diff --git a/.changeset/blue-parts-lie.md b/.changeset/blue-parts-lie.md
new file mode 100644
index 000000000000..2c0168a2cc13
--- /dev/null
+++ b/.changeset/blue-parts-lie.md
@@ -0,0 +1,25 @@
+---
+"@biomejs/biome": patch
+---
+
+Fixed [#8233](https://github.com/biomejs/biome/issues/8233), where Biome CLI in
+stdin mode didn't work correctly when handling files in projects with nested
+configurations. For example, with the following structure,
+`--stdin-file-path=subdirectory/...` would not use the nested configuration in
+`subdirectory/biome.json`:
+
+```
+├── biome.json
+└── subdirectory
+    ├── biome.json
+    └── lib.js
+```
+
+```shell
+biome format --write --stdin-file-path=subdirectory/lib.js < subdirectory/lib.js
+```
+
+Now, the nested configuration is correctly picked up and applied.
+
+In addition, Biome now shows a warning if `--stdin-file-path` is provided but
+that path is ignored and therefore not formatted or fixed.
diff --git a/.github/workflows/pull_request.yml b/.github/workflows/pull_request.yml
index e75e0aa01a98..cfb44be0d8e1 100644
--- a/.github/workflows/pull_request.yml
+++ b/.github/workflows/pull_request.yml
@@ -101,9 +101,7 @@ jobs:
       - name: Build Biome debug binary
         run: cargo build --bin biome
       - name: Run tests
-        run: |
-          cd e2e-tests
-          sh test-all.sh
+        run: ./e2e-tests/test-all.sh
 
   documentation:
     name: Documentation
diff --git a/biome.json b/biome.json
index c52df58e969f..6eaae321f1e0 100644
--- a/biome.json
+++ b/biome.json
@@ -33,6 +33,7 @@
       "!**/undefined",
       "!**/benchmark/target",
       "!**/benches",
+      "!!**/e2e-tests",
       "!!**/target",
       "!!.cargo"
     ]
diff --git a/crates/biome_cli/src/execute/mod.rs b/crates/biome_cli/src/execute/mod.rs
index 16c3c1ca0516..6a3e63a19812 100644
--- a/crates/biome_cli/src/execute/mod.rs
+++ b/crates/biome_cli/src/execute/mod.rs
@@ -562,7 +562,15 @@ pub fn execute_mode(
 
     // don't do any traversal if there's some content coming from stdin
     if let Some(stdin) = execution.as_stdin_file() {
-        let biome_path = BiomePath::new(stdin.as_path());
+        // Biome path must starts_with(the project directory), which will have been
+        // joined to workdir. Otherwise we won't find nested settings.
+        let working_dir = session
+            .app
+            .workspace
+            .fs()
+            .working_directory()
+            .unwrap_or_default();
+        let biome_path = BiomePath::new(working_dir.join(stdin.as_path()));
         return std_in::run(
             session,
             project_key,
diff --git a/crates/biome_cli/src/execute/std_in.rs b/crates/biome_cli/src/execute/std_in.rs
index 6972f7750eee..05baa9201371 100644
--- a/crates/biome_cli/src/execute/std_in.rs
+++ b/crates/biome_cli/src/execute/std_in.rs
@@ -49,6 +49,10 @@ pub(crate) fn run<'a>(
 
         if file_features.is_ignored() {
             console.append(markup! {{content}});
+            // Write error last because files may generally be long
+            console.error(markup! {
+                <Warn>"The content was not formatted because the path `"{biome_path.as_str()}"` is ignored."</Warn>
+            });
             return Ok(());
         }
 
@@ -99,6 +103,7 @@ pub(crate) fn run<'a>(
             console.append(markup! {
                 {content}
             });
+            // Write error last because files may generally be long
             console.error(markup! {
                 <Warn>"The content was not formatted because the formatter is currently disabled."</Warn>
             });
@@ -130,6 +135,10 @@ pub(crate) fn run<'a>(
 
         if file_features.is_ignored() {
             console.append(markup! {{content}});
+            // Write error last because files may generally be long
+            console.error(markup! {
+                <Warn>"The content was not fixed because the path `"{biome_path.as_str()}"` is ignored."</Warn>
+            });
             return Ok(());
         }
 
