diff --git a/mk2rbc/mk2rbc.go b/mk2rbc/mk2rbc.go
index 212b7f658..c881751d7 100644
--- a/mk2rbc/mk2rbc.go
+++ b/mk2rbc/mk2rbc.go
@@ -1376,7 +1376,7 @@ func (p *myDirCallParser) parse(ctx *parseContext, node mkparser.Node, args *mkp
 	if !args.Empty() {
 		return ctx.newBadExpr(node, "my-dir function cannot have any arguments passed to it.")
 	}
-	return &variableRefExpr{ctx.addVariable("LOCAL_PATH"), true}
+	return &stringLiteralExpr{literal: filepath.Dir(ctx.script.mkFile)}
 }
 
 type isProductInListCallParser struct{}
diff --git a/mk2rbc/mk2rbc_test.go b/mk2rbc/mk2rbc_test.go
index 1aca983d6..31739fa98 100644
--- a/mk2rbc/mk2rbc_test.go
+++ b/mk2rbc/mk2rbc_test.go
@@ -1459,6 +1459,19 @@ def init(g, handle):
   g["MY_VAR_4"] = "foo"
   _my_local_var_with_dashes = ["foo"]
   g["MY_STRING_VAR"] = " ".join(rblf.expand_wildcard("foo/bar.mk"))
+`,
+	},
+	{
+		desc:   "Set LOCAL_PATH to my-dir",
+		mkname: "product.mk",
+		in: `
+LOCAL_PATH := $(call my-dir)
+`,
+		expected: `load("//build/make/core:product_config.rbc", "rblf")
+
+def init(g, handle):
+  cfg = rblf.cfg(handle)
+  
 `,
 	},
 }
diff --git a/mk2rbc/variable.go b/mk2rbc/variable.go
index 506266a29..be1b17428 100644
--- a/mk2rbc/variable.go
+++ b/mk2rbc/variable.go
@@ -319,15 +319,13 @@ func (ctx *parseContext) addVariable(name string) variable {
 			v = &localVariable{baseVariable{nam: name, typ: hintType}}
 		} else {
 			vt := hintType
-			if strings.HasPrefix(name, "LOCAL_") && vt == starlarkTypeUnknown {
-				// Heuristics: local variables that contribute to corresponding config variables
-				if cfgVarName, found := localProductConfigVariables[name]; found {
-					vi, found2 := KnownVariables[cfgVarName]
-					if !found2 {
-						panic(fmt.Errorf("unknown config variable %s for %s", cfgVarName, name))
-					}
-					vt = vi.valueType
+			// Heuristics: local variables that contribute to corresponding config variables
+			if cfgVarName, found := localProductConfigVariables[name]; found && vt == starlarkTypeUnknown {
+				vi, found2 := KnownVariables[cfgVarName]
+				if !found2 {
+					panic(fmt.Errorf("unknown config variable %s for %s", cfgVarName, name))
 				}
+				vt = vi.valueType
 			}
 			if strings.HasSuffix(name, "_LIST") && vt == starlarkTypeUnknown {
 				// Heuristics: Variables with "_LIST" suffix are lists