diff --git a/README.md b/README.md
index 218c83b..4ced99a 100644
--- a/README.md
+++ b/README.md
@@ -388,6 +388,52 @@ function MDXPage({code}: {code: string}) {
 }
 ```
 
+#### cwd
+
+Setting `cwd` (_current working directory_) to a directory will allow esbuild to
+resolve imports. This directory could be the directory the mdx content was read
+from or a directory that off-disk mdx should be _run_ in.
+
+_content/pages/demo.tsx_
+
+```typescript
+import * as React from 'react'
+
+function Demo() {
+  return <div>Neat demo!</div>
+}
+
+export default Demo
+```
+
+_src/build.ts_
+
+```typescript
+import {bundleMDX} from 'mdx-bundler'
+
+const mdxSource = `
+---
+title: Example Post
+published: 2021-02-13
+description: This is some description
+---
+
+# Wahoo
+
+import Demo from './demo'
+
+Here's a **neat** demo:
+
+<Demo />
+`.trim()
+
+const result = await bundleMDX(mdxSource, {
+  cwd: '/users/you/site/_content/pages',
+})
+
+const {code, frontmatter} = result
+```
+
 ### Component Substitution
 
 MDX Bundler passes on
@@ -428,12 +474,11 @@ You can reference frontmatter meta or consts in the mdx content.
 title: Example Post
 ---
 
-export const exampleImage = 'https://example.com/image.jpg';
+export const exampleImage = 'https://example.com/image.jpg'
 
 # {frontmatter.title}
 
 <img src={exampleImage} alt="Image alt text" />
-
 ```
 
 ### Known Issues
diff --git a/other/150.png b/other/150.png
new file mode 100644
index 0000000..d90352c
Binary files /dev/null and b/other/150.png differ
diff --git a/other/sample-component.jsx b/other/sample-component.jsx
new file mode 100644
index 0000000..ffa245a
--- /dev/null
+++ b/other/sample-component.jsx
@@ -0,0 +1,13 @@
+import React from 'react'
+
+import image from './150.png'
+
+/** @type React.FC */
+export const Sample = () => {
+  return (
+    <div>
+      <b>Sample!</b>
+      <img src={image} />
+    </div>
+  )
+}
diff --git a/package.json b/package.json
index 99965f8..5579329 100644
--- a/package.json
+++ b/package.json
@@ -40,34 +40,36 @@
     "validate": "kcd-scripts validate"
   },
   "dependencies": {
-    "@babel/runtime": "^7.13.10",
-    "@esbuild-plugins/node-resolve": "0.1.4",
+    "@babel/runtime": "^7.13.17",
+    "@esbuild-plugins/node-resolve": "^0.1.4",
     "@fal-works/esbuild-plugin-global-externals": "^2.1.1",
-    "esbuild": "^0.11.6",
-    "gray-matter": "^4.0.2",
-    "jsdom": "^16.5.2",
+    "esbuild": "^0.11.15",
+    "gray-matter": "^4.0.3",
+    "jsdom": "^16.5.3",
     "remark-frontmatter": "^3.0.0",
     "remark-mdx-frontmatter": "^1.0.1",
     "uvu": "^0.5.1",
-    "xdm": "^1.6.0"
+    "xdm": "^1.8.0"
   },
   "devDependencies": {
     "@testing-library/react": "^11.2.6",
     "@types/jsdom": "^16.2.10",
-    "@types/react": "^17.0.3",
+    "@types/react": "^17.0.4",
     "@types/react-dom": "^17.0.3",
     "cross-env": "^7.0.3",
-    "kcd-scripts": "^8.2.1",
+    "kcd-scripts": "^10.0.0",
     "left-pad": "^1.3.0",
     "react": "^17.0.2",
     "react-dom": "^17.0.2",
+    "remark-mdx-images": "^1.0.2",
     "typescript": "^4.2.4"
   },
   "eslintConfig": {
     "extends": "./node_modules/kcd-scripts/eslint.js",
     "rules": {
       "import/extensions": "off",
-      "@typescript-eslint/no-unsafe-assignment": "off"
+      "@typescript-eslint/no-unsafe-assignment": "off",
+      "max-lines-per-function": "off"
     }
   },
   "eslintIgnore": [
diff --git a/src/__tests__/index.js b/src/__tests__/index.js
index 084a147..3df54f3 100644
--- a/src/__tests__/index.js
+++ b/src/__tests__/index.js
@@ -1,10 +1,10 @@
 import './setup-tests.js'
-import path from 'path'
 import {test} from 'uvu'
 import * as assert from 'uvu/assert'
 import React from 'react'
 import rtl from '@testing-library/react'
 import leftPad from 'left-pad'
+import {remarkMdxImages} from 'remark-mdx-images'
 import {bundleMDX} from '../index.js'
 import {getMDXComponent} from '../client.js'
 