diff --git a/crates/biome_cli/tests/snapshots/main_commands_check/check_stdin_ignores_unknown_file_path.snap b/crates/biome_cli/tests/snapshots/main_commands_check/check_stdin_ignores_unknown_file_path.snap
index 88585ac947b1..c9f8a1645258 100644
--- a/crates/biome_cli/tests/snapshots/main_commands_check/check_stdin_ignores_unknown_file_path.snap
+++ b/crates/biome_cli/tests/snapshots/main_commands_check/check_stdin_ignores_unknown_file_path.snap
@@ -13,3 +13,7 @@ function f() {var x=1; return{x}} class Foo {}
 ```block
 function f() {var x=1; return{x}} class Foo {}
 ```
+
+```block
+The content was not fixed because the path `mock.cc` is ignored.
+```
diff --git a/crates/biome_cli/tests/snapshots/main_commands_format/format_stdin_does_not_error_with_ignore_unknown_file_extensions.snap b/crates/biome_cli/tests/snapshots/main_commands_format/format_stdin_does_not_error_with_ignore_unknown_file_extensions.snap
index f61d4a0f1fb3..e33a80856272 100644
--- a/crates/biome_cli/tests/snapshots/main_commands_format/format_stdin_does_not_error_with_ignore_unknown_file_extensions.snap
+++ b/crates/biome_cli/tests/snapshots/main_commands_format/format_stdin_does_not_error_with_ignore_unknown_file_extensions.snap
@@ -13,3 +13,7 @@ function f() {return{}}
 ```block
 function f() {return{}}
 ```
+
+```block
+The content was not formatted because the path `mock.cc` is ignored.
+```
diff --git a/e2e-tests/relative-path-ignore-file/biome.json b/e2e-tests/relative-path-ignore-file/biome.json
index e84571ba3c6b..1aea52f104c2 100644
--- a/e2e-tests/relative-path-ignore-file/biome.json
+++ b/e2e-tests/relative-path-ignore-file/biome.json
@@ -1,5 +1,5 @@
 {
-	"root": false,
+	"root": true,
 	"files": {
 		"includes": ["**", "!file.js"]
 	},
diff --git a/e2e-tests/relative-path/biome.json b/e2e-tests/relative-path/biome.json
index a972cb86c08f..5a881e23adc9 100644
--- a/e2e-tests/relative-path/biome.json
+++ b/e2e-tests/relative-path/biome.json
@@ -1,5 +1,5 @@
 {
-	"root": false,
+	"root": true,
 	"files": {
 		"includes": ["**"]
 	},
diff --git a/e2e-tests/stdin-nested-config/app.js b/e2e-tests/stdin-nested-config/app.js
new file mode 100644
index 000000000000..c6184bf69097
--- /dev/null
+++ b/e2e-tests/stdin-nested-config/app.js
@@ -0,0 +1,5 @@
+let    x = 5;
+
+function indent() {
+        return x;
+}
diff --git a/e2e-tests/stdin-nested-config/app.js.formatted b/e2e-tests/stdin-nested-config/app.js.formatted
new file mode 100644
index 000000000000..99f9621d99dc
--- /dev/null
+++ b/e2e-tests/stdin-nested-config/app.js.formatted
@@ -0,0 +1,5 @@
+let x = 5;
+
+function indent() {
+    return x;
+}
diff --git a/e2e-tests/stdin-nested-config/biome.jsonc b/e2e-tests/stdin-nested-config/biome.jsonc
new file mode 100644
index 000000000000..42d507a3a185
--- /dev/null
+++ b/e2e-tests/stdin-nested-config/biome.jsonc
@@ -0,0 +1,16 @@
+{
+    "root": true,
+    "vcs": {
+        "enabled": false
+    },
+    "files": {
+        "ignoreUnknown": false,
+        // Include .js recursively, but not .ts
+        "includes": ["**/biome.jsonc", "**/*.js"]
+    },
+    "formatter": {
+        "enabled": true,
+        "indentStyle": "space",
+        "indentWidth": 4
+    }
+}
diff --git a/e2e-tests/stdin-nested-config/donotformat.ts b/e2e-tests/stdin-nested-config/donotformat.ts
new file mode 100644
index 000000000000..c5b0f8cd8a06
--- /dev/null
+++ b/e2e-tests/stdin-nested-config/donotformat.ts
@@ -0,0 +1 @@
+let x =              10;
diff --git a/e2e-tests/stdin-nested-config/subdirectory/biome.jsonc b/e2e-tests/stdin-nested-config/subdirectory/biome.jsonc
