diff --git a/src/vs/base/common/paths.ts b/src/vs/base/common/paths.ts
index d96b7517082474926679b495c90231f0cee508c6..d18519a7731b6207dcc55f2bce3e767c9af5ad12 100644
--- a/src/vs/base/common/paths.ts
+++ b/src/vs/base/common/paths.ts
@@ -17,6 +17,11 @@ export const sep = '/';
  */
 export const nativeSep = isWindows ? '\\' : '/';
 
+
+function isPathSeparator(code: number) {
+	return code === CharCode.Slash || code === CharCode.Backslash;
+}
+
 /**
  * @param path the path to get the dirname from
  * @param separator the separator to use
@@ -24,20 +29,32 @@ export const nativeSep = isWindows ? '\\' : '/';
  *
  */
 export function dirname(path: string, separator = nativeSep): string {
-	const idx = ~path.lastIndexOf('/') || ~path.lastIndexOf('\\');
-	if (idx === 0) {
+	const len = path.length;
+	if (len === 0) {
 		return '.';
-	} else if (~idx === 0) {
-		return path[0];
-	} else if (~idx === path.length - 1) {
-		return dirname(path.substring(0, path.length - 1));
-	} else {
-		let res = path.substring(0, ~idx);
-		if (isWindows && res[res.length - 1] === ':') {
-			res += separator; // make sure drive letters end with backslash
+	} else if (len === 1) {
+		return isPathSeparator(path.charCodeAt(0)) ? path : '.';
+	}
+	const root = getRoot(path, separator);
+	let rootLength = root.length;
+	if (rootLength >= len) {
+		return root; // matched the root
+	}
+	if (rootLength === 0 && isPathSeparator(path.charCodeAt(0))) {
+		rootLength = 1; // absolute paths stay absolute paths.
+	}
+
+	let i = len - 1;
+	if (i > rootLength) {
+		i--; // no need to look at the last character. If it's a trailing slash, we ignore it.
+		while (i > rootLength && !isPathSeparator(path.charCodeAt(i))) {
+			i--;
 		}
-		return res;
 	}
+	if (i === 0) {
+		return '.'; // it was a relative path with a single segment, no root. Nodejs returns '.' here.
+	}
+	return path.substr(0, i);
 }
 
 /**
diff --git a/src/vs/base/common/resources.ts b/src/vs/base/common/resources.ts
index d3170eb406bf400b9fe2c7831854880f423f4c18..a10a3b01e74bc1f155175f5f7e66ef95baca2165 100644
--- a/src/vs/base/common/resources.ts
+++ b/src/vs/base/common/resources.ts
@@ -76,6 +76,9 @@ export function dirname(resource: URI): URI | null {
 	if (resource.scheme === Schemas.file) {
 		return URI.file(paths.dirname(fsPath(resource)));
 	}
+	if (resource.path.length === 0) {
+		return resource;
+	}
 	let dirname = paths.dirname(resource.path, '/');
 	if (resource.authority && dirname.length && dirname.charCodeAt(0) !== CharCode.Slash) {
 		return null; // If a URI contains an authority component, then the path component must either be empty or begin with a CharCode.Slash ("/") character
diff --git a/src/vs/base/test/common/paths.test.ts b/src/vs/base/test/common/paths.test.ts
index e0cf182e378034961fc3ddd5b3bc74f7a91ff270..835e7e5d2ef9138229ed04b11d6781e3bd6d8cb3 100644
--- a/src/vs/base/test/common/paths.test.ts
+++ b/src/vs/base/test/common/paths.test.ts
@@ -8,21 +8,34 @@ import * as platform from 'vs/base/common/platform';
 
