diff --git a/src/kernel/mconfig_dot.ml b/src/kernel/mconfig_dot.ml
index 65d94e76b..c146c8733 100644
--- a/src/kernel/mconfig_dot.ml
+++ b/src/kernel/mconfig_dot.ml
@@ -129,6 +129,34 @@ end = struct
     | Dot_merlin -> "dot-merlin-reader"
     | Dune -> "dune"
 
+  let find_exe = function
+    | Dot_merlin ->
+      (* 1. If DOT_MERLIN_READER_EXE is defined, then use its value for the
+            dot-merlin-reader exe
+         2. If not, look in the same directory as the merlin executable for a
+            dot-merlin-reader.
+         3. If not, fallback to using whatever one is on the PATH. *)
+      let get_from_env_var = lazy (Sys.getenv_opt "DOT_MERLIN_READER_EXE") in
+      let get_from_same_dir_as_merlin_exe =
+        lazy
+          (let merlin_exe = Unix.realpath Sys.executable_name in
+           let merlin_bin = Filename.dirname merlin_exe in
+           let dot_merlin_reader_exe =
+             Filename.concat merlin_bin "dot-merlin-reader"
+           in
+           match Sys.file_exists dot_merlin_reader_exe with
+           | true -> Some dot_merlin_reader_exe
+           | false -> None)
+      in
+      List.find_map_opt
+        [ get_from_env_var; get_from_same_dir_as_merlin_exe ]
+        ~f:Lazy.force
+      |> Option.value ~default:"dot-merlin-reader"
+    | Dune ->
+      (* Always use the dune on the PATH *)
+      (* CR-someday: consider doing something better here *)
+      "dune"
+
   exception Process_exited
 
   module Process = struct
@@ -148,10 +176,10 @@ end = struct
       let prog, args =
         match cfg with
         | Dot_merlin ->
-          let prog = "dot-merlin-reader" in
+          let prog = find_exe Dot_merlin in
           (prog, [| prog |])
         | Dune ->
-          let prog = "dune" in
+          let prog = find_exe Dune in
           (prog, [| prog; "ocaml-merlin"; "--no-print-directory" |])
       in
       let cwd = Sys.getcwd () in
@@ -393,8 +421,11 @@ let get_config { workdir; process_dir; configurator } path_abs =
   | Unix.Unix_error (ENOENT, "create_process", "dot-merlin-reader") ->
     let error =
       Printf.sprintf
-        "%s could not find `dot-merlin-reader` in the PATH. Please make sure \
-         that `dot-merlin-reader` is installed and in the PATH."
+        "%s could not find `dot-merlin-reader`. Please make sure that \
+         `dot-merlin-reader` is installed. `dot-merlin-reader` is expected to \
+         be in the same directory as the merlin executable or on the PATH. You \
+         may also specify the path to `dot-merlin-reader` via the \
+         `DOT_MERLIN_READER_EXE` environment variable."
         (Lib_config.program_name ())
     in
     (empty_config, [ error ])
diff --git a/src/utils/std.ml b/src/utils/std.ml
index af969edcb..26637f52e 100644
--- a/src/utils/std.ml
+++ b/src/utils/std.ml
@@ -109,12 +109,17 @@ module List = struct
       | None -> filter_map ~f xs
       | Some x -> x :: filter_map ~f xs)
 
-  let rec find_map ~f = function
-    | [] -> raise Not_found
+  let rec find_map_opt ~f = function
+    | [] -> None
     | x :: xs -> (
       match f x with
-      | None -> find_map ~f xs
-      | Some x' -> x')
+      | None -> find_map_opt ~f xs
+      | Some x' -> Some x')
+
+  let find_map ~f l =
+    match find_map_opt ~f l with
+    | None -> raise Not_found
+    | Some x -> x
 
