diff --git a/src/core/config.cpp b/src/core/config.cpp
index 623be4d..0463a13 100644
--- a/src/core/config.cpp
+++ b/src/core/config.cpp
@@ -19,7 +19,7 @@ void Loader::ReadBasicConfig()
     linb::ini data;
 
     Log("Loading basic config file %s", basicConfig.c_str());
-    if(data.load_file(gamePath + basicConfig))
+    if(data.load_file(modloaderPath + basicConfig))
     {
         // Read basic stuff from [Config] section
         for(auto& pair : data["Config"])
@@ -62,7 +62,7 @@ void Loader::ReadBasicConfig()
      config["AutoRefresh"]          = modloader::to_string(bAutoRefresh);
 
      // Log only about failure since we'll be saving every time a entry on the menu changes
-     if(!ini.write_file(gamePath + basicConfig))
+     if(!ini.write_file(modloaderPath + basicConfig))
          Log("Failed to save basic config file");
  }
 
@@ -224,7 +224,7 @@ void Loader::UpdateOldConfig_0115_021()
             newer[newsec.section] = old[oldsec.section];
     };
 
-    if(old.load_file(gamePath + "/modloader/modloader.ini"))
+    if(old.load_file(modloaderPath + folderConfigFilename))
     {
         if(old.count("CONFIG") && old.count("PRIORITY"))
         {
@@ -246,7 +246,7 @@ void Loader::UpdateOldConfig_0115_021()
                 kv.second = std::to_string(pr > 0 && pr <= limit? (limit + 1) - pr : pr);
             }
 
-            newer.write_file(gamePath + "modloader/" +  folderConfigFilename);
+            newer.write_file(modloaderPath + folderConfigFilename);
         }
     }
 }
@@ -275,7 +275,7 @@ void Loader::UpdateOldConfig_023_024()
             newer[newsec.section] = old[oldsec.section];
     };
 
-    if(old.load_file(gamePath + "modloader/modloader.ini"))
+    if(old.load_file(modloaderPath + folderConfigFilename))
     {
         if(old.count("Config") && old.count("Priority"))
         {
@@ -292,7 +292,7 @@ void Loader::UpdateOldConfig_023_024()
             newer.set("Folder.Config", "Profile", "Default");
             newer["Profiles.Default.ExclusiveMods"];
 
-            newer.write_file(gamePath + "modloader/" +  folderConfigFilename);
+            newer.write_file(modloaderPath + folderConfigFilename);
         }
     }
 }
diff --git a/src/core/extras/gta3/menu.cpp b/src/core/extras/gta3/menu.cpp
index fe0e6b1..c4511b8 100644
--- a/src/core/extras/gta3/menu.cpp
+++ b/src/core/extras/gta3/menu.cpp
@@ -211,7 +211,7 @@ void TheMenu::LoadText()
 
     auto LoadFXT = [this](uint32_t locale)
     {
-        auto lang = loader.gamePath + loader.dataPath + "/text/" + std::to_string(locale) + "/menu.fxt";
+        auto lang = loader.modloaderPath + loader.dataPath + "text/" + std::to_string(locale) + "/menu.fxt";
         return ParseFXT(fxt, lang.data());
     };
 
diff --git a/src/core/folder.cpp b/src/core/folder.cpp
index b9cab27..d4ee577 100644
--- a/src/core/folder.cpp
+++ b/src/core/folder.cpp
@@ -386,7 +386,7 @@ void Loader::FolderInformation::LoadConfigFromINI()
         Log("Warning: Failed to load folder config file");
 
