diff --git a/maven-plugin-testing-harness/src/main/java/org/apache/maven/plugin/testing/AbstractMojoTestCase.java b/maven-plugin-testing-harness/src/main/java/org/apache/maven/plugin/testing/AbstractMojoTestCase.java
index 3de20a3..7219bf3 100644
--- a/maven-plugin-testing-harness/src/main/java/org/apache/maven/plugin/testing/AbstractMojoTestCase.java
+++ b/maven-plugin-testing-harness/src/main/java/org/apache/maven/plugin/testing/AbstractMojoTestCase.java
@@ -22,10 +22,13 @@
 import java.io.BufferedReader;
 import java.io.File;
 import java.io.FileInputStream;
+import java.io.IOException;
 import java.io.InputStream;
 import java.io.Reader;
 import java.lang.reflect.AccessibleObject;
 import java.lang.reflect.Field;
+import java.net.MalformedURLException;
+import java.net.URL;
 import java.util.ArrayList;
 import java.util.Arrays;
 import java.util.HashMap;
@@ -124,7 +127,8 @@
             lookup( RepositorySystem.class ).createArtifact( pluginDescriptor.getGroupId(),
                                                              pluginDescriptor.getArtifactId(),
                                                              pluginDescriptor.getVersion(), ".jar" );
-        artifact.setFile( new File( getBasedir() ).getCanonicalFile() );
+
+        artifact.setFile( getPluginArtifactFile() );
         pluginDescriptor.setPluginArtifact( artifact );
         pluginDescriptor.setArtifacts( Arrays.asList( artifact ) );
 
@@ -140,6 +144,63 @@
         }
     }
 
+    /**
+     * Returns best-effort plugin artifact file.
+     * <p>
+     * First, attempts to determine parent directory of META-INF directory holding the plugin descriptor. If META-INF
+     * parent directory cannot be determined, falls back to test basedir.
+     */
+    private File getPluginArtifactFile()
+        throws IOException
+    {
+        final String pluginDescriptorLocation = getPluginDescriptorLocation();
+        final URL resource = getClass().getResource( "/" + pluginDescriptorLocation );
+
+        File file = null;
+
+        // attempt to resolve relative to META-INF/maven/plugin.xml first
+        if ( resource != null )
+        {
+            if ( "file".equalsIgnoreCase( resource.getProtocol() ) )
+            {
+                String path = resource.getPath();
+                if ( path.endsWith( pluginDescriptorLocation ) )
+                {
+                    file = new File( path.substring( 0, path.length() - pluginDescriptorLocation.length() ) );
+                }
+            }
+            else if ( "jar".equalsIgnoreCase( resource.getProtocol() ) )
+            {
+                // TODO is there a helper for this somewhere?
+                try
+                {
+                    URL jarfile = new URL( resource.getPath() );
+                    if ( "file".equalsIgnoreCase( jarfile.getProtocol() ) )
+                    {
+                        String path = jarfile.getPath();
+                        if ( path.endsWith( pluginDescriptorLocation ) )
+                        {
+                            file =
+                                new File( path.substring( 0, path.length() - pluginDescriptorLocation.length() - 2 ) );
+                        }
+                    }
+                }
+                catch ( MalformedURLException e )
+                {
+                    // not jar:file:/ URL, too bad
+                }
+            }
+        }
+
+        // fallback to test project basedir if couldn't resolve relative to META-INF/maven/plugin.xml
+        if ( file == null || ! file.exists() )
+        {
+            file = new File( getBasedir() );
+        }
+
+        return file.getCanonicalFile();
+    }
+
     protected InputStream getPublicDescriptorStream()
         throws Exception
     {
diff --git a/maven-plugin-testing-harness/src/test/java/org/apache/maven/plugin/testing/PluginArtifactFileTest.java b/maven-plugin-testing-harness/src/test/java/org/apache/maven/plugin/testing/PluginArtifactFileTest.java
new file mode 100644
index 0000000..c94fb35
--- /dev/null
+++ b/maven-plugin-testing-harness/src/test/java/org/apache/maven/plugin/testing/PluginArtifactFileTest.java
@@ -0,0 +1,47 @@
+package org.apache.maven.plugin.testing;
+
+/*
+ * Licensed to the Apache Software Foundation (ASF) under one
+ * or more contributor license agreements.  See the NOTICE file
+ * distributed with this work for additional information
+ * regarding copyright ownership.  The ASF licenses this file
+ * to you under the Apache License, Version 2.0 (the
+ * "License"); you may not use this file except in compliance
+ * with the License.  You may obtain a copy of the License at
+ *
+ *   http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing,
+ * software distributed under the License is distributed on an
+ * "AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
+ * KIND, either express or implied.  See the License for the
+ * specific language governing permissions and limitations
+ * under the License.
+ */
+
+import java.util.List;
+
+import org.apache.maven.artifact.Artifact;
+import org.apache.maven.plugin.MojoExecution;
+
+public class PluginArtifactFileTest
+    extends AbstractMojoTestCase
+{
+    public void testArtifact()
+        throws Exception
+    {
+        MojoExecution execution = newMojoExecution( "parameters" ); // TODO dedicated test mojo
+
+        List<Artifact> artifacts = execution.getMojoDescriptor().getPluginDescriptor().getArtifacts();
+
+        assertEquals( 1, artifacts.size() );
+
+        Artifact artifact = artifacts.get( 0 );
+        assertEquals( "test", artifact.getGroupId() );
+        assertEquals( "test-plugin", artifact.getArtifactId() );
+        assertEquals( "0.0.1-SNAPSHOT", artifact.getBaseVersion() );
+        assertTrue( artifact.getFile().getAbsolutePath().endsWith( "target/test-classes" ) );
+    }
+
+    // TODO find a way to automate testing of jar:file:/ test plugin URLs
+}