diff --git a/src/libexpr/eval.hh b/src/libexpr/eval.hh
index ce798ed96..9a92992c1 100644
--- a/src/libexpr/eval.hh
+++ b/src/libexpr/eval.hh
@@ -839,7 +839,7 @@ std::string showType(const Value & v);
 /**
  * If `path` refers to a directory, then append "/default.nix".
  */
-SourcePath resolveExprPath(const SourcePath & path);
+SourcePath resolveExprPath(SourcePath path);
 
 struct InvalidPathError : EvalError
 {
diff --git a/src/libexpr/parser.y b/src/libexpr/parser.y
index b86cef217..f6cf1f689 100644
--- a/src/libexpr/parser.y
+++ b/src/libexpr/parser.y
@@ -686,17 +686,25 @@ Expr * EvalState::parse(
 }
 
 
-SourcePath resolveExprPath(const SourcePath & path)
+SourcePath resolveExprPath(SourcePath path)
 {
+    unsigned int followCount = 0, maxFollow = 1024;
+
     /* If `path' is a symlink, follow it.  This is so that relative
        path references work. */
-    auto path2 = path.resolveSymlinks();
+    while (true) {
+        // Basic cycle/depth limit to avoid infinite loops.
+        if (++followCount >= maxFollow)
+            throw Error("too many symbolic links encountered while traversing the path '%s'", path);
+        if (path.lstat().type != InputAccessor::tSymlink) break;
+        path = {path.accessor, CanonPath(path.readLink(), path.path.parent().value_or(CanonPath::root))};
+    }
 
     /* If `path' refers to a directory, append `/default.nix'. */
-    if (path2.lstat().type == InputAccessor::tDirectory)
-        return path2 + "default.nix";
+    if (path.lstat().type == InputAccessor::tDirectory)
+        return path + "default.nix";
 
-    return path2;
+    return path;
 }
 
 
diff --git a/tests/functional/lang/eval-okay-symlink-resolution.exp b/tests/functional/lang/eval-okay-symlink-resolution.exp
new file mode 100644
index 000000000..8b8441b91
--- /dev/null
+++ b/tests/functional/lang/eval-okay-symlink-resolution.exp
@@ -0,0 +1 @@
+"test"
diff --git a/tests/functional/lang/eval-okay-symlink-resolution.nix b/tests/functional/lang/eval-okay-symlink-resolution.nix
new file mode 100644
index 000000000..ffb1818bd
--- /dev/null
+++ b/tests/functional/lang/eval-okay-symlink-resolution.nix
@@ -0,0 +1 @@
+import symlink-resolution/foo/overlays/overlay.nix
diff --git a/tests/functional/lang/symlink-resolution/foo/lib/default.nix b/tests/functional/lang/symlink-resolution/foo/lib/default.nix
new file mode 100644
index 000000000..8b8441b91
--- /dev/null
+++ b/tests/functional/lang/symlink-resolution/foo/lib/default.nix
@@ -0,0 +1 @@
+"test"
diff --git a/tests/functional/lang/symlink-resolution/foo/overlays b/tests/functional/lang/symlink-resolution/foo/overlays
new file mode 120000
index 000000000..0d44a21c5
--- /dev/null
+++ b/tests/functional/lang/symlink-resolution/foo/overlays
@@ -0,0 +1 @@
+../overlays
\ No newline at end of file
diff --git a/tests/functional/lang/symlink-resolution/overlays/overlay.nix b/tests/functional/lang/symlink-resolution/overlays/overlay.nix
new file mode 100644
index 000000000..b0368308e
--- /dev/null
+++ b/tests/functional/lang/symlink-resolution/overlays/overlay.nix
@@ -0,0 +1 @@
+import ../lib