diff --git a/app/helpers/gitlab_markdown_helper.rb b/app/helpers/gitlab_markdown_helper.rb
index b34f703353..8894a01eae 100644
--- a/app/helpers/gitlab_markdown_helper.rb
+++ b/app/helpers/gitlab_markdown_helper.rb
@@ -64,7 +64,9 @@ module GitlabMarkdownHelper
   # ref - name of the branch or reference, eg. stable
   # requested_path - path of request, eg. doc/api/README.md, used in special case when path is pointing to the .md file were the original request is coming from
   # wiki - whether the markdown is from wiki or not
-  def create_relative_links(text, project_path_with_namespace, ref, requested_path, wiki = false)
+  def create_relative_links(text, project, ref, requested_path, wiki = false)
+    @path_to_satellite = project.satellite.path
+    project_path_with_namespace = project.path_with_namespace
     paths = extract_paths(text)
     paths.each do |file_path|
       new_path = rebuild_path(project_path_with_namespace, file_path, requested_path, ref)
@@ -145,13 +147,18 @@ module GitlabMarkdownHelper
 
   def file_exists?(path)
     return false if path.nil? || path.empty?
-    File.exists?(Rails.root.join(path))
+    File.exists?(path_on_fs(path))
   end
 
   # Check if the path is pointing to a directory(tree) or a file(blob)
   # eg. doc/api is directory and doc/README.md is file
   def local_path(path)
-    File.directory?(Rails.root.join(path)) ? "tree" : "blob"
+    File.directory?(path_on_fs(path)) ? "tree" : "blob"
+  end
+
+  # Path to the file in the satellites repository on the filesystem
+  def path_on_fs(path)
+    [@path_to_satellite, path].join("/")
   end
 
   # We will assume that if no ref exists we can point to master
diff --git a/lib/redcarpet/render/gitlab_html.rb b/lib/redcarpet/render/gitlab_html.rb
index b84c005524..2d1e0aec5e 100644
--- a/lib/redcarpet/render/gitlab_html.rb
+++ b/lib/redcarpet/render/gitlab_html.rb
@@ -36,7 +36,7 @@ class Redcarpet::Render::GitlabHTML < Redcarpet::Render::HTML
 
   def preprocess(full_document)
     if @project
-      h.create_relative_links(full_document, @project.path_with_namespace, @ref, @request_path, is_wiki?)
+      h.create_relative_links(full_document, @project, @ref, @request_path, is_wiki?)
     else
       full_document
     end
diff --git a/spec/factories.rb b/spec/factories.rb
index 624cb0f765..3b0e305460 100644
--- a/spec/factories.rb
+++ b/spec/factories.rb
@@ -66,6 +66,7 @@ FactoryGirl.define do
 
     after :create do |project|
       TestEnv.clear_repo_dir(project.namespace, project.path)
+      TestEnv.reset_satellite_dir
       TestEnv.create_repo(project.namespace, project.path)
     end
   end
diff --git a/spec/support/test_env.rb b/spec/support/test_env.rb
index 5dbdffe410..87dffe197d 100644
--- a/spec/support/test_env.rb
+++ b/spec/support/test_env.rb
@@ -97,6 +97,15 @@ module TestEnv
     FileUtils.rm_rf File.join(testing_path(), "#{name}.wiki.git")
   end
 
+  def reset_satellite_dir
+    setup_stubs
+    FileUtils.cd(seed_satellite_path) do
+      `git reset --hard --quiet`
+      `git clean -fx`
+      `git checkout --quiet origin/master`
+    end
+  end
+
   # Create a repo and it's satellite
   def create_repo(namespace, name)
     setup_stubs