diff --git a/README.md b/README.md
index 7aee5b1..0915358 100644
--- a/README.md
+++ b/README.md
@@ -67,7 +67,8 @@ to have it output logging details of how it is performing its search.
 ### `py` (any version)
 
 1. Use `${VIRTUAL_ENV}/bin/python` immediately if available
-1. Use `.venv/bin/python` immediately if available
+1. Use `.venv/bin/python` if available in the current working directory or any
+   of its parent directories
 1. If the first argument is a file path ...
    1. Check for a shebang
    1. If shebang path starts with `/usr/bin/python`, `/usr/local/bin/python`,
diff --git a/src/cli.rs b/src/cli.rs
index 65b04ad..28d1a4d 100644
--- a/src/cli.rs
+++ b/src/cli.rs
@@ -124,17 +124,23 @@ fn list_executables(executables: &HashMap<ExactVersion, PathBuf>) -> crate::Resu
     Ok(table.to_string() + "\n")
 }
 
+fn relative_venv_path(add_default: bool) -> PathBuf {
+    let mut path = PathBuf::new();
+    if add_default {
+        path.push(DEFAULT_VENV_DIR);
+    }
+    path.push("bin");
+    path.push("python");
+    path
+}
+
 /// Returns the path to the activated virtual environment's executable.
 ///
 /// A virtual environment is determined to be activated based on the
 /// existence of the `VIRTUAL_ENV` environment variable.
 fn venv_executable_path(venv_root: &str) -> PathBuf {
-    let mut path = PathBuf::new();
-    path.push(venv_root);
-    path.push("bin");
-    path.push("python");
+    PathBuf::from(venv_root).join(relative_venv_path(false))
     // XXX: Do a is_file() check first?
-    path
 }
 
 fn activated_venv() -> Option<PathBuf> {
@@ -145,20 +151,22 @@ fn activated_venv() -> Option<PathBuf> {
     })
 }
 
-fn venv_in_dir() -> Option<PathBuf> {
-    log::info!("Checking for a venv in {:?}", DEFAULT_VENV_DIR);
-    let venv_path = venv_executable_path(DEFAULT_VENV_DIR);
-    venv_path.exists().then(|| {
-        log::debug!(
-            "Virtual environment executable found in {}",
-            venv_path.display()
-        );
-        venv_path
+fn venv_path_search() -> Option<PathBuf> {
+    let cwd = env::current_dir().unwrap();
+    log::info!(
+        "Searching for a venv in {} and parent directories",
+        cwd.display()
+    );
+    cwd.ancestors().find_map(|path| {
+        let venv_path = path.join(relative_venv_path(true));
+        log::info!("Checking {}", venv_path.display());
+        // bool::then_some() makes more sense, but still experimental.
+        venv_path.is_file().then(|| venv_path)
     })
 }
 
 fn venv_executable() -> Option<PathBuf> {
-    activated_venv().or_else(venv_in_dir)
+    activated_venv().or_else(venv_path_search)
 }
 
 // https://en.m.wikipedia.org/wiki/Shebang_(Unix)
diff --git a/tests/cli_system_tests.rs b/tests/cli_system_tests.rs
index a90d48b..9de2d18 100644
--- a/tests/cli_system_tests.rs
+++ b/tests/cli_system_tests.rs
@@ -1,5 +1,6 @@
 mod common;
 
+use std::env;
 use std::fs;
 use std::fs::File;
 use std::io::Write;
@@ -156,7 +157,7 @@ fn from_main_activated_virtual_env() {
 
 #[test]
 #[serial]
-fn from_main_default_venv_path() {
+fn from_main_default_cwd_venv_path() {
     let _working_dir = common::CurrentDir::new();
     let env_state = common::EnvState::new();
     let mut expected = PathBuf::new();
@@ -168,7 +169,42 @@ fn from_main_default_venv_path() {
 
     match Action::from_main(&["/path/to/py".to_string()]) {
         Ok(Action::Execute { executable, .. }) => {
-            assert_eq!(executable, expected);
+            assert_eq!(executable, expected.canonicalize().unwrap());
+        }
+        _ => panic!("No executable found in default virtual environment case"),
+    }
+
+    // VIRTUAL_ENV gets ignored if any specific version is requested.
+    match Action::from_main(&["/path/to/py".to_string(), "-3".to_string()]) {
+        Ok(Action::Execute { executable, .. }) => {
+            assert_eq!(executable, env_state.python37);
+        }
+        _ => panic!("No executable found in default virtual environment case"),
+    }
+}
+
+#[test]
+#[serial]
+fn from_main_default_parent_venv_path() {
+    let working_dir = common::CurrentDir::new();
+    let temp_dir = working_dir.dir.path().to_path_buf();
+    let env_state = common::EnvState::new();
+    let mut expected = temp_dir.clone();
+    expected.push(cli::DEFAULT_VENV_DIR);
+    expected.push("bin");
+    fs::create_dir_all(&expected).unwrap();
+    expected.push("python");
+    common::touch_file(expected.clone());
+
+    let subdir = temp_dir.join("subdir");
+    fs::create_dir(&subdir).unwrap();
+    env::set_current_dir(&subdir).unwrap();
+
+    // XXX Change working dir
+
+    match Action::from_main(&["/path/to/py".to_string()]) {
+        Ok(Action::Execute { executable, .. }) => {
+            assert_eq!(executable, expected.canonicalize().unwrap());
         }
         _ => panic!("No executable found in default virtual environment case"),
     }