     // Then from the profiles directory
-    if(MakeSureDirectoryExistA((loader.gamePath + loader.profilesPath).c_str()))
+    if(MakeSureDirectoryExistA((loader.modloaderPath + loader.profilesPath).c_str()))
     {
         ::scoped_gdir xdir(loader.profilesPath.c_str());
         for(auto& filename : FilesWalk("", "*.ini", false))
@@ -430,7 +430,7 @@ void Loader::FolderInformation::SaveConfigForINI()
             // Profile direcly in modloader.ini
             profile.SaveConfigForINI(ini);
         }
-        else if(MakeSureDirectoryExistA((loader.gamePath + loader.profilesPath).c_str()))
+        else if(MakeSureDirectoryExistA((loader.modloaderPath + loader.profilesPath).c_str()))
         {
             // This profile has it's own directory
             ::scoped_gdir xdir(loader.profilesPath.c_str());
diff --git a/src/core/loader.cpp b/src/core/loader.cpp
index 26cf56b..3dda965 100644
--- a/src/core/loader.cpp
+++ b/src/core/loader.cpp
@@ -19,6 +19,14 @@ REGISTER_ML_NULL();
 
 // Mod Loader object
 Loader loader;
+static HINSTANCE hLoaderModule = NULL;
+
+static std::string MakePathRelativeTo(const std::string& path, const std::string& base)
+{
+    if(path.size() >= base.size() && !_strnicmp(path.c_str(), base.c_str(), base.size()))
+        return path.substr(base.size());
+    return path;
+}
 
 /*
  * DllMain
@@ -29,6 +37,7 @@ BOOL WINAPI DllMain(HINSTANCE hinstDLL, DWORD fdwReason, LPVOID lpvReserved)
 {
     if(fdwReason == DLL_PROCESS_ATTACH)
     {
+        hLoaderModule = hinstDLL;
         if(!loader.Patch())
             return FALSE;
     }
@@ -139,10 +148,27 @@ bool Loader::Patch()
 void Loader::Startup()
 {
     char rootPath[MAX_PATH];
+    char moduleFilename[MAX_PATH];
     char appDataPath[MAX_PATH];
 
-    // If not running yet and 'modloader' folder exists, let's start up
-    if(!this->bRunning && IsDirectoryA("modloader"))
+    GetCurrentDirectoryA(sizeof(rootPath), rootPath);
+    MakeSureStringIsDirectory(this->gamePath = rootPath);
+
+    if(hLoaderModule && GetModuleFileNameA(hLoaderModule, moduleFilename, sizeof(moduleFilename)))
+    {
+        this->modulePath = moduleFilename;
+        this->modulePath.erase(this->modulePath.find_last_of("\\/") + 1);
+        MakeSureStringIsDirectory(this->modulePath);
+    }
+    else
+        this->modulePath = this->gamePath;
+
+    std::string rootModloaderPath = this->gamePath + "modloader";
+    std::string moduleModloaderPath = this->modulePath + "modloader";
+
+    // If not running yet and a 'modloader' folder exists, let's start up.
+    // Prefer the ASI directory, then fall back to the traditional game root folder.
+    if(!this->bRunning && (IsDirectoryA(rootModloaderPath.c_str()) || IsDirectoryA(moduleModloaderPath.c_str())))
     {
         // Cleanup the base structure
         memset(this, 0, sizeof(modloader_t));
@@ -157,14 +183,19 @@ void Loader::Startup()
         this->maxBytesInLog  = 5242880;     // 5 MiB
         this->currentModId   = 0;
         this->currentFileId  = 0x8000000000000000;  // File id should have the hibit set
-        
-        // Open the log file
-        OpenLog();
-        LogGameVersion();
 
         // Setup root path variables
-        GetCurrentDirectoryA(sizeof(rootPath), rootPath);
         MakeSureStringIsDirectory(this->gamePath = rootPath);
+        MakeSureStringIsDirectory(this->modulePath);
+        this->modloaderPath = IsDirectoryA(moduleModloaderPath.c_str())? moduleModloaderPath : rootModloaderPath;
+        MakeSureStringIsDirectory(this->modloaderPath);
+        MakeSureStringIsDirectory(this->modloaderRelativePath = MakePathRelativeTo(this->modloaderPath, this->gamePath));
+        this->mods = FolderInformation(this->modloaderRelativePath);
+
+        // Open the log file
+        OpenLog();
+        LogGameVersion();
+        Log("Using Mod Loader folder \"%s\"", this->modloaderPath.c_str());
 
