diff --git a/src/vs/base/common/uri.ts b/src/vs/base/common/uri.ts
index 39ad9e80805750471e6a0a02a92a817f7ac48872..4dfeff378ee92a806ec7985a66b6c14c041ea81c 100644
--- a/src/vs/base/common/uri.ts
+++ b/src/vs/base/common/uri.ts
@@ -56,6 +56,7 @@ export default class URI {
 	private static _empty = '';
 	private static _slash = '/';
 	private static _regexp = /^(([^:/?#]+?):)?(\/\/([^/?#]*))?([^?#]*)(\?([^#]*))?(#(.*))?/;
+	private static _driveLetter = /^[a-zA-Z]:/;
 	private static _driveLetterPath = /^\/[a-zA-Z]:/;
 	private static _upperCaseDrive = /^(\/)?([A-Z]:)/;
 
@@ -212,19 +213,25 @@ export default class URI {
 			let idx = path.indexOf(URI._slash, 2);
 			if (idx === -1) {
 				authority = path.substring(2);
-				path = URI._empty;
+				path = URI._slash;
 			} else {
 				authority = path.substring(2, idx);
 				path = path.substring(idx);
 			}
 		}
 
-		// Ensure that path starts with a slash
-		// or that it is at least a slash
-		if (path[0] !== URI._slash) {
+		// absolute windows paths get another slash
+		if (URI._driveLetter.test(path)) {
 			path = URI._slash + path;
 		}
 
+		// path must be absolute because we cannot format them
+		// otherwise: `file:./foo` -> file://./foo -> `{ authority: '.', path: 'foo' }`
+		// https://tools.ietf.org/html/rfc8089#section-2
+		else if (path[0] !== URI._slash) {
+			throw new Error('[UriError]: relative paths are not supported.');
+		}
+
 		return new URI('file', authority, path, URI._empty, URI._empty);
 	}
 
diff --git a/src/vs/base/test/common/uri.test.ts b/src/vs/base/test/common/uri.test.ts
index 3341b0bcb6aae261aafc421e0fcc1d14648af0f1..df2d989d26c149ef65878e33d8d412113181c335 100644
--- a/src/vs/base/test/common/uri.test.ts
+++ b/src/vs/base/test/common/uri.test.ts
@@ -38,13 +38,11 @@ suite('URI', () => {
 			assert.equal(URI.file('c:/win/path/').fsPath, 'c:\\win\\path\\');
 			assert.equal(URI.file('C:/win/path').fsPath, 'c:\\win\\path');
 			assert.equal(URI.file('/c:/win/path').fsPath, 'c:\\win\\path');
-			assert.equal(URI.file('./c/win/path').fsPath, '\\.\\c\\win\\path');
 		} else {
 			assert.equal(URI.file('c:/win/path').fsPath, 'c:/win/path');
 			assert.equal(URI.file('c:/win/path/').fsPath, 'c:/win/path/');
 			assert.equal(URI.file('C:/win/path').fsPath, 'c:/win/path');
 			assert.equal(URI.file('/c:/win/path').fsPath, 'c:/win/path');
-			assert.equal(URI.file('./c/win/path').fsPath, '/./c/win/path');
 		}
 	});
 
@@ -318,27 +316,12 @@ suite('URI', () => {
 	test('URI#file, no path-is-uri check', () => {
 
 		// we don't complain here
-		let value = URI.file('file://path/to/file');
+		let value = URI.file('/file://path/to/file');
 		assert.equal(value.scheme, 'file');
 		assert.equal(value.authority, '');
 		assert.equal(value.path, '/file://path/to/file');
 	});
 
-	test('URI#file, always slash', () => {
-
-		var value = URI.file('a.file');
-		assert.equal(value.scheme, 'file');
-		assert.equal(value.authority, '');
-		assert.equal(value.path, '/a.file');
-		assert.equal(value.toString(), 'file:///a.file');
-
-		value = URI.parse(value.toString());
-		assert.equal(value.scheme, 'file');
-		assert.equal(value.authority, '');
-		assert.equal(value.path, '/a.file');
-		assert.equal(value.toString(), 'file:///a.file');
-	});
-
 	test('URI.toString, only scheme and query', () => {
 		var value = URI.parse('stuff:?qüery');
 		assert.equal(value.toString(), 'stuff:?q%C3%BCery');
@@ -427,13 +410,36 @@ suite('URI', () => {
 		assert.equal(uri.toString(true), 'https://twitter.com/search?src=typd&q=%23tag');
 	});
 
+	test('class URI cannot represent relative file paths, #34449', function () {
+		const uri = URI.parse('file:./relative/path');
+		assert.equal(uri.scheme, 'file');
+		assert.equal(uri.authority, '');
+		assert.equal(uri.path, './relative/path');
+
+		assert.equal(uri.toString(), 'file://./relative/path');
+
+		// this is asymetric to be spec-compliant
+		const uri2 = URI.parse(uri.toString());
+		assert.equal(uri2.authority, '.');
+		assert.equal(uri2.path, '/relative/path');
+	});
+
+	test('class URI cannot represent relative file paths, #34449', function () {
+
+		const path = '/foo/bar';
+		assert.equal(URI.file(path).path, path);
+
+		// no relative paths
+		assert.throws(() => URI.file('foo/bar'));
+		assert.throws(() => URI.file('./foo/bar'));
+	});
 
 	test('URI - (de)serialize', function () {
 
 		var values = [
 			URI.parse('http://localhost:8080/far'),
 			URI.file('c:\\test with %25\\c#code'),
-			URI.file('\\\\shäres\\path\\c#\\plugin.json'),
+			URI.file('//shäres/path/c#/plugin.json'),
 			URI.parse('http://api/files/test.me?t=1234'),
 			URI.parse('http://api/files/test.me?t=1234#fff'),
 			URI.parse('http://api/files/test.me#fff'),