diff --git a/crates/red_knot_project/src/metadata/options.rs b/crates/red_knot_project/src/metadata/options.rs
index 56f52b3b20..8662172632 100644
--- a/crates/red_knot_project/src/metadata/options.rs
+++ b/crates/red_knot_project/src/metadata/options.rs
@@ -121,7 +121,7 @@ impl Options {
                         .ok()
                         .map(PythonPath::from_virtual_env_var)
                 })
-                .unwrap_or_else(|| PythonPath::KnownSitePackages(vec![])),
+                .unwrap_or(PythonPath::Discover),
         }
     }
 
diff --git a/crates/red_knot_python_semantic/src/module_resolver/resolver.rs b/crates/red_knot_python_semantic/src/module_resolver/resolver.rs
index 2c6f8f3dcd..0d35cbd082 100644
--- a/crates/red_knot_python_semantic/src/module_resolver/resolver.rs
+++ b/crates/red_knot_python_semantic/src/module_resolver/resolver.rs
@@ -11,7 +11,7 @@ use ruff_python_ast::PythonVersion;
 use crate::db::Db;
 use crate::module_name::ModuleName;
 use crate::module_resolver::typeshed::{vendored_typeshed_versions, TypeshedVersions};
-use crate::site_packages::VirtualEnvironment;
+use crate::site_packages::{SitePackagesDiscoveryError, SysPrefixPathOrigin, VirtualEnvironment};
 use crate::{Program, PythonPath, SearchPathSettings};
 
 use super::module::{Module, ModuleKind};
@@ -133,6 +133,22 @@ pub(crate) fn search_paths(db: &dyn Db) -> SearchPathIterator {
     Program::get(db).search_paths(db).iter(db)
 }
 
+/// Searches for a `.venv` directory in the current or any parent directory
+fn virtual_env_from_working_dir() -> Option<SystemPathBuf> {
+    let current_dir = std::env::current_dir().ok()?;
+
+    for dir in current_dir.ancestors() {
+        let dot_venv = dir.join(".venv");
+        if dot_venv.is_dir() {
+            if !dot_venv.join("pyvenv.cfg").is_file() {
+                return None;
+            }
+            return SystemPathBuf::from_path_buf(dot_venv).ok();
+        }
+    }
+    None
+}
+
 #[derive(Debug, PartialEq, Eq)]
 pub struct SearchPaths {
     /// Search paths that have been statically determined purely from reading Ruff's configuration settings.
@@ -235,6 +251,37 @@ impl SearchPaths {
                     .and_then(|venv| venv.site_packages_directories(system))?
             }
 
+            PythonPath::Discover => {
+                tracing::debug!("Discovering virtual environment");
+                let virtual_env_path = virtual_env_from_working_dir();
+                if let Some(virtual_env_path) = virtual_env_path {
+                    tracing::debug!("Found `.venv` folder at '{}'", virtual_env_path);
+
+                    let handle_invalid_virtual_env = |error: SitePackagesDiscoveryError| {
+                        tracing::debug!(
+                            "Ignoring automatically detected virtual environment at '{}': {}",
+                            virtual_env_path,
+                            error
+                        );
+                        vec![]
+                    };
+
+                    match VirtualEnvironment::new(
+                        virtual_env_path.clone(),
+                        SysPrefixPathOrigin::LocalVenv,
+                        system,
+                    ) {
+                        Ok(venv) => venv
+                            .site_packages_directories(system)
+                            .unwrap_or_else(handle_invalid_virtual_env),
+                        Err(error) => handle_invalid_virtual_env(error),
+                    }
+                } else {
+                    tracing::debug!("No virtual environment found");
+                    vec![]
+                }
+            }
+
             PythonPath::KnownSitePackages(paths) => paths
                 .iter()
                 .map(|path| canonicalize(path, system))
diff --git a/crates/red_knot_python_semantic/src/program.rs b/crates/red_knot_python_semantic/src/program.rs
index 325d594faf..73c553d14d 100644
--- a/crates/red_knot_python_semantic/src/program.rs
+++ b/crates/red_knot_python_semantic/src/program.rs
@@ -145,6 +145,8 @@ pub enum PythonPath {
     /// [`sys.prefix`]: https://docs.python.org/3/library/sys.html#sys.prefix
     SysPrefix(SystemPathBuf, SysPrefixPathOrigin),
 
+    Discover,
+
     /// Resolved site packages paths.
     ///
     /// This variant is mainly intended for testing where we want to skip resolving `site-packages`
diff --git a/crates/red_knot_python_semantic/src/site_packages.rs b/crates/red_knot_python_semantic/src/site_packages.rs
index 6cfbd3ef8a..c4b76d877e 100644
--- a/crates/red_knot_python_semantic/src/site_packages.rs
+++ b/crates/red_knot_python_semantic/src/site_packages.rs
@@ -459,6 +459,7 @@ pub enum SysPrefixPathOrigin {
     PythonCliFlag,
     VirtualEnvVar,
     Derived,
+    LocalVenv,
 }
 
 impl Display for SysPrefixPathOrigin {
@@ -467,6 +468,7 @@ impl Display for SysPrefixPathOrigin {
             Self::PythonCliFlag => f.write_str("`--python` argument"),
             Self::VirtualEnvVar => f.write_str("`VIRTUAL_ENV` environment variable"),
             Self::Derived => f.write_str("derived `sys.prefix` path"),
+            Self::LocalVenv => f.write_str("local virtual environment"),
         }
     }
 }