diff --git a/libexec/rbenv-local b/libexec/rbenv-local
index 9169943e..d5c5f11c 100755
--- a/libexec/rbenv-local
+++ b/libexec/rbenv-local
@@ -47,9 +47,10 @@ elif [ -n "$RBENV_VERSION" ]; then
     } >&2
   fi
 else
-  rbenv-version-file-read .ruby-version ||
-  rbenv-version-file-read .rbenv-version ||
-  { echo "rbenv: no local version configured for this directory"
+  if version_file="$(rbenv-version-file "$PWD")"; then
+    rbenv-version-file-read "$version_file"
+  else
+    echo "rbenv: no local version configured for this directory" >&2
     exit 1
-  } >&2
+  fi
 fi
diff --git a/test/local.bats b/test/local.bats
index 3e93ca7f..a84833eb 100644
--- a/test/local.bats
+++ b/test/local.bats
@@ -32,11 +32,11 @@ setup() {
   assert_success "2.0"
 }
 
-@test "ignores version in parent directory" {
+@test "discovers version file in parent directory" {
   echo "1.2.3" > .ruby-version
   mkdir -p "subdir" && cd "subdir"
   run rbenv-local
-  assert_failure
+  assert_success "1.2.3"
 }
 
 @test "ignores RBENV_DIR" {