diff --git a/crates/nargo/src/cli/mod.rs b/crates/nargo/src/cli/mod.rs
index 50f9de29997..27f98b33ba6 100644
--- a/crates/nargo/src/cli/mod.rs
+++ b/crates/nargo/src/cli/mod.rs
@@ -6,6 +6,8 @@ use std::path::{Path, PathBuf};
 
 use color_eyre::eyre;
 
+use crate::find_package_root;
+
 mod fs;
 
 mod check_cmd;
@@ -59,19 +61,22 @@ enum NargoCommand {
 }
 
 pub fn start_cli() -> eyre::Result<()> {
-    let matches = NargoCli::parse();
-
-    match matches.command {
-        NargoCommand::New(args) => new_cmd::run(args, matches.config),
-        NargoCommand::Check(args) => check_cmd::run(args, matches.config),
-        NargoCommand::Compile(args) => compile_cmd::run(args, matches.config),
-        NargoCommand::Execute(args) => execute_cmd::run(args, matches.config),
-        NargoCommand::Prove(args) => prove_cmd::run(args, matches.config),
-        NargoCommand::Verify(args) => verify_cmd::run(args, matches.config),
-        NargoCommand::Preprocess(args) => preprocess_cmd::run(args, matches.config),
-        NargoCommand::Test(args) => test_cmd::run(args, matches.config),
-        NargoCommand::Gates(args) => gates_cmd::run(args, matches.config),
-        NargoCommand::CodegenVerifier(args) => codegen_verifier_cmd::run(args, matches.config),
+    let NargoCli { command, mut config } = NargoCli::parse();
+
+    // Search through parent directories to find package root.
+    config.program_dir = find_package_root(&config.program_dir)?;
+
+    match command {
+        NargoCommand::New(args) => new_cmd::run(args, config),
+        NargoCommand::Check(args) => check_cmd::run(args, config),
+        NargoCommand::Compile(args) => compile_cmd::run(args, config),
+        NargoCommand::Execute(args) => execute_cmd::run(args, config),
+        NargoCommand::Prove(args) => prove_cmd::run(args, config),
+        NargoCommand::Verify(args) => verify_cmd::run(args, config),
+        NargoCommand::Preprocess(args) => preprocess_cmd::run(args, config),
+        NargoCommand::Test(args) => test_cmd::run(args, config),
+        NargoCommand::Gates(args) => gates_cmd::run(args, config),
+        NargoCommand::CodegenVerifier(args) => codegen_verifier_cmd::run(args, config),
     }?;
 
     Ok(())
diff --git a/crates/nargo/src/lib.rs b/crates/nargo/src/lib.rs
index 7c5a988e458..6ea9fe46058 100644
--- a/crates/nargo/src/lib.rs
+++ b/crates/nargo/src/lib.rs
@@ -26,14 +26,25 @@ fn nargo_crates() -> PathBuf {
     dirs::home_dir().unwrap().join("nargo")
 }
 
-/// Searches for the Nargo.toml file
+/// Returns the path of the root directory of the package containing `current_path`.
 ///
-/// XXX: In the end, this should find the root of the project and check
-/// for the Nargo.toml file there
-/// However, it should only do this after checking the current path
-/// This allows the use of workspace settings in the future.
+/// Returns a `CliError` if no parent directories of `current_path` contain a manifest file.
+fn find_package_root(current_path: &Path) -> Result<PathBuf, InvalidPackageError> {
+    let manifest_path = find_package_manifest(current_path)?;
+
+    let package_root =
+        manifest_path.parent().expect("infallible: manifest file path can't be root directory");
+
+    Ok(package_root.to_path_buf())
+}
+
+/// Returns the path of the manifest file (`Nargo.toml`) of the package containing `current_path`.
+///
+/// Returns a `CliError` if no parent directories of `current_path` contain a manifest file.
 fn find_package_manifest(current_path: &Path) -> Result<PathBuf, InvalidPackageError> {
-    find_file(current_path, "Nargo", "toml")
+    current_path
+        .ancestors()
+        .find_map(|dir| find_file(dir, "Nargo", "toml"))
         .ok_or_else(|| InvalidPackageError::MissingManifestFile(current_path.to_path_buf()))
 }