 suite('Paths', () => {
 
-	test('dirname', () => {
-		assert.equal(paths.dirname('foo/bar'), 'foo');
-		assert.equal(paths.dirname('foo\\bar'), 'foo');
-		assert.equal(paths.dirname('/foo/bar'), '/foo');
-		assert.equal(paths.dirname('\\foo\\bar'), '\\foo');
-		assert.equal(paths.dirname('/foo'), '/');
-		assert.equal(paths.dirname('\\foo'), '\\');
-		assert.equal(paths.dirname('/'), '/');
-		assert.equal(paths.dirname('\\'), '\\');
-		assert.equal(paths.dirname('foo'), '.');
-		assert.equal(paths.dirname('/folder/'), '/');
-		if (platform.isWindows) {
-			assert.equal(paths.dirname('c:\\some\\file.txt'), 'c:\\some');
-			assert.equal(paths.dirname('c:\\some'), 'c:\\');
+	function assertDirname(path: string, expected: string, win = false) {
+		const actual = paths.dirname(path, win ? '\\' : '/');
+
+		if (actual !== expected) {
+			assert.fail(`${path}: expected: ${expected}, ours: ${actual}`);
 		}
+	}
+
+	test('dirname', () => {
+		assertDirname('foo/bar', 'foo');
+		assertDirname('foo\\bar', 'foo', true);
+		assertDirname('/foo/bar', '/foo');
+		assertDirname('\\foo\\bar', '\\foo', true);
+		assertDirname('/foo', '/');
+		assertDirname('\\foo', '\\', true);
+		assertDirname('/', '/');
+		assertDirname('\\', '\\', true);
+		assertDirname('foo', '.');
+		assertDirname('f', '.');
+		assertDirname('f/', '.');
+		assertDirname('/folder/', '/');
+		assertDirname('c:\\some\\file.txt', 'c:\\some', true);
+		assertDirname('c:\\some', 'c:\\', true);
+		assertDirname('c:\\', 'c:\\', true);
+		assertDirname('c:', 'c:', true);
+		assertDirname('\\\\server\\share\\some\\path', '\\\\server\\share\\some', true);
+		assertDirname('\\\\server\\share\\some', '\\\\server\\share\\', true);
+		assertDirname('\\\\server\\share\\', '\\\\server\\share\\', true);
 	});
 
 	test('normalize', () => {
diff --git a/src/vs/base/test/common/resources.test.ts b/src/vs/base/test/common/resources.test.ts
index 919855add12b5c4c6b09393add21e512d315ed97..9816adbbbe980dbb1edf78b458a0bc0a274aeae0 100644
--- a/src/vs/base/test/common/resources.test.ts
+++ b/src/vs/base/test/common/resources.test.ts
@@ -47,6 +47,7 @@ suite('Resources', () => {
 			assert.equal(dirname(URI.file('c:\\some\\file\\'))!.toString(), 'file:///c%3A/some');
 			assert.equal(dirname(URI.file('c:\\some'))!.toString(), 'file:///c%3A/');
 			assert.equal(dirname(URI.file('C:\\some'))!.toString(), 'file:///c%3A/');
+			assert.equal(dirname(URI.file('c:\\'))!.toString(), 'file:///c%3A/');
 		} else {
 			assert.equal(dirname(URI.file('/some/file/test.txt'))!.toString(), 'file:///some/file');
 			assert.equal(dirname(URI.file('/some/file/'))!.toString(), 'file:///some');
@@ -56,6 +57,8 @@ suite('Resources', () => {
 		assert.equal(dirname(URI.parse('foo://a/some/file/'))!.toString(), 'foo://a/some');
 		assert.equal(dirname(URI.parse('foo://a/some/file'))!.toString(), 'foo://a/some');
 		assert.equal(dirname(URI.parse('foo://a/some'))!.toString(), 'foo://a/');
+		assert.equal(dirname(URI.parse('foo://a/'))!.toString(), 'foo://a/');
+		assert.equal(dirname(URI.parse('foo://a'))!.toString(), 'foo://a');
 
 		// does not explode (https://github.com/Microsoft/vscode/issues/41987)
 		dirname(URI.from({ scheme: 'file', authority: '/users/someone/portal.h' }));