diff --git a/crates/doc/src/builder.rs b/crates/doc/src/builder.rs
index a4019db4a6a3a..3788df8e7edfa 100644
--- a/crates/doc/src/builder.rs
+++ b/crates/doc/src/builder.rs
@@ -124,6 +124,7 @@ impl DocBuilder {
             .collect::<Vec<_>>();
 
         let out_dir = self.out_dir()?;
+        let out_target_dir = out_dir.clone();
         let documents = compiler.enter_mut(|compiler| -> eyre::Result<Vec<Vec<Document>>> {
             let gcx = compiler.gcx();
             let documents = combined_sources
@@ -197,7 +198,7 @@ impl DocBuilder {
                                     path.clone(),
                                     target_path,
                                     from_library,
-                                    self.config.out.clone(),
+                                    out_target_dir.clone(),
                                 )
                                 .with_content(DocumentContent::Single(item), ident))
                             })
@@ -231,7 +232,7 @@ impl DocBuilder {
                                     path.clone(),
                                     target_path,
                                     from_library,
-                                    self.config.out.clone(),
+                                    out_target_dir.clone(),
                                 )
                                 .with_content(DocumentContent::Constants(consts), identity),
                             )
@@ -250,7 +251,7 @@ impl DocBuilder {
                                         path.clone(),
                                         target_path,
                                         from_library,
-                                        self.config.out.clone(),
+                                        out_target_dir.clone(),
                                     )
                                     .with_content(
                                         DocumentContent::OverloadedFunctions(funcs),
diff --git a/crates/doc/src/preprocessor/contract_inheritance.rs b/crates/doc/src/preprocessor/contract_inheritance.rs
index 6d4195700bcc4..1c2159131b01a 100644
--- a/crates/doc/src/preprocessor/contract_inheritance.rs
+++ b/crates/doc/src/preprocessor/contract_inheritance.rs
@@ -62,7 +62,7 @@ impl ContractInheritance {
                 && let ParseSource::Contract(ref contract) = item.source
                 && base == contract.name.safe_unwrap().name
             {
-                return Some(candidate.target_path.clone());
+                return Some(candidate.relative_output_path().to_path_buf());
             }
         }
         None
diff --git a/crates/doc/src/writer/as_doc.rs b/crates/doc/src/writer/as_doc.rs
index ef6bf3875fcbb..b7d1490c1ccd2 100644
--- a/crates/doc/src/writer/as_doc.rs
+++ b/crates/doc/src/writer/as_doc.rs
@@ -9,7 +9,7 @@ use crate::{
 };
 use itertools::Itertools;
 use solang_parser::pt::{Base, FunctionDefinition};
-use std::path::{Path, PathBuf};
+use std::path::Path;
 
 /// The result of [`AsDoc::as_doc`].
 pub type AsDocResult = Result<String, std::fmt::Error>;
@@ -141,9 +141,6 @@ impl AsDoc for Document {
                         if !contract.base.is_empty() {
                             writer.write_bold("Inherits:")?;
 
-                            // we need this to find the _relative_ paths
-                            let src_target_dir = self.target_src_dir();
-
                             let mut bases = vec![];
                             let linked =
                                 read_context!(self, CONTRACT_INHERITANCE_ID, ContractInheritance);
@@ -155,11 +152,7 @@ impl AsDoc for Document {
                                     .as_ref()
                                     .and_then(|link| {
                                         link.get(base_ident).map(|path| {
-                                            let path = Path::new("/").join(
-                                                path.strip_prefix(&src_target_dir)
-                                                    .ok()
-                                                    .unwrap_or(path),
-                                            );
+                                            let path = Path::new("/").join(path);
                                             Markdown::Link(&base_doc, &path.display().to_string())
                                                 .as_doc()
                                         })
@@ -287,11 +280,6 @@ impl AsDoc for Document {
 }
 
 impl Document {
-    /// Where all the source files are written to
-    fn target_src_dir(&self) -> PathBuf {
-        self.out_target_dir.join("src")
-    }
-
     /// Writes a function to the buffer.
     fn write_function(
         &self,
diff --git a/crates/forge/tests/cli/doc.rs b/crates/forge/tests/cli/doc.rs
index fad1294b8fe09..97c829cade1d1 100644
--- a/crates/forge/tests/cli/doc.rs
+++ b/crates/forge/tests/cli/doc.rs
@@ -69,3 +69,51 @@ contract Example is IExample {
     assert!(content.contains("Process multiple addresses"));
     assert!(content.contains("Process an address with a value"));
 });
+
+// Test that hyperlinks use relative paths, not absolute paths
+// fixes <https://github.com/foundry-rs/foundry/issues/12361>
+forgetest_init!(hyperlinks_use_relative_paths, |prj, cmd| {
+    prj.add_source(
+        "IBase.sol",
+        r#"
+// SPDX-License-Identifier: MIT
+pragma solidity ^0.8.0;
+
+interface IBase {
+    function baseFunction() external;
+}
+"#,
+    );
+
+    prj.add_source(
+        "Derived.sol",
+        r#"
+// SPDX-License-Identifier: MIT
+pragma solidity ^0.8.0;
+
+import "./IBase.sol";
+
+/// @dev Inherits: {IBase}
+contract Derived is IBase {
+    function baseFunction() external override {}
+}
+"#,
+    );
+
+    cmd.args(["doc", "--build"]).assert_success();
+
+    let doc_path = prj.root().join("docs/src/src/Derived.sol/contract.Derived.md");
+    let content = std::fs::read_to_string(&doc_path).unwrap();
+
+    assert!(
+        content.contains("[IBase](/src/"),
+        "Hyperlink should use relative path starting with /src/, but found: {:?}",
+        content.lines().find(|line| line.contains("[IBase]")).unwrap_or("not found")
+    );
+    assert!(!content.contains("/Users/"), "Hyperlink should not contain absolute path /Users/");
+    assert!(!content.contains("/home/"), "Hyperlink should not contain absolute path /home/");
+    assert!(
+        content.contains("IBase.sol/interface.IBase.md"),
+        "Hyperlink should point to IBase.sol/interface.IBase.md"
+    );
+});