   let rec map_end ~f l1 l2 =
     match l1 with
diff --git a/tests/test-dirs/config/dot-merlin-reader/find-dot-merlin-reader.t b/tests/test-dirs/config/dot-merlin-reader/find-dot-merlin-reader.t
new file mode 100644
index 000000000..91c48fbcc
--- /dev/null
+++ b/tests/test-dirs/config/dot-merlin-reader/find-dot-merlin-reader.t
@@ -0,0 +1,69 @@
+  $ cat > .merlin <<EOF
+  > UNIT_NAME Dot_merlin_was_successfully_read
+  > EOF
+
+
+In real-world scenarios, ocamlmerlin and dot-merlin-reader are usually installed in the
+same directory (for example, via an opam install). In this situation, if dot-merlin-reader
+isn't on the PATH, we can still read the .merlin file.
+  $ mkdir merlin-bin
+  $ cp $(which dot-merlin-reader) merlin-bin
+  $ cp $(which ocamlmerlin) merlin-bin
+  $ cp $(which ocamlmerlin-server) merlin-bin
+  $ cp $(which ocaml-index) merlin-bin
+
+  $ PATH="" merlin-bin/ocamlmerlin single dump-configuration -filename test.ml \
+  > | jq .value.merlin.unit_name -r
+  Dot_merlin_was_successfully_read
+
+If ocamlmerlin is a symlink, it looks in the original install directory.
+
+  $ mkdir merlin-bin-symlink
+  $ ln -s $(realpath merlin-bin/ocamlmerlin) merlin-bin-symlink/ocamlmerlin
+
+  $ PATH="" merlin-bin-symlink/ocamlmerlin single dump-configuration -filename test.ml \
+  > | jq .value.merlin.unit_name -r
+  Dot_merlin_was_successfully_read
+
+The dot-merlin-reader in the same directory is prioritized over the one on the PATH.
+  $ mkdir bad-dot-merlin-reader-bin
+  $ cat > bad-dot-merlin-reader-bin/dot-merlin-reader <<EOF
+  > #!/bin/sh
+  > echo "this is a bad dot-merlin-reader" >&2
+  > exit 1
+  > EOF
+
+  $ PATH="bad-dot-merlin-reader-bin" \
+  > merlin-bin/ocamlmerlin single dump-configuration -filename test.ml \
+  > | jq .value.merlin.unit_name -r
+  Dot_merlin_was_successfully_read
+
+But we can fall back to the one on the PATH if a dot-merlin-reader doesn't exist in the
+same directory.
+  $ cp -r merlin-bin merlin-bin-no-reader
+  $ rm merlin-bin-no-reader/dot-merlin-reader
+
+  $ PATH="" \
+  > merlin-bin-no-reader/ocamlmerlin single dump-configuration -filename test.ml \
+  > | jq .value.merlin.unit_name -r
+  null
+
+  $ PATH="merlin-bin" \
+  > merlin-bin-no-reader/ocamlmerlin single dump-configuration -filename test.ml \
+  > | jq .value.merlin.unit_name -r
+  Dot_merlin_was_successfully_read
+
+We can override using the DOT_MERLIN_READER_EXE environment variable.
+  $ cp -r merlin-bin merlin-bin-bad-reader
+  $ rm merlin-bin-bad-reader/dot-merlin-reader
+  $ cp bad-dot-merlin-reader-bin/dot-merlin-reader merlin-bin-bad-reader
+
+  $ PATH="merlin-bin-bad-reader" \
+  > merlin-bin-bad-reader/ocamlmerlin single dump-configuration -filename test.ml \
+  > | jq .value.merlin.unit_name -r
+  null
+
+  $ PATH="merlin-bin-bad-reader" DOT_MERLIN_READER_EXE="merlin-bin/dot-merlin-reader" \
+  > merlin-bin-bad-reader/ocamlmerlin single dump-configuration -filename test.ml \
+  > | jq .value.merlin.unit_name -r
+  Dot_merlin_was_successfully_read
diff --git a/tests/test-dirs/config/no-dune.t b/tests/test-dirs/config/no-dune.t
index 093914a4d..ecf944de9 100644
--- a/tests/test-dirs/config/no-dune.t
+++ b/tests/test-dirs/config/no-dune.t
@@ -27,5 +27,5 @@
 
   $ cat output | jq '.value.merlin.failures'
   [
-    "Merlin could not find `dot-merlin-reader` in the PATH. Please make sure that `dot-merlin-reader` is installed and in the PATH."
+    "Merlin could not find `dot-merlin-reader`. Please make sure that `dot-merlin-reader` is installed. `dot-merlin-reader` is expected to be in the same directory as the merlin executable or on the PATH. You may also specify the path to `dot-merlin-reader` via the `DOT_MERLIN_READER_EXE` environment variable."
   ]