diff --git a/modules/swagger-parser-v3/src/main/java/io/swagger/v3/parser/processors/ExternalRefProcessor.java b/modules/swagger-parser-v3/src/main/java/io/swagger/v3/parser/processors/ExternalRefProcessor.java
index 286f9ccac9..67ad3ffda6 100644
--- a/modules/swagger-parser-v3/src/main/java/io/swagger/v3/parser/processors/ExternalRefProcessor.java
+++ b/modules/swagger-parser-v3/src/main/java/io/swagger/v3/parser/processors/ExternalRefProcessor.java
@@ -125,7 +125,7 @@ public String processRefToExternalSchema(String $ref, RefFormat refFormat) {
                     if (!ref.equals(RefFormat.URL)) {
                         String schemaFullRef = schema.get$ref();
                         String parent = (file.contains("/")) ? file.substring(0, file.lastIndexOf('/')) : "";
-                        if (!parent.isEmpty()) {
+                        if (!parent.isEmpty() && !schemaFullRef.startsWith("/")) {
                             if (schemaFullRef.contains("#/")) {
                                 String[] parts = schemaFullRef.split("#/");
                                 String schemaFullRefFilePart = parts[0];
diff --git a/modules/swagger-parser-v3/src/test/java/io/swagger/v3/parser/test/OpenAPIV3ParserTest.java b/modules/swagger-parser-v3/src/test/java/io/swagger/v3/parser/test/OpenAPIV3ParserTest.java
index c46c320ce4..d3349aec26 100644
--- a/modules/swagger-parser-v3/src/test/java/io/swagger/v3/parser/test/OpenAPIV3ParserTest.java
+++ b/modules/swagger-parser-v3/src/test/java/io/swagger/v3/parser/test/OpenAPIV3ParserTest.java
@@ -3398,6 +3398,26 @@ public void testValidateExternalRefsTrue() {
 
     }
 
+    @Test(description = "test that a model in a folder that has a ref to a model in the classpath is properly resolved.")
+    public void testIssue1891() {
+        ParseOptions options = new ParseOptions();
+        options.setResolve(true);
+        options.setFlatten(true);
+
+        SwaggerParseResult result = new OpenAPIV3Parser().readLocation("./issue-1891/openapi.yaml", null, options);
+        assertTrue(result.getMessages().isEmpty());
+
+        // Expect all references to be properly resolved to local references.
+        OpenAPI openAPI = result.getOpenAPI();
+        Schema<?> localModel = openAPI.getComponents().getSchemas().get("LocalModel");
+        Schema<?> typesModel = openAPI.getComponents().getSchemas().get("TypesModel");
+        Schema<?> sharedModel = openAPI.getComponents().getSchemas().get("SharedModel");
+
+        assertEquals("#/components/schemas/TypesModel", localModel.getProperties().get("sharedModelField").get$ref());
+        assertEquals("#/components/schemas/SharedModel", typesModel.get$ref());
+        assertNotNull(sharedModel);
+    }
+
     @Test(description = "directly parsed  definition, tested in previous method as reference relative/local ")
     public void testValidateDefinition() {
         ParseOptions options = new ParseOptions();
diff --git a/modules/swagger-parser-v3/src/test/resources/issue-1891-shared-types.yaml b/modules/swagger-parser-v3/src/test/resources/issue-1891-shared-types.yaml
new file mode 100644
index 0000000000..2be9b0db89
--- /dev/null
+++ b/modules/swagger-parser-v3/src/test/resources/issue-1891-shared-types.yaml
@@ -0,0 +1,22 @@
+---
+openapi: 3.0.0
+
+info:
+  description: Models that would published in a jar and then read from the classpath.
+  version: 1.0.0
+  title: shared-types
+
+paths:
+  /empty:
+    description: >
+      Empty API so that we can load this file in Swagger Editor for validation and
+      not get flagged for a contract without a paths element.
+
+components:
+  schemas:
+    SharedModel:
+      description: A shared model
+      type: object
+      properties:
+        name:
+          type: string
diff --git a/modules/swagger-parser-v3/src/test/resources/issue-1891/openapi.yaml b/modules/swagger-parser-v3/src/test/resources/issue-1891/openapi.yaml
new file mode 100644
index 0000000000..fc794d8cf2
--- /dev/null
+++ b/modules/swagger-parser-v3/src/test/resources/issue-1891/openapi.yaml
@@ -0,0 +1,22 @@
+---
+openapi: 3.0.0
+
+info:
+  description: Models that would published in a jar and then read from the classpath.
+  version: 1.0.0
+  title: shared-models
+
+paths:
+  /empty:
+    description: >
+      Empty API so that we can load this file in Swagger Editor for validation and
+      not get flagged for a contract without a paths element.
+
+components:
+  schemas:
+    LocalModel:
+      type: object
+      properties:
+        sharedModelField:
+          # This is resolved via the file system, but looking in the folder 'types'
+          $ref: 'types/local-types.yaml#/components/schemas/TypesModel'
diff --git a/modules/swagger-parser-v3/src/test/resources/issue-1891/types/local-types.yaml b/modules/swagger-parser-v3/src/test/resources/issue-1891/types/local-types.yaml
new file mode 100644
index 0000000000..d2d07854cb
--- /dev/null
+++ b/modules/swagger-parser-v3/src/test/resources/issue-1891/types/local-types.yaml
@@ -0,0 +1,22 @@
+---
+openapi: 3.0.0
+
+info:
+  description: Models that would published in a jar and then read from the classpath.
+  version: 1.0.0
+  title: shared-models
+
+paths:
+  /empty:
+    description: >
+      Empty API so that we can load this file in Swagger Editor for validation and
+      not get flagged for a contract without a paths element.
+
+components:
+  schemas:
+    TypesModel:
+      # The file 'issue-1891-shared-types.yaml' is located outside this directory and resolved
+      # via an absolute path reference (starts with a /). Typically, this resource would be
+      # found in a jar file on the classpath, but for the purposes of this test, it is
+      # found at the root of the file system, which will be loaded via the classpath helper.
+      $ref: '/issue-1891-shared-types.yaml#/components/schemas/SharedModel'