diff --git a/internal/getproviders/filesystem_search.go b/internal/getproviders/filesystem_search.go
index ed5a9e194..15cc4662e 100644
--- a/internal/getproviders/filesystem_search.go
+++ b/internal/getproviders/filesystem_search.go
@@ -21,6 +21,25 @@ import (
 // directory structure conventions.
 func SearchLocalDirectory(baseDir string) (map[addrs.Provider]PackageMetaList, error) {
 	ret := make(map[addrs.Provider]PackageMetaList)
+
+	// We don't support symlinks at intermediate points inside the directory
+	// heirarchy because that could potentially cause our walk to get into
+	// an infinite loop, but as a measure of pragmatism we'll allow the
+	// top-level location itself to be a symlink, so that a user can
+	// potentially keep their plugins in a non-standard location but use a
+	// symlink to help Terraform find them anyway.
+	originalBaseDir := baseDir
+	if finalDir, err := filepath.EvalSymlinks(baseDir); err == nil {
+		log.Printf("[TRACE] getproviders.SearchLocalDirectory: %s is a symlink to %s", baseDir, finalDir)
+		baseDir = finalDir
+	} else {
+		// We'll eat this particular error because if we're somehow able to
+		// find plugins via baseDir below anyway then we'd rather do that than
+		// hard fail, but we'll log it in case it's useful for diagnosing why
+		// discovery didn't produce the expected outcome.
+		log.Printf("[TRACE] getproviders.SearchLocalDirectory: failed to resolve symlinks for %s: %s", baseDir, err)
+	}
+
 	err := filepath.Walk(baseDir, func(fullPath string, info os.FileInfo, err error) error {
 		if err != nil {
 			return fmt.Errorf("cannot search %s: %s", fullPath, err)
@@ -45,6 +64,15 @@ func SearchLocalDirectory(baseDir string) (map[addrs.Provider]PackageMetaList, e
 		if len(parts) < 3 {
 			// Likely a prefix of a valid path, so we'll ignore it and visit
 			// the full valid path on a later call.
+
+			if (info.Mode() & os.ModeSymlink) != 0 {
+				// We don't allow symlinks for intermediate steps in the
+				// heirarchy because otherwise this walk would risk getting
+				// itself into an infinite loop, but if we do find one then
+				// we'll warn about it to help with debugging.
+				log.Printf("[WARN] Provider plugin search ignored symlink %s: only the base directory %s may be a symlink", fullPath, originalBaseDir)
+			}
+
 			return nil
 		}
 
diff --git a/internal/getproviders/filesystem_search_test.go b/internal/getproviders/filesystem_search_test.go
new file mode 100644
index 000000000..857706556
--- /dev/null
+++ b/internal/getproviders/filesystem_search_test.go
@@ -0,0 +1,52 @@
+package getproviders
+
+import (
+	"path/filepath"
+	"testing"
+
+	"github.com/google/go-cmp/cmp"
+	"github.com/hashicorp/terraform/addrs"
+)
+
+func TestSearchLocalDirectory(t *testing.T) {
+	tests := []struct {
+		Fixture string
+		Subdir  string
+		Want    map[addrs.Provider]PackageMetaList
+	}{
+		{
+			"symlinks",
+			"symlink",
+			map[addrs.Provider]PackageMetaList{
+				addrs.MustParseProviderSourceString("example.com/foo/bar"): {
+					{
+						Provider:       addrs.MustParseProviderSourceString("example.com/foo/bar"),
+						Version:        MustParseVersion("1.0.0"),
+						TargetPlatform: Platform{OS: "linux", Arch: "amd64"},
+						Filename:       "terraform-provider-bar_1.0.0_linux_amd64.zip",
+						Location:       PackageLocalDir("testdata/search-local-directory/symlinks/real/example.com/foo/bar/1.0.0/linux_amd64"),
+					},
+				},
+				// This search doesn't find example.net/foo/bar because only
+				// the top-level search directory is supported as being a
+				// symlink, and so we ignore the example.net symlink to
+				// example.com that is one level deeper.
+			},
+		},
+	}
+
+	for _, test := range tests {
+		t.Run(test.Fixture, func(t *testing.T) {
+			fullDir := filepath.Join("testdata/search-local-directory", test.Fixture, test.Subdir)
+			got, err := SearchLocalDirectory(fullDir)
+			if err != nil {
+				t.Errorf("unexpected error: %s", err)
+			}
+			want := test.Want
+
+			if diff := cmp.Diff(want, got); diff != "" {
+				t.Errorf("wrong result\n%s", diff)
+			}
+		})
+	}
+}
diff --git a/internal/getproviders/testdata/search-local-directory/symlinks/real/example.com/foo/bar/1.0.0/linux_amd64/terraform-provider-bar b/internal/getproviders/testdata/search-local-directory/symlinks/real/example.com/foo/bar/1.0.0/linux_amd64/terraform-provider-bar
new file mode 100644
index 000000000..e69de29bb
diff --git a/internal/getproviders/testdata/search-local-directory/symlinks/real/example.net b/internal/getproviders/testdata/search-local-directory/symlinks/real/example.net
new file mode 120000
index 000000000..caa12a8fb
--- /dev/null
+++ b/internal/getproviders/testdata/search-local-directory/symlinks/real/example.net
@@ -0,0 +1 @@
+example.com
\ No newline at end of file
diff --git a/internal/getproviders/testdata/search-local-directory/symlinks/symlink b/internal/getproviders/testdata/search-local-directory/symlinks/symlink
new file mode 120000
index 000000000..ac558a3e1
--- /dev/null
+++ b/internal/getproviders/testdata/search-local-directory/symlinks/symlink
@@ -0,0 +1 @@
+real
\ No newline at end of file