diff --git a/bin/bitbake-setup b/bin/bitbake-setup
index 47de4654e..7e227d82d 100755
--- a/bin/bitbake-setup
+++ b/bin/bitbake-setup
@@ -129,21 +129,24 @@ def checkout_layers(layers, layerdir, d):
     return layers_fixed_revisions
 
 def setup_bitbake_build(bitbake_config, layerdir, setupdir, thisdir):
-    def _setup_build_conf(layers, build_conf_dir):
+    def _setup_build_conf(layers, relative_layers, build_conf_dir):
         os.makedirs(build_conf_dir)
         layers_s = []
+
         for l in layers:
-            if l.startswith("{THISDIR}/"):
-                if thisdir:
-                    l = l.format(THISDIR=thisdir)
-                else:
-                    raise Exception("Configuration is using {THISDIR} to specify " \
-                    "a layer path relative to itself. This can be done only " \
-                    "when the configuration is specified by its path on local " \
-                    "disk, not when it's in a registry or is fetched over http.")
-            if not os.path.isabs(l):
-                l = os.path.join(layerdir, l)
+            l = os.path.join(layerdir, l)
+            layers_s.append("  {} \\".format(l))
+
+        for l in relative_layers:
+            if thisdir:
+                l = os.path.join(thisdir, l)
+            else:
+                raise Exception("Configuration is using {THISDIR} to specify " \
+                "a layer path relative to itself. This can be done only " \
+                "when the configuration is specified by its path on local " \
+                "disk, not when it's in a registry or is fetched over http.")
             layers_s.append("  {} \\".format(l))
+
         layers_s = "\n".join(layers_s)
         bblayers_conf = """BBLAYERS ?= " \\
 {}
@@ -220,7 +223,8 @@ def setup_bitbake_build(bitbake_config, layerdir, setupdir, thisdir):
         os.rename(bitbake_confdir, backup_bitbake_confdir)
 
     if layers:
-        _setup_build_conf(layers, bitbake_confdir)
+        relative_layers = bitbake_config.get("bb-layers-relative-to-this-file") or []
+        _setup_build_conf(layers, relative_layers, bitbake_confdir)
 
     if template:
         bb.process.run("{} setup -c {} -b {} --no-shell".format(oesetupbuild, template, bitbake_builddir))
diff --git a/lib/bb/tests/setup.py b/lib/bb/tests/setup.py
index 767a6298d..83b1794a3 100644
--- a/lib/bb/tests/setup.py
+++ b/lib/bb/tests/setup.py
@@ -148,9 +148,10 @@ print("BBPATH is {{}}".format(os.environ["BBPATH"]))
                 "oe-fragments": ["test-fragment-2"]
             },
             {
-                "name": "gizmo-notemplate-with-thisdir",
-                "description": "Gizmo notemplate configuration using THISDIR",
-                "bb-layers": ["layerC","layerD/meta-layer","{THISDIR}/layerE/meta-layer"],
+                "name": "gizmo-notemplate-with-relative-layers",
+                "description": "Gizmo notemplate configuration using relative layers",
+                "bb-layers": ["layerC","layerD/meta-layer"],
+                "bb-layers-relative-to-this-file": ["layerE/meta-layer"],
                 "oe-fragments": ["test-fragment-2"]
             }
         ]
@@ -204,14 +205,13 @@ print("BBPATH is {{}}".format(os.environ["BBPATH"]))
             with open(os.path.join(bb_conf_path, 'bblayers.conf')) as f:
                 bblayers = f.read()
                 for l in bitbake_config["bb-layers"]:
-                    if l.startswith('{THISDIR}/'):
-                        thisdir_layer = os.path.join(
+                    self.assertIn(os.path.join(setuppath, "layers", l), bblayers)
+                for l in bitbake_config.get("bb-layers-relative-to-this-file") or []:
+                    relative_layer = os.path.join(
                             os.path.dirname(config_upstream["path"]),
-                            l.removeprefix("{THISDIR}/"),
+                            l,
                         )
-                        self.assertIn(thisdir_layer, bblayers)
-                    else:
-                        self.assertIn(os.path.join(setuppath, "layers", l), bblayers)
+                    self.assertIn(relative_layer, bblayers)
 
         if 'oe-fragment' in bitbake_config.keys():
             for f in bitbake_config["oe-fragments"]:
@@ -298,7 +298,7 @@ print("BBPATH is {{}}".format(os.environ["BBPATH"]))
                                                                   'gizmo-env-passthrough',
                                                                   'gizmo-no-fragment',
                                                                   'gadget-notemplate','gizmo-notemplate',
-                                                                  'gizmo-notemplate-with-thisdir')}
+                                                                  'gizmo-notemplate-with-relative-layers')}
                                }
         for cf, v in test_configurations.items():
             for c in v['buildconfigs']: