diff --git a/clang-tools-extra/clangd/GlobalCompilationDatabase.cpp b/clang-tools-extra/clangd/GlobalCompilationDatabase.cpp
index d983f76e227f4d..fde4e56ac72d8d 100644
--- a/clang-tools-extra/clangd/GlobalCompilationDatabase.cpp
+++ b/clang-tools-extra/clangd/GlobalCompilationDatabase.cpp
@@ -271,7 +271,8 @@ parseJSON(PathRef Path, llvm::StringRef Data, std::string &Error) {
 }
 static std::unique_ptr<tooling::CompilationDatabase>
 parseFixed(PathRef Path, llvm::StringRef Data, std::string &Error) {
-  return tooling::FixedCompilationDatabase::loadFromBuffer(Path, Data, Error);
+  return tooling::FixedCompilationDatabase::loadFromBuffer(
+      llvm::sys::path::parent_path(Path), Data, Error);
 }
 
 bool DirectoryBasedGlobalCompilationDatabase::DirectoryCache::load(
diff --git a/clang-tools-extra/clangd/unittests/GlobalCompilationDatabaseTests.cpp b/clang-tools-extra/clangd/unittests/GlobalCompilationDatabaseTests.cpp
index 63b1b731656afc..fbb85684af5ff6 100644
--- a/clang-tools-extra/clangd/unittests/GlobalCompilationDatabaseTests.cpp
+++ b/clang-tools-extra/clangd/unittests/GlobalCompilationDatabaseTests.cpp
@@ -279,6 +279,17 @@ TEST(GlobalCompilationDatabaseTest, BuildDir) {
       << "x/build/compile_flags.json only applicable to x/";
 }
 
+TEST(GlobalCompilationDatabaseTest, CompileFlagsDirectory) {
+  MockFS FS;
+  FS.Files[testPath("x/compile_flags.txt")] = "-DFOO";
+  DirectoryBasedGlobalCompilationDatabase CDB(FS);
+  auto Commands = CDB.getCompileCommand(testPath("x/y.cpp"));
+  ASSERT_TRUE(Commands.hasValue());
+  EXPECT_THAT(Commands.getValue().CommandLine, Contains("-DFOO"));
+  // Make sure we pick the right working directory.
+  EXPECT_EQ(testPath("x"), Commands.getValue().Directory);
+}
+
 TEST(GlobalCompilationDatabaseTest, NonCanonicalFilenames) {
   OverlayCDB DB(nullptr);
   std::vector<std::string> DiscoveredFiles;