diff --git a/podman_compose.py b/podman_compose.py
index 0d0957f6..55c84a87 100755
--- a/podman_compose.py
+++ b/podman_compose.py
@@ -54,6 +54,15 @@ def is_list(list_object: Any) -> bool:
     )
 
 
+def is_relative_ref(path: str) -> bool:
+    return (
+        path.startswith("./")
+        or path.startswith(".:")
+        or path.startswith("../")
+        or path.startswith("..:")
+    )
+
+
 # identity filter
 def filteri(a: list[str]) -> list[str]:
     return list(filter(lambda i: i, a))
@@ -1810,6 +1819,19 @@ def normalize_service(service: dict[str, Any], sub_dir: str = "") -> dict[str, A
         for k, v in deps.items():
             v.setdefault('condition', 'service_started')
         service["depends_on"] = deps
+    if "volumes" in service and sub_dir:
+        new_volumes = []
+        for v in service["volumes"]:
+            if isinstance(v, str):
+                if is_relative_ref(v):
+                    v = os.path.join(sub_dir, v)
+            elif isinstance(v, dict):
+                source = v["source"]
+                if is_relative_ref(source):
+                    v["source"] = os.path.join(sub_dir, source)
+
+            new_volumes.append(v)
+        service["volumes"] = new_volumes
     return service
 
 
@@ -2917,7 +2939,7 @@ def cleanup_temp_dockfile() -> None:
 
         if path_exists(dockerfile):
             # normalize dockerfile path, as the user could have provided unpredictable file formats
-            dockerfile = os.path.normpath(os.path.join(ctx, dockerfile))
+            dockerfile = os.path.normpath(dockerfile)
             build_args.extend(["-f", dockerfile])
         else:
             if custom_dockerfile_given:
diff --git a/tests/unit/test_container_to_build_args.py b/tests/unit/test_container_to_build_args.py
index bc553a01..d9629709 100644
--- a/tests/unit/test_container_to_build_args.py
+++ b/tests/unit/test_container_to_build_args.py
@@ -352,3 +352,23 @@ def test_build_ssh_array(self):
                 '.',
             ],
         )
+
+    def test_containerfile_in_context(self):
+        c = create_compose_mock()
+
+        cnt = get_minimal_container()
+        cnt['build']['context'] = "./subdir"
+        args = get_minimal_args()
+        args = container_to_build_args(c, cnt, args, lambda path: True)
+        self.assertEqual(
+            args,
+            [
+                '-f',
+                'subdir/Containerfile',
+                '-t',
+                'new-image',
+                '--no-cache',
+                '--pull-always',
+                './subdir',
+            ],
+        )
diff --git a/tests/unit/test_normalize_service.py b/tests/unit/test_normalize_service.py
index b58d6067..e7089238 100644
--- a/tests/unit/test_normalize_service.py
+++ b/tests/unit/test_normalize_service.py
@@ -47,6 +47,37 @@ def test_simple(self, input: dict[str, Any], expected: dict[str, Any]) -> None:
             {"build": {"context": "./dir-1", "dockerfile": "dockerfile-1"}},
             {"build": {"context": "./sub_dir/dir-1", "dockerfile": "dockerfile-1"}},
         ),
+        (
+            {"volumes": ["./nested/relative:/mnt", "../dir-in-parent:/mnt", "..:/mnt", ".:/mnt"]},
+            {
+                "volumes": [
+                    "./sub_dir/./nested/relative:/mnt",
+                    "./sub_dir/../dir-in-parent:/mnt",
+                    "./sub_dir/..:/mnt",
+                    "./sub_dir/.:/mnt",
+                ]
+            },
+        ),
+        (
+            {
+                "volumes": [
+                    {
+                        "type": "bind",
+                        "source": "./nested/relative",
+                        "target": "/mnt",
+                    }
+                ]
+            },
+            {
+                "volumes": [
+                    {
+                        "type": "bind",
+                        "source": "./sub_dir/./nested/relative",
+                        "target": "/mnt",
+                    }
+                ]
+            },
+        ),
     ])
     def test_normalize_service_with_sub_dir(
         self, input: dict[str, Any], expected: dict[str, Any]