diff --git a/invokeai/backend/model_management/model_manager.py b/invokeai/backend/model_management/model_manager.py
index 3e8888be24..ebe7ffbbd0 100644
--- a/invokeai/backend/model_management/model_manager.py
+++ b/invokeai/backend/model_management/model_manager.py
@@ -533,7 +533,7 @@ class ModelManager(object):
         model_path = self.resolve_model_path(model_path)
         return model_path, is_submodel_override
 
-    def _get_model_config(self, base_model, model_name, model_type) -> ModelConfigBase:
+    def _get_model_config(self, base_model: BaseModelType, model_name: str, model_type: ModelType) -> ModelConfigBase:
         """Get a model's config object."""
         model_key = self.create_key(model_name, base_model, model_type)
         try:
diff --git a/pyproject.toml b/pyproject.toml
index b3f12481a8..2ae297a6da 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -100,7 +100,7 @@ dependencies = [
 "dev" = [
   "pudb",
 ]
-"test" = ["pytest>6.0.0", "pytest-cov", "black"]
+"test" = ["pytest>6.0.0", "pytest-cov", "pytest-datadir", "black"]
 "xformers" = [
 	   "xformers~=0.0.19; sys_platform!='darwin'",
 	   "triton; sys_platform=='linux'",
diff --git a/tests/test_model_manager.py b/tests/test_model_manager.py
new file mode 100644
index 0000000000..af0394eac2
--- /dev/null
+++ b/tests/test_model_manager.py
@@ -0,0 +1,36 @@
+from pathlib import Path
+
+import pytest
+
+from invokeai.app.services.config import InvokeAIAppConfig
+from invokeai.backend import ModelManager, BaseModelType, ModelType, SubModelType
+
+
+@pytest.fixture
+def model_manager(datadir) -> ModelManager:
+    InvokeAIAppConfig.get_config(root=datadir)
+    return ModelManager(datadir / "configs" / "relative_sub.models.yaml")
+
+
+def test_get_model_names(model_manager: ModelManager):
+    names = model_manager.model_names()
+    assert names[:2] == [
+        ("SDXL base", BaseModelType.StableDiffusionXL, ModelType.Main),
+        ("SDXL with VAE", BaseModelType.StableDiffusionXL, ModelType.Main),
+    ]
+
+
+def test_get_model_path_for_diffusers(model_manager: ModelManager, datadir: Path):
+    model_config = model_manager._get_model_config(BaseModelType.StableDiffusionXL, "SDXL base", ModelType.Main)
+    top_model_path, is_override = model_manager._get_model_path(model_config)
+    expected_model_path = datadir / "models" / "sdxl" / "main" / "SDXL base 1_0"
+    assert top_model_path == expected_model_path
+    assert not is_override
+
+
+def test_get_model_path_for_overridden_vae(model_manager: ModelManager, datadir: Path):
+    model_config = model_manager._get_model_config(BaseModelType.StableDiffusionXL, "SDXL with VAE", ModelType.Main)
+    vae_model_path, is_override = model_manager._get_model_path(model_config, SubModelType.Vae)
+    expected_vae_path = datadir / "models" / "sdxl" / "vae" / "sdxl-vae-fp16-fix"
+    assert vae_model_path == expected_vae_path
+    assert is_override
diff --git a/tests/test_model_manager/configs/relative_sub.models.yaml b/tests/test_model_manager/configs/relative_sub.models.yaml
new file mode 100644
index 0000000000..757c50e3b5
--- /dev/null
+++ b/tests/test_model_manager/configs/relative_sub.models.yaml
@@ -0,0 +1,15 @@
+__metadata__:
+  version: 3.0.0
+
+sdxl/main/SDXL base:
+  path: sdxl/main/SDXL base 1_0
+  description: SDXL base v1.0
+  variant: normal
+  format: diffusers
+
+sdxl/main/SDXL with VAE:
+  path: sdxl/main/SDXL base 1_0
+  description: SDXL base v1.0
+  vae: sdxl/vae/sdxl-vae-fp16-fix/
+  variant: normal
+  format: diffusers
diff --git a/tests/test_model_manager/models/sdxl/main/SDXL base 1_0/model_index.json b/tests/test_model_manager/models/sdxl/main/SDXL base 1_0/model_index.json
new file mode 100644
index 0000000000..e69de29bb2
diff --git a/tests/test_model_manager/models/sdxl/vae/sdxl-vae-fp16-fix/config.json b/tests/test_model_manager/models/sdxl/vae/sdxl-vae-fp16-fix/config.json
new file mode 100644
index 0000000000..e69de29bb2