diff --git a/CHANGELOG.md b/CHANGELOG.md
index 8fc00ca25f..aa30313674 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -60,6 +60,8 @@ END_UNRELEASED_TEMPLATE
 * (rules) {obj}`pip_compile` now generates a `.test` target. The `_test` target is deprecated
   and will be removed in the next major release.
   ([#2794](https://github.com/bazel-contrib/rules_python/issues/2794)
+* (runfiles) Fall back to directory based runfiles using relative paths if runfiles
+  cannot be found using environment variables.
 
 {#v0-0-0-fixed}
 ### Fixed
diff --git a/python/runfiles/runfiles.py b/python/runfiles/runfiles.py
index 3943be5646..020adedabb 100644
--- a/python/runfiles/runfiles.py
+++ b/python/runfiles/runfiles.py
@@ -323,6 +323,9 @@ def Create(env: Optional[Dict[str, str]] = None) -> Optional["Runfiles"]:
         Otherwise, if `env` contains "RUNFILES_DIR" with non-empty value (checked in
         this priority order), this method returns a directory-based implementation.
 
+        Otherwise, if a valid runfiles folder is found relative to this file, this
+        method returns a directory-based implementation.
+
         If neither cases apply, this method returns null.
 
         Args:
@@ -339,6 +342,10 @@ def Create(env: Optional[Dict[str, str]] = None) -> Optional["Runfiles"]:
         directory = env_map.get("RUNFILES_DIR")
         if directory:
             return CreateDirectoryBased(directory)
+        
+        directory =  _FindPythonRunfilesRoot()
+        if os.path.exists(os.path.join(directory, "_repo_mapping")):
+            return CreateDirectoryBased(directory)
 
         return None
 
diff --git a/tests/runfiles/BUILD.bazel b/tests/runfiles/BUILD.bazel
index 5c92026082..19eb0140e1 100644
--- a/tests/runfiles/BUILD.bazel
+++ b/tests/runfiles/BUILD.bazel
@@ -1,6 +1,7 @@
 load("@bazel_skylib//rules:build_test.bzl", "build_test")
 load("@rules_python//python:py_test.bzl", "py_test")
 load("@rules_python//python/private:bzlmod_enabled.bzl", "BZLMOD_ENABLED")  # buildifier: disable=bzl-visibility
+load("//tests/support:sh_py_run_test.bzl", "sh_py_run_test")
 
 py_test(
     name = "runfiles_test",
@@ -11,6 +12,14 @@ py_test(
     deps = ["//python/runfiles"],
 )
 
