diff --git a/resources/test/fixtures/isort/pyproject.toml b/resources/test/fixtures/isort/pyproject.toml
new file mode 100644
index 0000000000..97fda9d62e
--- /dev/null
+++ b/resources/test/fixtures/isort/pyproject.toml
@@ -0,0 +1,2 @@
+[tool.ruff]
+line-length = 88
diff --git a/resources/test/fixtures/isort/separate_local_folder_imports.py b/resources/test/fixtures/isort/separate_local_folder_imports.py
new file mode 100644
index 0000000000..6eb9966811
--- /dev/null
+++ b/resources/test/fixtures/isort/separate_local_folder_imports.py
@@ -0,0 +1,4 @@
+import sys
+import leading_prefix
+import os
+from . import leading_prefix
diff --git a/src/isort/categorize.rs b/src/isort/categorize.rs
index 11ffd4f101..ed71054c0a 100644
--- a/src/isort/categorize.rs
+++ b/src/isort/categorize.rs
@@ -12,16 +12,20 @@ pub enum ImportType {
     StandardLibrary,
     ThirdParty,
     FirstParty,
+    LocalFolder,
 }
 
 pub fn categorize(
     module_base: &str,
+    level: &Option<usize>,
     src: &[PathBuf],
     known_first_party: &BTreeSet<String>,
     known_third_party: &BTreeSet<String>,
     extra_standard_library: &BTreeSet<String>,
 ) -> ImportType {
-    if known_first_party.contains(module_base) {
+    if level.map(|level| level > 0).unwrap_or(false) {
+        ImportType::LocalFolder
+    } else if known_first_party.contains(module_base) {
         ImportType::FirstParty
     } else if known_third_party.contains(module_base) {
         ImportType::ThirdParty
@@ -31,12 +35,10 @@ pub fn categorize(
         import_type.clone()
     } else if KNOWN_STANDARD_LIBRARY.contains(module_base) {
         ImportType::StandardLibrary
+    } else if find_local(src, module_base) {
+        ImportType::FirstParty
     } else {
-        if find_local(src, module_base) {
-            ImportType::FirstParty
-        } else {
-            ImportType::ThirdParty
-        }
+        ImportType::ThirdParty
     }
 }
 
diff --git a/src/isort/mod.rs b/src/isort/mod.rs
index efeb733a7f..e637bf6751 100644
--- a/src/isort/mod.rs
+++ b/src/isort/mod.rs
@@ -62,6 +62,7 @@ fn categorize_imports<'a>(
     for alias in block.import {
         let import_type = categorize(
             &alias.module_base(),
+            &None,
             src,
             known_first_party,
             known_third_party,
@@ -77,6 +78,7 @@ fn categorize_imports<'a>(
     for (import_from, aliases) in block.import_from {
         let classification = categorize(
             &import_from.module_base(),
+            import_from.level,
             src,
             known_first_party,
             known_third_party,
@@ -119,6 +121,7 @@ pub fn sort_imports(
         ImportType::StandardLibrary,
         ImportType::ThirdParty,
         ImportType::FirstParty,
+        ImportType::LocalFolder,
     ] {
         if let Some(import_block) = block_by_type.get(&import_type) {
             // Add a blank line between every section.
@@ -218,6 +221,7 @@ mod tests {
     #[test_case(Path::new("reorder_within_section.py"))]
     #[test_case(Path::new("separate_first_party_imports.py"))]
     #[test_case(Path::new("separate_future_imports.py"))]
+    #[test_case(Path::new("separate_local_folder_imports.py"))]
     #[test_case(Path::new("separate_third_party_imports.py"))]
     #[test_case(Path::new("skip.py"))]
     #[test_case(Path::new("trailing_suffix.py"))]
diff --git a/src/isort/snapshots/ruff__isort__tests__separate_local_folder_imports.py.snap b/src/isort/snapshots/ruff__isort__tests__separate_local_folder_imports.py.snap
new file mode 100644
index 0000000000..9653981217
--- /dev/null
+++ b/src/isort/snapshots/ruff__isort__tests__separate_local_folder_imports.py.snap
@@ -0,0 +1,22 @@
+---
+source: src/isort/mod.rs
+expression: checks
+---
+- kind: UnsortedImports
+  location:
+    row: 1
+    column: 0
+  end_location:
+    row: 5
+    column: 0
+  fix:
+    patch:
+      content: "import os\nimport sys\n\nimport leading_prefix\n\nfrom . import leading_prefix\n"
+      location:
+        row: 1
+        column: 0
+      end_location:
+        row: 5
+        column: 0
+    applied: false
+