diff --git a/src/vs/base/common/resources.ts b/src/vs/base/common/resources.ts
index 521a02a4b57..8ccc9567737 100644
--- a/src/vs/base/common/resources.ts
+++ b/src/vs/base/common/resources.ts
@@ -221,7 +221,7 @@ export function addTrailingPathSeparator(resource: URI, sep: string = paths.sep)
  * Returns a relative path between two URIs. If the URIs don't have the same schema or authority, `undefined` is returned.
  * The returned relative path always uses forward slashes.
  */
-export function relativePath(from: URI, to: URI): string | undefined {
+export function relativePath(from: URI, to: URI, ignoreCase = hasToIgnoreCase(from)): string | undefined {
 	if (from.scheme !== to.scheme || !isEqualAuthority(from.authority, to.authority)) {
 		return undefined;
 	}
@@ -229,7 +229,20 @@ export function relativePath(from: URI, to: URI): string | undefined {
 		const relativePath = paths.relative(from.path, to.path);
 		return isWindows ? extpath.toSlashes(relativePath) : relativePath;
 	}
-	return paths.posix.relative(from.path || '/', to.path || '/');
+	let fromPath = from.path || '/', toPath = to.path || '/';
+	if (ignoreCase) {
+		// make casing of fromPath match toPath
+		let i = 0;
+		for (const len = Math.min(fromPath.length, toPath.length); i < len; i++) {
+			if (fromPath.charCodeAt(i) !== toPath.charCodeAt(i)) {
+				if (fromPath.charAt(i).toLowerCase() !== toPath.charAt(i).toLowerCase()) {
+					break;
+				}
+			}
+		}
+		fromPath = toPath.substr(0, i) + fromPath.substr(i);
+	}
+	return paths.posix.relative(fromPath, toPath);
 }
 
 /**
diff --git a/src/vs/base/test/common/resources.test.ts b/src/vs/base/test/common/resources.test.ts
index b9d1a99d539..cb535362222 100644
--- a/src/vs/base/test/common/resources.test.ts
+++ b/src/vs/base/test/common/resources.test.ts
@@ -237,8 +237,8 @@ suite('Resources', () => {
 		}
 	}
 
-	function assertRelativePath(u1: URI, u2: URI, expectedPath: string | undefined, ignoreJoin?: boolean) {
-		assert.equal(relativePath(u1, u2), expectedPath, `from ${u1.toString()} to ${u2.toString()}`);
+	function assertRelativePath(u1: URI, u2: URI, expectedPath: string | undefined, ignoreJoin?: boolean, ignoreCase?: boolean) {
+		assert.equal(relativePath(u1, u2, ignoreCase), expectedPath, `from ${u1.toString()} to ${u2.toString()}`);
 		if (expectedPath !== undefined && !ignoreJoin) {
 			assertEqualURI(removeTrailingPathSeparator(joinPath(u1, expectedPath)), removeTrailingPathSeparator(u2), 'joinPath on relativePath should be equal');
 		}
@@ -263,6 +263,11 @@ suite('Resources', () => {
 		assertRelativePath(URI.parse('foo://a2/b'), URI.parse('foo://a/b'), undefined);
 		assertRelativePath(URI.parse('goo://a/b'), URI.parse('foo://a/b'), undefined);
 
+		assertRelativePath(URI.parse('foo://a/foo'), URI.parse('foo://A/FOO/bar/goo'), 'bar/goo', false, true);
+		assertRelativePath(URI.parse('foo://a/foo'), URI.parse('foo://A/FOO/BAR/GOO'), 'BAR/GOO', false, true);
+		assertRelativePath(URI.parse('foo://a/foo/xoo'), URI.parse('foo://A/FOO/BAR/GOO'), '../BAR/GOO', false, true);
+		assertRelativePath(URI.parse('foo:///c:/a/foo'), URI.parse('foo:///C:/a/foo/xoo/'), 'xoo', false, true);
+
 		if (isWindows) {
 			assertRelativePath(URI.file('c:\\foo\\bar'), URI.file('c:\\foo\\bar'), '');
 			assertRelativePath(URI.file('c:\\foo\\bar\\huu'), URI.file('c:\\foo\\bar'), '..');