+sh_py_run_test(
+    name = "run_binary_with_runfiles_test",
+    build_python_zip = "no",
+    py_src = "bin_with_runfiles_test.py",
+    sh_src = "run_binary_with_runfiles_test.sh",
+    deps = ["//python/runfiles"],
+)
+
 build_test(
     name = "publishing",
     targets = [
diff --git a/tests/runfiles/bin_with_runfiles_test.py b/tests/runfiles/bin_with_runfiles_test.py
new file mode 100644
index 0000000000..0fc85c92c0
--- /dev/null
+++ b/tests/runfiles/bin_with_runfiles_test.py
@@ -0,0 +1,32 @@
+# Copyright 2018 The Bazel Authors. All rights reserved.
+#
+# Licensed under the Apache License, Version 2.0 (the "License");
+# you may not use this file except in compliance with the License.
+# You may obtain a copy of the License at
+#
+#    http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS,
+# WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+# See the License for the specific language governing permissions and
+# limitations under the License.
+
+import os
+import unittest
+
+from python.runfiles import runfiles
+
+
+class RunfilesTest(unittest.TestCase):
+    """Unit tests for `rules_python.python.runfiles.Runfiles`."""
+
+    def testCreatesDirectoryBasedRunfiles(self) -> None:
+        r = runfiles.Create()
+        repo = r.CurrentRepository() or "_main"
+        bin_location = r.Rlocation(os.path.join(repo,"tests/runfiles/bin_with_runfiles_test.py"))
+        self.maxDiff = None
+        self.assertEqual(bin_location, __file__)
+
+if __name__ == "__main__":
+    unittest.main()
diff --git a/tests/runfiles/run_binary_with_runfiles_test.sh b/tests/runfiles/run_binary_with_runfiles_test.sh
new file mode 100755
index 0000000000..e76c25de30
--- /dev/null
+++ b/tests/runfiles/run_binary_with_runfiles_test.sh
@@ -0,0 +1,39 @@
+# Copyright 2024 The Bazel Authors. All rights reserved.
+#
+# Licensed under the Apache License, Version 2.0 (the "License");
+# you may not use this file except in compliance with the License.
+# You may obtain a copy of the License at
+#
+#    http://www.apache.org/licenses/LICENSE-2.0
+#
+# Unless required by applicable law or agreed to in writing, software
+# distributed under the License is distributed on an "AS IS" BASIS,
+# WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+# See the License for the specific language governing permissions and
+# limitations under the License.
+
+# --- begin runfiles.bash initialization v3 ---
+# Copy-pasted from the Bazel Bash runfiles library v3.
+set -uo pipefail; set +e; f=bazel_tools/tools/bash/runfiles/runfiles.bash
+source "${RUNFILES_DIR:-/dev/null}/$f" 2>/dev/null || \
+  source "$(grep -sm1 "^$f " "${RUNFILES_MANIFEST_FILE:-/dev/null}" | cut -f2- -d' ')" 2>/dev/null || \
+  source "$0.runfiles/$f" 2>/dev/null || \
+  source "$(grep -sm1 "^$f " "$0.runfiles_manifest" | cut -f2- -d' ')" 2>/dev/null || \
+  source "$(grep -sm1 "^$f " "$0.exe.runfiles_manifest" | cut -f2- -d' ')" 2>/dev/null || \
+  { echo>&2 "ERROR: cannot find $f"; exit 1; }; f=; set -e
+# --- end runfiles.bash initialization v3 ---
+set +e
+
+bin=$(rlocation $BIN_RLOCATION)
+if [[ -z "$bin" ]]; then
+  echo "Unable to locate test binary: $BIN_RLOCATION"
+  exit 1
+fi
+
+# Test invocation without RUNFILES environment variables set
+unset RUNFILES_MANIFEST_FILE
+unset RUNFILES_DIR
+
+# Fail if tests fail
+set -e
+${bin}
diff --git a/tests/runfiles/runfiles_test.py b/tests/runfiles/runfiles_test.py
index a3837ac842..c6ad98a1b3 100644
--- a/tests/runfiles/runfiles_test.py
+++ b/tests/runfiles/runfiles_test.py
@@ -164,7 +164,7 @@ def _Run():
 
         self.assertRaisesRegex(IOError, "non-existing path", _Run)
 
-    def testFailsToCreateAnyRunfilesBecauseEnvvarsAreNotDefined(self) -> None:
+    def testSucceedsWithoutEnvVars(self) -> None:
         with _MockFile(contents=["a b"]) as mf:
             runfiles.Create(
                 {
@@ -179,8 +179,8 @@ def testFailsToCreateAnyRunfilesBecauseEnvvarsAreNotDefined(self) -> None:
                 "TEST_SRCDIR": "always ignored",
             }
         )
-        self.assertIsNone(runfiles.Create({"TEST_SRCDIR": "always ignored"}))
-        self.assertIsNone(runfiles.Create({"FOO": "bar"}))
+        self.assertIsNotNone(runfiles.Create({"TEST_SRCDIR": "always ignored"}))
+        self.assertIsNotNone(runfiles.Create({"FOO": "bar"}))
 
     def testManifestBasedRlocation(self) -> None:
         with _MockFile(