diff --git a/core/src/main/java/io/micronaut/core/io/IOUtils.java b/core/src/main/java/io/micronaut/core/io/IOUtils.java
index 32e2d443512..8255f9667e4 100644
--- a/core/src/main/java/io/micronaut/core/io/IOUtils.java
+++ b/core/src/main/java/io/micronaut/core/io/IOUtils.java
@@ -136,6 +136,11 @@ private static Path loadNestedJarUri(List<Closeable> toClose, String jarUri) thr
             return Paths.get(URI.create(jarUri));
         }
         Path jarPath = loadNestedJarUri(toClose, jarUri.substring(0, sep));
+        if (Files.isDirectory(jarPath)) {
+            // spring boot creates weird jar URLs, like 'jar:file:/xyz.jar!/BOOT-INF/classes!/abc'
+            // This check makes our class loading resilient to that
+            return jarPath;
+        }
         FileSystem zipfs;
         try {
             // can't use newFileSystem(Path) here (without CL) because it doesn't exist on java 8
diff --git a/core/src/test/groovy/io/micronaut/core/io/IOUtilsSpec.groovy b/core/src/test/groovy/io/micronaut/core/io/IOUtilsSpec.groovy
index 960868ca775..59327499228 100644
--- a/core/src/test/groovy/io/micronaut/core/io/IOUtilsSpec.groovy
+++ b/core/src/test/groovy/io/micronaut/core/io/IOUtilsSpec.groovy
@@ -1,5 +1,6 @@
 package io.micronaut.core.io
 
+import spock.lang.Issue
 import spock.lang.Specification
 
 import java.nio.charset.StandardCharsets
@@ -66,4 +67,30 @@ class IOUtilsSpec extends Specification {
         cleanup:
         Files.deleteIfExists(zipPath)
     }
+
+    @Issue('https://github.com/grails/grails-core/issues/12625/')
+    def 'dir inside jar'() {
+        given:
+        Path zipPath = Files.createTempFile("micronaut-ioutils-spec", ".zip")
+        try (ZipOutputStream outer = new ZipOutputStream(Files.newOutputStream(zipPath))) {
+            outer.putNextEntry(new ZipEntry("foo/bar/baz/test.txt"))
+            outer.write("bla".getBytes(StandardCharsets.UTF_8))
+            outer.closeEntry()
+        }
+
+        def visitedInner = []
+        def textInner = []
+
+        when:
+        IOUtils.eachFile(URI.create('jar:' + zipPath.toUri() + '!/foo/bar!/xyz'), 'baz', entry -> {
+            visitedInner.add(entry.getFileName().toString())
+            textInner = Files.readAllLines(entry)
+        })
+        then:
+        visitedInner == ['test.txt']
+        textInner == ['bla']
+
+        cleanup:
+        Files.deleteIfExists(zipPath)
+    }
 }