diff --git a/CHANGELOG.md b/CHANGELOG.md
index 61d5723ca1..295cb363da 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -4,7 +4,7 @@
 No changes to highlight.
 
 ## Bug Fixes:
-No changes to highlight.
+* Fix relative import bug in reload mode by [@freddyaboulton](https://github.com/freddyaboulton) in [PR 2992](https://github.com/gradio-app/gradio/pull/2992) 
 
 ## Documentation Changes:
 No changes to highlight.
diff --git a/gradio/reload.py b/gradio/reload.py
index c77b497595..9c73176a60 100644
--- a/gradio/reload.py
+++ b/gradio/reload.py
@@ -24,11 +24,11 @@ def run_in_reload_mode():
         demo_name = args[1]
 
     original_path = args[0]
-    abs_original_path = Path(original_path).name
-    path = str(Path(original_path).resolve())
+    abs_original_path = Path(original_path).resolve()
+    path = os.path.normpath(original_path)
     path = path.replace("/", ".")
     path = path.replace("\\", ".")
-    filename = Path(path).stem
+    filename = os.path.splitext(path)[0]
 
     gradio_folder = Path(inspect.getfile(gradio)).parent
 
@@ -48,7 +48,7 @@ def run_in_reload_mode():
         message += f" '{gradio_folder}'"
         message_change_count += 1
 
-    abs_parent = Path(abs_original_path).parent
+    abs_parent = abs_original_path.parent
     if str(abs_parent).strip():
         command += f'--reload-dir "{abs_parent}"'
         if message_change_count == 1:
diff --git a/test/test_reload.py b/test/test_reload.py
new file mode 100644
index 0000000000..f8ce88c1ee
--- /dev/null
+++ b/test/test_reload.py
@@ -0,0 +1,20 @@
+from pathlib import Path
+from unittest.mock import patch
+
+import gradio
+from gradio.reload import run_in_reload_mode
+
+
+@patch("gradio.reload.os.system")
+@patch("gradio.reload.sys")
+def test_run_in_reload_mode(mock_sys, mock_system_call):
+
+    mock_sys.argv = ["gradio", "demo/calculator/run.py"]
+    run_in_reload_mode()
+    reload_command = mock_system_call.call_args[0][0]
+    gradio_dir = Path(gradio.__file__).parent
+    demo_dir = Path("demo/calculator/run.py").resolve().parent
+
+    assert "uvicorn demo.calculator.run:demo.app" in reload_command
+    assert f'--reload-dir "{gradio_dir}"' in reload_command
+    assert f'--reload-dir "{demo_dir}"' in reload_command