diff --git a/extensions/markdown-language-features/src/features/pathCompletions.ts b/extensions/markdown-language-features/src/features/pathCompletions.ts
index 0e419a45a19..3ff2dd945c9 100644
--- a/extensions/markdown-language-features/src/features/pathCompletions.ts
+++ b/extensions/markdown-language-features/src/features/pathCompletions.ts
@@ -269,9 +269,13 @@ export class PathCompletionProvider implements vscode.CompletionItemProvider {
 		}
 
 		try {
-			return document.uri.with({
-				path: resolve(dirname(document.uri.path), ref),
-			});
+			if (document.uri.scheme === 'file') {
+				return vscode.Uri.file(resolve(dirname(document.uri.fsPath), ref));
+			} else {
+				return document.uri.with({
+					path: resolve(dirname(document.uri.path), ref),
+				});
+			}
 		} catch (e) {
 			return undefined;
 		}
diff --git a/extensions/markdown-language-features/src/test/pathCompletion.test.ts b/extensions/markdown-language-features/src/test/pathCompletion.test.ts
index c950ca4da54..6f7365116ab 100644
--- a/extensions/markdown-language-features/src/test/pathCompletion.test.ts
+++ b/extensions/markdown-language-features/src/test/pathCompletion.test.ts
@@ -26,8 +26,7 @@ function getCompletionsAtCursor(resource: vscode.Uri, fileContents: string) {
 	});
 }
 
-
-suite.skip('Markdown path completion provider', () => {
+suite('Markdown path completion provider', () => {
 
 	setup(async () => {
 		// These tests assume that the markdown completion provider is already registered