diff --git a/src/libexpr/common-opts.cc b/src/libexpr/common-opts.cc
index d029d2ec35..e0865d9fcc 100644
--- a/src/libexpr/common-opts.cc
+++ b/src/libexpr/common-opts.cc
@@ -44,4 +44,15 @@ bool parseSearchPathArg(const string & arg, Strings::iterator & i,
 }
 
 
+Path lookupFileArg(EvalState & state, string s)
+{
+    if (s.size() > 2 && s.at(0) == '<' && s.at(s.size() - 1) == '>') {
+        Path p = state.findFile(s.substr(1, s.size() - 2));
+        if (p == "") throw Error(format("file `%1%' was not found in the Nix search path (add it using $NIX_PATH or -I)") % p);
+        return p;
+    } else
+        return absPath(s);
+}
+
+
 }
diff --git a/src/libexpr/common-opts.hh b/src/libexpr/common-opts.hh
index 6b7247fc3d..c28641e901 100644
--- a/src/libexpr/common-opts.hh
+++ b/src/libexpr/common-opts.hh
@@ -14,6 +14,8 @@ bool parseOptionArg(const string & arg, Strings::iterator & i,
 bool parseSearchPathArg(const string & arg, Strings::iterator & i,
     const Strings::iterator & argsEnd, EvalState & state);
 
+Path lookupFileArg(EvalState & state, string s);
+
 }
 
 
diff --git a/src/nix-env/nix-env.cc b/src/nix-env/nix-env.cc
index 3dfecb2d73..a8d9076cfb 100644
--- a/src/nix-env/nix-env.cc
+++ b/src/nix-env/nix-env.cc
@@ -1270,7 +1270,7 @@ void run(Strings args)
         else if (arg == "--profile" || arg == "-p")
             globals.profile = absPath(needArg(i, args, arg));
         else if (arg == "--file" || arg == "-f")
-            globals.instSource.nixExprPath = absPath(needArg(i, args, arg));
+            globals.instSource.nixExprPath = lookupFileArg(globals.state, needArg(i, args, arg));
         else if (arg == "--switch-profile" || arg == "-S")
             op = opSwitchProfile;
         else if (arg == "--switch-generation" || arg == "-G")
diff --git a/src/nix-instantiate/nix-instantiate.cc b/src/nix-instantiate/nix-instantiate.cc
index 98eadbd695..93aa509434 100644
--- a/src/nix-instantiate/nix-instantiate.cc
+++ b/src/nix-instantiate/nix-instantiate.cc
@@ -138,8 +138,7 @@ void run(Strings args)
     }
 
     foreach (Strings::iterator, i, files) {
-        Path path = absPath(*i);
-        Expr * e = state.parseExprFromFile(path);
+        Expr * e = state.parseExprFromFile(lookupFileArg(state, *i));
         processExpr(state, attrPaths, parseOnly, strict, autoArgs,
             evalOnly, xmlOutput, xmlOutputSourceLocation, e);
     }
diff --git a/tests/user-envs.sh b/tests/user-envs.sh
index 025a5ff817..5037e28b91 100644
--- a/tests/user-envs.sh
+++ b/tests/user-envs.sh
@@ -36,7 +36,7 @@ nix-env -p $profiles/test -q '*' | grep -q foo-2.0pre1
 test "$($profiles/test/bin/foo)" = "foo-2.0pre1"
 
 # Upgrade "foo": should install foo-2.0.
-nix-env -p $profiles/test -f ./user-envs.nix -u foo
+NIX_PATH=nixpkgs=./user-envs.nix nix-env -p $profiles/test -f '<nixpkgs>' -u foo
 
 # Query installed: should contain foo-2.0 now.
 test "$(nix-env -p $profiles/test -q '*' | wc -l)" -eq 1