
 destinationDir: f => `../${f.hash}`
 ```
 
----
-
 ### Custom set which file types to ignore using `ignoreFileExtensions`
 
-By default, the file types that this plugin ignores are: `png`, `jpg`, `jpeg`, `bmp`, `tiff`.
-
-> For example, `[Download it now](image.png)` will be ignored and not copied to the root dir (i.e. `public` folder)
+By default, the file types that this plugin ignores are: `png`, `jpg`, `jpeg`, `bmp`, `tiff`. For example, `[Download it now](image.png)` will be ignored and not copied to the root of the `public` folder.
 
 To change this, set `ignoreFileExtensions` to an array of extensions to ignore (i.e., an empty array `[]` to ignore nothing).
 
-```javascript
-// In your gatsby-config.js
-plugins: [
-  {
-    resolve: `gatsby-transformer-remark`,
-    options: {
-      plugins: [
-        {
-          resolve: "gatsby-remark-copy-linked-files",
-          options: {
-            // `ignoreFileExtensions` defaults to [`png`, `jpg`, `jpeg`, `bmp`, `tiff`]
-            // as we assume you'll use gatsby-remark-images to handle
-            // images in markdown as it automatically creates responsive
-            // versions of images.
-            //
-            // If you'd like to not use gatsby-remark-images and just copy your
-            // original images to the public directory, set
-            // `ignoreFileExtensions` to an empty array.
-            ignoreFileExtensions: [],
-          },
+```js:title=gatsby-config.js
+{
+  resolve: `gatsby-transformer-remark`,
+  options: {
+    plugins: [
+      {
+        resolve: "gatsby-remark-copy-linked-files",
+        options: {
+          // `ignoreFileExtensions` defaults to [`png`, `jpg`, `jpeg`, `bmp`, `tiff`]
+          // as we assume you'll use gatsby-remark-images to handle
+          // images in markdown as it automatically creates responsive
+          // versions of images.
+          //
+          // If you'd like to not use gatsby-remark-images and just copy your
+          // original images to the public directory, set
+          // `ignoreFileExtensions` to an empty array.
+          ignoreFileExtensions: [],
         },
-      ],
-    },
+      },
+    ],
   },
-]
+}
 ```
 
-> So now, `[Download it now](image.png)` will be copied to the root dir (i.e. `public` folder)
-
----
+So now, `[Download it now](image.png)` will be copied to the root of the `public` folder.
 
 ### Supported Markdown tags
 
diff --git a/packages/gatsby-remark-copy-linked-files/src/__tests__/index.js b/packages/gatsby-remark-copy-linked-files/src/__tests__/index.js
index fe979f9ae178a..60f88ddce1a2d 100644
--- a/packages/gatsby-remark-copy-linked-files/src/__tests__/index.js
+++ b/packages/gatsby-remark-copy-linked-files/src/__tests__/index.js
@@ -526,6 +526,29 @@ describe(`gatsby-remark-copy-linked-files`, () => {
       })
     })
 
+    it(`copies file to the destination supplied by the destinationDir function (using returned absolutePath)`, async () => {
+      const imgName = `sample-image`
+      const imgRelPath = `images/nested-dir/${imgName}.gif`
+      const imgPath = parentDir + imgRelPath
+
+      const markdownAST = remark.parse(`![some absolute image](${imgRelPath})`)
+      const customDestinationDir = f =>
+        `${path.dirname(f.absolutePath)}/${f.name}`
+      const expectedDestination = `images/nested-dir/sample-image.gif`
+      expect.assertions(3)
+      await plugin(
+        { files: getFiles(imgPath), markdownAST, markdownNode, getNode },
+        { destinationDir: customDestinationDir }
+      ).then(v => {
+        const expectedNewPath = path.posix.join(
+          ...[process.cwd(), `public`, expectedDestination]
+        )
+        expect(v).toBeDefined()
+        expect(fsExtra.copy).toHaveBeenCalledWith(imgPath, expectedNewPath)
+        expect(imageURL(markdownAST)).toEqual(`/${expectedDestination}`)
+      })
+    })
+
     it(`copies file to the root dir when destinationDir is not supplied`, async () => {
       const markdownAST = remark.parse(
         `![some absolute image](${imageRelativePath})`
diff --git a/packages/gatsby-remark-copy-linked-files/src/index.js b/packages/gatsby-remark-copy-linked-files/src/index.js
index 35f766e60d50c..3afc32ae607f3 100644
--- a/packages/gatsby-remark-copy-linked-files/src/index.js
+++ b/packages/gatsby-remark-copy-linked-files/src/index.js
@@ -20,10 +20,12 @@ const validateDestinationDir = dir => {
     return true
   } else if (typeof dir === `string`) {
     // need to pass dummy data for validation to work
-    return destinationIsValid(`${dir}/h/n`)
+    return destinationIsValid(`${dir}/n/h/a`)
   } else if (_.isFunction(dir)) {
     // need to pass dummy data for validation to work
-    return destinationIsValid(`${dir({ name: `n`, hash: `h` })}`)
+    return destinationIsValid(
+      `${dir({ name: `n`, hash: `h`, absolutePath: `a` })}`
+    )
   } else {
     return false
   }
@@ -34,14 +36,11 @@ const defaultDestination = linkNode =>
 
 const getDestination = (linkNode, dir) => {
   if (_.isFunction(dir)) {
-    // need to pass dummy data for validation to work
-    const isValidFunction = `${dir({ name: `n`, hash: `h` })}` !== `${dir({})}`
-    return isValidFunction
-      ? `${dir({
-          name: linkNode.name,
-          hash: linkNode.internal.contentDigest,
-        })}.${linkNode.extension}`
-      : `${dir()}/${defaultDestination(linkNode)}`
+    return `${dir({
+      name: linkNode.name,
+      hash: linkNode.internal.contentDigest,
+      absolutePath: linkNode.absolutePath,
+    })}.${linkNode.extension}`
   } else if (_.isString(dir)) {
     return `${dir}/${defaultDestination(linkNode)}`
   } else {
@@ -59,7 +58,10 @@ const newPath = (linkNode, options) => {
 const newLinkURL = (linkNode, options, pathPrefix) => {
   const { destinationDir } = options
   const destination = getDestination(linkNode, destinationDir)
-  return `${pathPrefix ? pathPrefix : ``}/${destination}`
+  const startsWithSlash = destination.startsWith(`/`)
+  return `${pathPrefix ? pathPrefix : ``}${
+    startsWithSlash ? `` : `/`
+  }${destination}`
 }
 
 function toArray(buf) {