Index: src/main/java/org/apache/maven/plugin/idea/AbstractIdeaMojo.java
===================================================================
--- src/main/java/org/apache/maven/plugin/idea/AbstractIdeaMojo.java	(revision 671445)
+++ src/main/java/org/apache/maven/plugin/idea/AbstractIdeaMojo.java	(working copy)
@@ -47,7 +47,6 @@
 import org.dom4j.Element;
 import org.dom4j.io.SAXReader;
 import org.dom4j.io.XMLWriter;
-
 import java.io.File;
 import java.io.IOException;
 import java.util.ArrayList;
@@ -58,6 +57,7 @@
 import java.util.List;
 import java.util.Map;
 import java.util.Set;
+import java.util.StringTokenizer;
 
 /**
  * @author Edwin Punzalan
@@ -211,19 +211,95 @@
      */
     protected String toRelative( File basedir, String absolutePath )
     {
+        getLog().debug( "translating to relative path: basedir=" + basedir + ", absolutePath=" + absolutePath );
         String relative;
+        String convertedAbsolutePath = absolutePath.replaceAll( "\\\\", "/" );
+        String convertedBasedirAbsolutePath = basedir.getAbsolutePath().replaceAll( "\\\\", "/" );
 
-        if ( absolutePath.startsWith( basedir.getAbsolutePath() )
-            && absolutePath.length() > basedir.getAbsolutePath().length() )
+        convertedAbsolutePath = StringUtils.replace( convertedAbsolutePath, "\\", "/" );
+        convertedBasedirAbsolutePath = StringUtils.replace( convertedBasedirAbsolutePath, "\\", "/" );
+
+        StringTokenizer baseTokens = new StringTokenizer( convertedBasedirAbsolutePath, "/", false );
+
+        int baseCount = baseTokens.countTokens();
+        List baseTokenList = new ArrayList( baseCount );
+        while ( baseTokens.hasMoreTokens() )
         {
-            relative = absolutePath.substring( basedir.getAbsolutePath().length() + 1 );
+            baseTokenList.add( baseTokens.nextToken() );
         }
+
+        StringTokenizer pathTokens = new StringTokenizer( convertedAbsolutePath, "/", false );
+
+        int pathCount = pathTokens.countTokens();
+        List pathTokenList = new ArrayList( pathCount );
+        while ( pathTokens.hasMoreTokens() )
+        {
+            pathTokenList.add( pathTokens.nextToken() );
+        }
+
+        int maxCount = Math.max( baseTokenList.size(), pathTokenList.size() );
+        int differIndex = -1;
+        for ( int i = 0; i < maxCount; i++ )
+        {
+            if ( i >= pathTokenList.size() || i >= baseTokenList.size() )
+            {
+                differIndex = i;
+                break;
+            }
+            String basePart = (String) baseTokenList.get( i );
+            String pathPart = (String) pathTokenList.get( i );
+            if ( !basePart.equals( pathPart ) )
+            {
+                differIndex = i;
+                break;
+            }
+        }
+        if ( differIndex < 1 )
+        {
+            // paths are either equal or completely different
+            relative = convertedAbsolutePath;
+        }
         else
         {
-            relative = absolutePath;
+            StringBuffer result = new StringBuffer();
+            int parentCount = baseTokenList.size() - differIndex;
+            /*
+            if ( getLog().isDebugEnabled() )
+            {
+                getLog().debug( "parentCount="+parentCount);
+            }
+            */
+            boolean isFirst = true;
+            for ( int i = 0; i < parentCount; i++ )
+            {
+                // add parents
+                if ( isFirst )
+                {
+                    isFirst = false;
+                }
+                else
+                {
+                    result.append( "/" );
+                }
+                result.append( ".." );
+            }
+            for ( int i = differIndex; i < pathTokenList.size(); i++ )
+            {
+                // add the remaining path elements
+                if ( isFirst )
+                {
+                    isFirst = false;
+                }
+                else
+                {
+                    result.append( "/" );
+                }
+                result.append( pathTokenList.get( i ) );
+            }
+            relative = result.toString();
         }
 
-        relative = StringUtils.replace( relative, "\\", "/" );
+        getLog().debug( "translated to " + relative );
 
         return relative;
     }