         // Setup "%ProgramData%/modloader/" variable
         if(SUCCEEDED(SHGetFolderPathA(NULL, CSIDL_COMMON_APPDATA|CSIDL_FLAG_CREATE, NULL, SHGFP_TYPE_CURRENT, appDataPath)))
@@ -175,22 +206,22 @@ void Loader::Startup()
             MakeSureStringIsDirectory(MakeSureStringIsDirectory(this->localAppDataPath = appDataPath).append("modloader"));
 
         // Setup basic path variables
-        this->dataPath    = "modloader/.data/";
-        this->pluginPath  = "modloader/.data/plugins/";
-        this->profilesPath= "modloader/.profiles/";
+        this->dataPath    = ".data/";
+        this->pluginPath  = ".data/plugins/";
+        this->profilesPath= ".profiles/";
 
         // Setup config file names
         this->folderConfigFilename = "modloader.ini";
         this->basicConfig          = dataPath + "config.ini";
         this->pluginConfigFilename = "plugins.ini";
-        this->folderConfigDefault  = gamePath + dataPath + "modloader.ini.0";
-        this->basicConfigDefault   = gamePath + dataPath + "config.ini.0";
-        this->pluginConfigDefault  = gamePath + dataPath + "plugins.ini.0";
+        this->folderConfigDefault  = modloaderPath + dataPath + "modloader.ini.0";
+        this->basicConfigDefault   = modloaderPath + dataPath + "config.ini.0";
+        this->pluginConfigDefault  = modloaderPath + dataPath + "plugins.ini.0";
 
         // Make sure the important folders exist
-        if(!MakeSureDirectoryExistA(dataPath.c_str())
-        || !MakeSureDirectoryExistA(profilesPath.c_str())
-        || !MakeSureDirectoryExistA(pluginPath.c_str())
+        if(!MakeSureDirectoryExistA((modloaderPath + dataPath).c_str())
+        || !MakeSureDirectoryExistA((modloaderPath + profilesPath).c_str())
+        || !MakeSureDirectoryExistA((modloaderPath + pluginPath).c_str())
         || !MakeSureDirectoryExistA(commonAppDataPath.c_str())
         || !MakeSureDirectoryExistA(localAppDataPath.c_str()))
         {
@@ -224,7 +255,7 @@ void Loader::Startup()
         this->UpdateOldConfig();
 
         // Load the basic configuration file
-        CopyFileA(basicConfigDefault.c_str(), basicConfig.c_str(), TRUE);
+        CopyFileA(basicConfigDefault.c_str(), (modloaderPath + basicConfig).c_str(), TRUE);
         this->ReadBasicConfig();
         
         // Check if logging is disabled by the basic config file
diff --git a/src/core/loader.hpp b/src/core/loader.hpp
index 462e1d6..e458773 100644
--- a/src/core/loader.hpp
+++ b/src/core/loader.hpp
@@ -468,6 +468,7 @@ class Loader : public modloader_t
     protected:
         friend struct Updating;
         friend struct scoped_gdir;
+        friend std::string GetGDirPath(const char* newdir);
         friend class  TheMenu;
 
         uint32_t       mUpdateRefCount = 0;
@@ -489,11 +490,14 @@ class Loader : public modloader_t
         
         // Directories
         std::string     gamePath;               // Full game path
-        std::string     dataPath;               // .data path
-        std::string     profilesPath;           // .profiles path
+        std::string     modulePath;             // Full path where modloader.asi is located
+        std::string     modloaderPath;          // Full path to the active modloader folder
+        std::string     modloaderRelativePath;  // Active modloader folder relative to game path when possible
+        std::string     dataPath;               // .data path, relative to modloader path
+        std::string     profilesPath;           // .profiles path, relative to modloader path
         std::string     commonAppDataPath;      // for all users AppData path
         std::string     localAppDataPath;       // for the current user AppData path
-        std::string     pluginPath;             // Plugins path (relative to game path)
+        std::string     pluginPath;             // Plugins path, relative to modloader path
 
         std::string     basicConfig;
         std::string     basicConfigDefault;     // Full path for the default basic config file
@@ -551,8 +555,10 @@ class Loader : public modloader_t
     public:
         
