diff --git a/contrib/chg/Makefile b/contrib/chg/Makefile
--- a/contrib/chg/Makefile
+++ b/contrib/chg/Makefile
@@ -8,6 +8,9 @@
 ifdef HGPATH
 override CPPFLAGS += -DHGPATH=\"$(HGPATH)\"
 endif
+ifdef HGPATHREL
+override CPPFLAGS += -DHGPATHREL=\"$(HGPATHREL)\"
+endif
 
 DESTDIR =
 PREFIX = /usr/local
diff --git a/contrib/chg/README b/contrib/chg/README
--- a/contrib/chg/README
+++ b/contrib/chg/README
@@ -30,3 +30,11 @@
  * CHGSOCKNAME specifies the socket path of the background cmdserver.
  * CHGTIMEOUT specifies how many seconds chg will wait before giving up
    connecting to a cmdserver. If it is 0, chg will wait forever. Default: 60
+
+Build environment variables:
+
+ * HGPATH: the path to the hg executable to call when CHGHG and HG are not set,
+   instead of "hg"
+ * HGPATHREL=1: when CHGHG and HG are not set, the hg executable will be ./hg
+   relative to the chg executable. Only works on linux, falls back to "hg"
+   otherwise.
diff --git a/contrib/chg/chg.c b/contrib/chg/chg.c
--- a/contrib/chg/chg.c
+++ b/contrib/chg/chg.c
@@ -184,13 +184,46 @@
 		abortmsg("too long TMPDIR or CHGSOCKNAME (r = %d)", r);
 }
 
+/* If the current program is, say, /a/b/c/chg, returns /a/b/c/hg. */
+static char *getrelhgcmd(void)
+{
+	ssize_t n;
+	char *res, *slash;
+	int maxsize = 4096;
+	res = malloc(maxsize);
+	if (res == NULL)
+		goto cleanup;
+	n = readlink("/proc/self/exe", res, maxsize);
+	if (n < 0 || n >= maxsize)
+		goto cleanup;
+	res[n] = '\0';
+	slash = strrchr(res, '/');
+	if (slash == NULL)
+		goto cleanup;
+	/* 4 is strlen("/hg") + nul byte */
+	if (slash + 4 >= res + maxsize)
+		goto cleanup;
+	memcpy(slash, "/hg", 4);
+	return res;
+ cleanup:
+	free(res);
+	return NULL;
+}
+
 static const char *gethgcmd(void)
 {
 	static const char *hgcmd = NULL;
+#ifdef HGPATHREL
+	int tryrelhgcmd = 1;
+#else
+	int tryrelhgcmd = 0;
+#endif
 	if (!hgcmd) {
 		hgcmd = getenv("CHGHG");
 		if (!hgcmd || hgcmd[0] == '\0')
 			hgcmd = getenv("HG");
+		if (tryrelhgcmd && (!hgcmd || hgcmd[0] == '\0'))
+			hgcmd = getrelhgcmd();
 		if (!hgcmd || hgcmd[0] == '\0')
 #ifdef HGPATH
 			hgcmd = (HGPATH);