new file mode 100644
index 000000000000..c553bc42e339
--- /dev/null
+++ b/e2e-tests/stdin-nested-config/subdirectory/biome.jsonc
@@ -0,0 +1,12 @@
+{
+  "root": false,
+  "extends": "//",
+  "files": {
+    // This should be relative to the location of this config file, so we should not touch root/donotformat.ts
+    "includes": ["*.ts"]
+  },
+  "formatter": {
+    "indentStyle": "space",
+    "indentWidth": 2
+  }
+}
diff --git a/e2e-tests/stdin-nested-config/subdirectory/lib.js b/e2e-tests/stdin-nested-config/subdirectory/lib.js
new file mode 100644
index 000000000000..44fd558cea34
--- /dev/null
+++ b/e2e-tests/stdin-nested-config/subdirectory/lib.js
@@ -0,0 +1,5 @@
+let            y = 65;
+
+function indent() {
+               return y;
+}
diff --git a/e2e-tests/stdin-nested-config/subdirectory/lib.js.formatted b/e2e-tests/stdin-nested-config/subdirectory/lib.js.formatted
new file mode 100644
index 000000000000..97fb2c8ca73b
--- /dev/null
+++ b/e2e-tests/stdin-nested-config/subdirectory/lib.js.formatted
@@ -0,0 +1,5 @@
+let y = 65;
+
+function indent() {
+  return y;
+}
diff --git a/e2e-tests/stdin-nested-config/subdirectory/typed.ts b/e2e-tests/stdin-nested-config/subdirectory/typed.ts
new file mode 100644
index 000000000000..ee2ce6d1b806
--- /dev/null
+++ b/e2e-tests/stdin-nested-config/subdirectory/typed.ts
@@ -0,0 +1,5 @@
+let y              = 65;
+
+function indent() {
+        return y;
+}
diff --git a/e2e-tests/stdin-nested-config/subdirectory/typed.ts.formatted b/e2e-tests/stdin-nested-config/subdirectory/typed.ts.formatted
new file mode 100644
index 000000000000..97fb2c8ca73b
--- /dev/null
+++ b/e2e-tests/stdin-nested-config/subdirectory/typed.ts.formatted
@@ -0,0 +1,5 @@
+let y = 65;
+
+function indent() {
+  return y;
+}
diff --git a/e2e-tests/stdin-nested-config/test.sh b/e2e-tests/stdin-nested-config/test.sh
new file mode 100755
index 000000000000..d6cb1acd4693
--- /dev/null
+++ b/e2e-tests/stdin-nested-config/test.sh
@@ -0,0 +1,28 @@
+#!/usr/bin/env bash
+set -euo pipefail
+
+TEMP=$(mktemp)
+trap 'rm -f $TEMP' EXIT
+
+biome() {
+    cargo run --bin biome -- "$@"
+}
+
+STATUS=0
+diff_stdin_filepath() {
+    biome format --stdin-file-path="$1" < "$1" > "$TEMP"
+    if ! git diff --no-index "$1.formatted" "$TEMP"; then
+        STATUS=1
+    fi
+}
+
+diff_stdin_filepath app.js
+diff_stdin_filepath subdirectory/lib.js
+diff_stdin_filepath subdirectory/typed.ts
+
+biome format --stdin-file-path="donotformat.ts" < "donotformat.ts" > "$TEMP"
+if ! git diff --no-index "donotformat.ts" "$TEMP"; then
+    STATUS=1
+fi
+
+exit $STATUS
diff --git a/e2e-tests/test-all.sh b/e2e-tests/test-all.sh
index 3e98bf744360..ef462d693b19 100755
--- a/e2e-tests/test-all.sh
+++ b/e2e-tests/test-all.sh
@@ -1,12 +1,35 @@
-#!/bin/sh
+#!/usr/bin/env bash
+
+# Usage:
+#  ./test-all.sh
+#  ./test-all.sh stdin   # to filter tests by name
 
 set -eu
 
+# Change to the script's directory
+cd "$(dirname "$0")"
+
+# Glob matcher
+if [[ -z "${1:-}" ]]; then FILTER="*"; else FILTER="*$1*"; fi
+
+redecho() {
+    echo -e "\033[1;31m$1\033[0m"
+}
+
+bail() {
+    redecho "Error: $1"
+    exit 1
+}
+
 for x in *; do
     if test -d "$x"; then
+        if [[ "$x" != $FILTER ]]; then
+            echo "Skipping $x"
+            continue
+        fi
         echo "Testing $x..."
-        cd "$x"
-        sh test.sh
-        cd ..
+        pushd "$x" > /dev/null
+        bash test.sh || bail "Test failed: $x. To re-run: $0 $x"
+        popd > /dev/null
     fi
 done