         // Constructor
-        Loader() : mods("modloader")
+        Loader() : mods("")
         {}
+
+        const std::string& GetModLoaderPath() const { return modloaderPath; }
         
         // Patches the game code to run this core
         bool Patch();
@@ -691,10 +697,22 @@ inline bool operator==(const Loader::PluginInformation& a, const Loader::PluginI
     return (&a == &b);
 }
 
-// Scoped chdir relative to gamedir
+inline std::string GetGDirPath(const char* newdir)
+{
+    if(!newdir[0])
+        return loader.gamePath;
+    if(modloader::IsAbsolutePath(newdir))
+        return newdir;
+    if(loader.modloaderRelativePath.size()
+    && !_strnicmp(newdir, loader.modloaderRelativePath.c_str(), loader.modloaderRelativePath.size()))
+        return loader.gamePath + newdir;
+    return loader.modloaderPath + newdir;
+}
+
+// Scoped chdir relative to active modloader dir, or gamedir for an empty path
 struct scoped_gdir : public modloader::scoped_chdir
 {
-    scoped_gdir(const char* newdir) : scoped_chdir((!newdir[0]? loader.gamePath : loader.gamePath + newdir).data())
+    scoped_gdir(const char* newdir) : scoped_chdir(GetGDirPath(newdir).data())
     { }
 };
 
diff --git a/src/core/logging.cpp b/src/core/logging.cpp
index 0fef100..8656626 100644
--- a/src/core/logging.cpp
+++ b/src/core/logging.cpp
@@ -35,7 +35,7 @@ void Loader::OpenLog()
 void Loader::TruncateLog()
 {
     // Clears the ammount of bytes written...
-    auto path = this->gamePath + "modloader/modloader.log";
+    auto path = this->modloaderPath + "modloader.log";
     numBytesInLog = 0;
     
     if(logfile == nullptr)
diff --git a/src/core/plugins.cpp b/src/core/plugins.cpp
index 7f847f8..d3cf3c2 100644
--- a/src/core/plugins.cpp
+++ b/src/core/plugins.cpp
@@ -116,7 +116,7 @@ bool Loader::LoadPlugin(std::string filename)
 
 
     // Load the plugin module, use full path because we don't want to conflict with any other plugin with same name but different directory
-    if(module = LoadLibraryA((this->gamePath + this->pluginPath + modulename).c_str()))
+    if(module = LoadLibraryA((this->modloaderPath + this->pluginPath + modulename).c_str()))
     {
         Log("Loading plugin module \"%s\"", modulename);
         auto GetLoaderVersion = (modloader_fGetLoaderVersion) GetProcAddress(module, "GetLoaderVersion");
diff --git a/src/core/watcher.cpp b/src/core/watcher.cpp
index 715cf6d..7e30a80 100644
--- a/src/core/watcher.cpp
+++ b/src/core/watcher.cpp
@@ -58,7 +58,7 @@ void Loader::StartupWatcher()
             if(hCancelEvent)
             {
                 // Takes up the directory handle for modloader...
-                hDirectory = CreateFileA((this->gamePath + "modloader/").c_str(),
+                hDirectory = CreateFileA(this->modloaderPath.c_str(),
                                         FILE_LIST_DIRECTORY, (FILE_SHARE_READ|FILE_SHARE_WRITE|FILE_SHARE_DELETE),
                                         NULL, OPEN_EXISTING, (FILE_FLAG_BACKUP_SEMANTICS|FILE_FLAG_OVERLAPPED), NULL);
                 if(hDirectory != INVALID_HANDLE_VALUE)
@@ -373,7 +373,7 @@ static void NotifyJournal(std::string modname, int action, bool is_root)
         {
             // Something changed in the directory itself, not inside it
 
-            bool is_existing_directory = !!IsDirectoryA(std::string(loader.gamepath).append("modloader/").append(modname).c_str());
+            bool is_existing_directory = !!IsDirectoryA((loader.GetModLoaderPath() + modname).c_str());
 
             if(action == FILE_ACTION_ADDED || action == FILE_ACTION_RENAMED_NEW_NAME)
                 AddToJournal(Loader::Status::Added);