diff --git a/api/krusty/remoteloader_test.go b/api/krusty/remoteloader_test.go
index b0e456c8c8c..b644bed8c0e 100644
--- a/api/krusty/remoteloader_test.go
+++ b/api/krusty/remoteloader_test.go
@@ -28,6 +28,7 @@ func TestRemoteLoad_LocalProtocol(t *testing.T) {
 		root          string
 		simple        string
 		noSuffix      string
+		hash          string
 		multiBaseDev  string
 		withSubmodule string
 	}
@@ -36,9 +37,10 @@ func TestRemoteLoad_LocalProtocol(t *testing.T) {
 	// root/
 	//   simple.git/			- base with just a pod
 	//   nosuffix/				- same as simple.git/ without the .git suffix
+	//   hash-xx/				- same as simple.git/ with random hash at xx
 	//   multibase.git/			- base with a dev overlay
 	//   with-submodule.git/	- includes `simple` as a submodule
-	//     submodule/			- the submodule referencing `simple
+	//     submodule/			- the submodule referencing `simple`
 	createGitRepos := func(t *testing.T) testRepos {
 		t.Helper()
 
@@ -50,10 +52,16 @@ func TestRemoteLoad_LocalProtocol(t *testing.T) {
 			}
 		}
 		root := t.TempDir()
+
+		hashPath, err := os.MkdirTemp(root, "hash-")
+		require.NoError(t, err)
+		hashDir := filepath.Base(hashPath)
+
 		bash(fmt.Sprintf(`
 set -eux
 
 export ROOT="%s"
+export HASH_DIR="%s"
 export GIT_AUTHOR_EMAIL=nobody@kustomize.io
 export GIT_AUTHOR_NAME=Nobody
 export GIT_COMMITTER_EMAIL=nobody@kustomize.io
@@ -85,19 +93,27 @@ cp -r testdata/remoteload/multibase $ROOT/multibase.git
 	git add .
 	git commit -m "import"
 )
+cp -r testdata/remoteload/with-submodule $ROOT/with-submodule.git # see README
+cp -r $ROOT/simple.git/. $ROOT/$HASH_DIR
 (
-	mkdir $ROOT/with-submodule.git
 	cd $ROOT/with-submodule.git
 	git init --initial-branch=main
-	git submodule add $ROOT/simple.git submodule
+	git add .
 	git commit -m "import"
+	git checkout -b relative-submodule
+	git submodule add ../$HASH_DIR submodule
+	git commit -m "relative submodule"
+	git checkout main
+	git submodule add $ROOT/simple.git submodule
+	git commit -m "submodule"	
 )
-`, root))
+`, root, hashDir))
 		return testRepos{
 			root: root,
 			// The strings below aren't currently used, and more serve as documentation.
 			simple:        "simple.git",
 			noSuffix:      "nosuffix",
+			hash:          hashDir,
 			multiBaseDev:  "multibase.git",
 			withSubmodule: "with-submodule.git",
 		}
@@ -183,6 +199,15 @@ resources:
 `,
 			expected: simpleBuild,
 		},
+		{
+			name: "has relative submodule",
+			kustomization: `
+resources:
+- file://$ROOT/with-submodule.git/submodule?ref=relative-submodule
+`,
+			// TODO(annasong): Replace with simpleBuild once #5131 is fixed.
+			err: `failed to run '\S+/git submodule update --init --recursive'`,
+		},
 		{
 			name: "has timeout",
 			kustomization: `
@@ -273,7 +298,7 @@ resources:
 
 			if test.err != "" {
 				require.Error(t, err)
-				require.Contains(t, err.Error(), test.err)
+				require.Regexp(t, test.err, err.Error())
 			} else {
 				require.NoError(t, err)
 				checkYaml(t, m, strings.ReplaceAll(test.expected, "$ROOT", repos.root))
@@ -430,6 +455,10 @@ func createKustDir(t *testing.T, content string) (filesys.FileSystem, filesys.Co
 	fSys := filesys.MakeFsOnDisk()
 	tmpDir, err := filesys.NewTmpConfirmedDir()
 	require.NoError(t, err)
+	t.Cleanup(func() {
+		require.NoError(t, fSys.RemoveAll(tmpDir.String()))
+	})
+
 	require.NoError(t, fSys.WriteFile(filepath.Join(tmpDir.String(), "kustomization.yaml"), []byte(content)))
 	return fSys, tmpDir
 }
diff --git a/api/krusty/testdata/remoteload/with-submodule/README.md b/api/krusty/testdata/remoteload/with-submodule/README.md
new file mode 100644
index 00000000000..d0d6022dea7
--- /dev/null
+++ b/api/krusty/testdata/remoteload/with-submodule/README.md
@@ -0,0 +1,10 @@
+# submodule
+
+This repo demonstrates kustomize's ability to download git repos 
+with submodules. The following branches contain
+* main: submodule via absolute path
+* relative-submodule: submodule via relative path
+
+For the submodule accessed via a relative path, we include a random hash in the
+submodule name to avoid accessing an unintended directory in the case kustomize
+contains loader bugs (issue #5131).
\ No newline at end of file