@@ -148,7 +148,7 @@ import Demo from './demo'
   assert.equal(
     error.message,
     `Build failed with 1 error:
-__mdx_bundler_fake_dir__${path.sep}index.mdx:2:17: error: [inMemory] Could not resolve "./demo" from the entry MDX file.`,
+__mdx_bundler_fake_dir__/index.mdx:2:17: error: Could not resolve "./demo"`,
   )
 })
 
@@ -168,7 +168,7 @@ import Demo from './demo'
   assert.equal(
     error.message,
     `Build failed with 1 error:
-__mdx_bundler_fake_dir__${path.sep}demo.tsx:1:7: error: [inMemory] Could not resolve "./blah-blah" from "./demo.tsx"`,
+__mdx_bundler_fake_dir__/demo.tsx:1:7: error: Could not resolve "./blah-blah"`,
   )
 })
 
@@ -188,7 +188,7 @@ import Demo from './demo.blah'
   assert.equal(
     error.message,
     `Build failed with 1 error:
-__mdx_bundler_fake_dir__${path.sep}index.mdx:2:17: error: [JavaScript plugins] Invalid loader: "blah" (valid: js, jsx, ts, tsx, css, json, text, base64, dataurl, file, binary)`,
+__mdx_bundler_fake_dir__/index.mdx:2:17: error: [plugin: JavaScript plugins] Invalid loader: "blah" (valid: js, jsx, ts, tsx, css, json, text, base64, dataurl, file, binary)`,
   )
 })
 
@@ -251,4 +251,46 @@ import LeftPad from 'left-pad-js'
   assert.match(container.innerHTML, 'this is left pad')
 })
 
+test('require from current directory', async () => {
+  const mdxSource = `
+# Title
+
+import {Sample} from './other/sample-component'
+
+<Sample />
+
+![A Sample Image](./other/150.png)
+`.trim()
+
+  const {code} = await bundleMDX(mdxSource, {
+    cwd: process.cwd(),
+    xdmOptions: (vFile, options) => {
+      options.remarkPlugins = [remarkMdxImages]
+
+      return options
+    },
+    esbuildOptions: options => {
+      options.loader = {
+        ...options.loader,
+        '.png': 'dataurl',
+      }
+
+      return options
+    },
+  })
+
+  const Component = getMDXComponent(code)
+
+  const {container} = render(React.createElement(Component))
+
+  assert.match(container.innerHTML, 'Sample!')
+  // Test that the React components image is imported correctly.
+  assert.match(container.innerHTML, 'img src="data:image/png')
+  // Test that the markdowns image is imported correctly.
+  assert.match(
+    container.innerHTML,
+    'img alt="A Sample Image" src="data:image/png',
+  )
+})
+
 test.run()
diff --git a/src/index.js b/src/index.js
index 84b3653..759f179 100644
--- a/src/index.js
+++ b/src/index.js
@@ -27,6 +27,7 @@ async function bundleMDX(
     xdmOptions = (vfileCompatible, options) => options,
     esbuildOptions = options => options,
     globals = {},
+    cwd = path.join(process.cwd(), `__mdx_bundler_fake_dir__`),
   } = {},
 ) {
   // xdm is a native ESM, and we're running in a CJS context. This is the
@@ -38,14 +39,13 @@ async function bundleMDX(
   // extract the frontmatter
   const {data: frontmatter} = matter(mdxSource)
 
-  const dir = path.join(process.cwd(), `__mdx_bundler_fake_dir__`)
-  const entryPath = path.join(dir, './index.mdx')
+  const entryPath = path.join(cwd, './index.mdx')
 
   /** @type Record<string, string> */
   const absoluteFiles = {[entryPath]: mdxSource}
 
   for (const [filepath, fileCode] of Object.entries(files)) {
-    absoluteFiles[path.join(dir, filepath)] = fileCode
+    absoluteFiles[path.join(cwd, filepath)] = fileCode
   }
 
   /** @type import('esbuild').Plugin */
@@ -53,66 +53,61 @@ async function bundleMDX(
     name: 'inMemory',
     setup(build) {
       build.onResolve({filter: /.*/}, ({path: filePath, importer}) => {
-        if (filePath === entryPath) return {path: filePath}
+        if (filePath === entryPath)
+          return {path: filePath, pluginData: {inMemory: true}}
 
         const modulePath = path.resolve(path.dirname(importer), filePath)
 
-        if (modulePath in absoluteFiles) return {path: modulePath}
+        if (modulePath in absoluteFiles)
+          return {path: modulePath, pluginData: {inMemory: true}}
 
         for (const ext of ['.js', '.ts', '.jsx', '.tsx', '.json', '.mdx']) {
           const fullModulePath = `${modulePath}${ext}`
-          if (fullModulePath in absoluteFiles) return {path: fullModulePath}
+          if (fullModulePath in absoluteFiles)
+            return {path: fullModulePath, pluginData: {inMemory: true}}
         }
 
-        return {
-          errors: [
-            {
-              text: `Could not resolve "${filePath}" from ${
-                importer === entryPath
-                  ? 'the entry MDX file.'
-                  : `"${importer.replace(dir, '.')}"`
-              }`,
-              location: null,
-            },
-          ],
-        }
+        // Return an empty object so that esbuild will handle resolving the file itself.
+        return {}
       })
 
-      build.onLoad(
-        {filter: /__mdx_bundler_fake_dir__/},
-        async ({path: filePath}) => {
-          // the || .js allows people to exclude a file extension
-          const fileType = (path.extname(filePath) || '.jsx').slice(1)
-          const contents = absoluteFiles[filePath]
-
-          switch (fileType) {
-            case 'mdx': {
-              /** @type import('xdm/lib/compile').VFileCompatible */
-              const vFileCompatible = {
-                path: filePath,
-                contents,
-              }
-              const vfile = await compileMDX(
-                vFileCompatible,
-                xdmOptions(vFileCompatible, {
-                  jsx: true,
-                  remarkPlugins: [
-                    remarkFrontmatter,
-                    [remarkMdxFrontmatter, {name: 'frontmatter'}],
-                  ],
-                }),
-              )
-              return {contents: vfile.toString(), loader: 'jsx'}
+      build.onLoad({filter: /.*/}, async ({path: filePath, pluginData}) => {
+        if (pluginData === undefined || !pluginData.inMemory) {
+          // Return an empty object so that esbuild will load & parse the file contents itself.
+          return {}
+        }
+
+        // the || .js allows people to exclude a file extension
+        const fileType = (path.extname(filePath) || '.jsx').slice(1)
+        const contents = absoluteFiles[filePath]
+
+        switch (fileType) {
+          case 'mdx': {
+            /** @type import('xdm/lib/compile').VFileCompatible */
+            const vFileCompatible = {
+              path: filePath,
+              contents,
             }
-            default: {
-              return {
-                contents,
-                loader: /** @type import('esbuild').Loader */ (fileType),
-              }
+            const vfile = await compileMDX(
+              vFileCompatible,
+              xdmOptions(vFileCompatible, {
+                jsx: true,
+                remarkPlugins: [
+                  remarkFrontmatter,
+                  [remarkMdxFrontmatter, {name: 'frontmatter'}],
+                ],
+              }),
+            )
+            return {contents: vfile.toString(), loader: 'jsx'}
+          }
+          default: {
+            return {
+              contents,
+              loader: /** @type import('esbuild').Loader */ (fileType),
             }
           }
-        },
-      )
+        }
+      })
     },
   }
 
diff --git a/src/types.d.ts b/src/types.d.ts
index efd09b6..173438e 100644
--- a/src/types.d.ts
+++ b/src/types.d.ts
@@ -105,4 +105,19 @@ type BundleMDXOptions = {
    * ```
    */
   globals?: Record<string, string | ModuleInfo>
+  /**
+   * The current working directory for the mdx bundle. Supplying this allows
+   * esbuild to resolve paths itself instead of using `files`.
+   *
+   * This could be the directory the mdx content was read from or in the case
+   * of off-disk content a common root directory.
+   *
+   * @example
+   * ```
+   * bundleMDX(mdxString, {
+   *  cwd: '/users/you/site/mdx_root'
+   * })
+   * ```
+   */
+  cwd?: string
 }