diff --git a/src/Microsoft.Blazor.Build/Cli/Commands/BuildRazorCommand.cs b/src/Microsoft.Blazor.Build/Cli/Commands/BuildRazorCommand.cs
index 0a9280bac2..f9acd45ec8 100644
--- a/src/Microsoft.Blazor.Build/Cli/Commands/BuildRazorCommand.cs
+++ b/src/Microsoft.Blazor.Build/Cli/Commands/BuildRazorCommand.cs
@@ -47,6 +47,7 @@ namespace Microsoft.Blazor.Build.Cli.Commands
                 using (var outputWriter = new StreamWriter(outputFilePath.Value()))
                 {
                     var diagnostics = new RazorCompiler().CompileFiles(
+                        sourceDirPathValue,
                         inputRazorFilePaths,
                         "Blazor", // TODO: Add required option for namespace
                         outputWriter,
diff --git a/src/Microsoft.Blazor.Build/Core/RazorCompilation/RazorCompiler.cs b/src/Microsoft.Blazor.Build/Core/RazorCompilation/RazorCompiler.cs
index d11b9c58b2..6d59fdab34 100644
--- a/src/Microsoft.Blazor.Build/Core/RazorCompilation/RazorCompiler.cs
+++ b/src/Microsoft.Blazor.Build/Core/RazorCompilation/RazorCompiler.cs
@@ -21,42 +21,73 @@ namespace Microsoft.Blazor.Build.Core.RazorCompilation
         /// <summary>
         /// Writes C# source code representing Blazor components defined by Razor files.
         /// </summary>
-        /// <param name="inputPaths">Paths to the input files.</param>
-        /// <param name="outputNamespace">The namespace for the generated classes.</param>
+        /// <param name="inputRootPath">Path to a directory containing input files.</param>
+        /// <param name="inputPaths">Paths to the input files relative to <paramref name="inputRootPath"/>. The generated namespaces will be based on these relative paths.</param>
+        /// <param name="baseNamespace">The base namespace for the generated classes.</param>
         /// <param name="resultOutput">A <see cref="TextWriter"/> to which C# source code will be written.</param>
         /// <param name="verboseOutput">If not null, additional information will be written to this <see cref="TextWriter"/>.</param>
         /// <returns>A collection of <see cref="RazorCompilerDiagnostic"/> instances representing any warnings or errors that were encountered.</returns>
-        public ICollection<RazorCompilerDiagnostic> CompileFiles(IEnumerable<string> inputPaths, string outputNamespace, TextWriter resultOutput, TextWriter verboseOutput)
+        public ICollection<RazorCompilerDiagnostic> CompileFiles(
+            string inputRootPath,
+            IEnumerable<string> inputPaths,
+            string baseNamespace,
+            TextWriter resultOutput,
+            TextWriter verboseOutput)
             => inputPaths.SelectMany(path =>
             {
                 using (var reader = File.OpenText(path))
                 {
-                    return CompileSingleFile(path, reader, outputNamespace, resultOutput, verboseOutput);
+                    return CompileSingleFile(inputRootPath, path, reader, baseNamespace, resultOutput, verboseOutput);
                 }
             }).ToList();
 
         /// <summary>
         /// Writes C# source code representing a Blazor component defined by a Razor file.
         /// </summary>
-        /// <param name="inputPaths">The path to the input file.</param>
-        /// <param name="outputNamespace">The namespace for the generated class.</param>
+        /// <param name="inputRootPath">Path to a directory containing input files.</param>
+        /// <param name="inputPaths">Paths to the input files relative to <paramref name="inputRootPath"/>. The generated namespaces will be based on these relative paths.</param>
+        /// <param name="baseNamespace">The base namespace for the generated class.</param>
         /// <param name="resultOutput">A <see cref="TextWriter"/> to which C# source code will be written.</param>
         /// <param name="verboseOutput">If not null, additional information will be written to this <see cref="TextWriter"/>.</param>
         /// <returns>An enumerable of <see cref="RazorCompilerDiagnostic"/> instances representing any warnings or errors that were encountered.</returns>
-        public IEnumerable<RazorCompilerDiagnostic> CompileSingleFile(string inputFilePath, TextReader inputFileReader, string outputNamespace, TextWriter resultOutput, TextWriter verboseOutput)
+        public IEnumerable<RazorCompilerDiagnostic> CompileSingleFile(
+            string inputRootPath,
+            string inputFilePath,
+            TextReader inputFileReader,
+            string baseNamespace,
+            TextWriter resultOutput,
+            TextWriter verboseOutput)
         {
+            if (inputFileReader == null)
+            {
+                throw new ArgumentNullException(nameof(inputFileReader));
+            }
+
             if (resultOutput == null)
             {
                 throw new ArgumentNullException(nameof(resultOutput));
             }
 
+            if (string.IsNullOrEmpty(inputRootPath))
+            {
+                throw new ArgumentException("Cannot be null or empty.", nameof(inputRootPath));
+            }
+
+            if (string.IsNullOrEmpty(baseNamespace))
+            {
+                throw new ArgumentException("Cannot be null or empty.", nameof(baseNamespace));
+            }
+
             try
             {
                 verboseOutput?.WriteLine($"Compiling {inputFilePath}...");
-                var className = GetClassName(inputFilePath);
+                var (itemNamespace, itemClassName) = GetNamespaceAndClassName(inputRootPath, inputFilePath);
+                var combinedNamespace = string.IsNullOrEmpty(itemNamespace)
+                    ? baseNamespace
+                    : $"{baseNamespace}.{itemNamespace}";
 
-                resultOutput.WriteLine($"namespace {outputNamespace} {{");
-                resultOutput.WriteLine($"public class {className}");
+                resultOutput.WriteLine($"namespace {combinedNamespace} {{");
+                resultOutput.WriteLine($"public class {itemClassName}");
                 resultOutput.WriteLine("{");
                 resultOutput.WriteLine("}");
                 resultOutput.WriteLine("}");
@@ -82,15 +113,32 @@ namespace Microsoft.Blazor.Build.Core.RazorCompilation
             }
         }
 
-        private static string GetClassName(string inputFilePath)
+        private static (string, string) GetNamespaceAndClassName(string inputRootPath, string inputFilePath)
         {
-            var basename = Path.GetFileNameWithoutExtension(inputFilePath);
-            if (!ClassNameRegex.IsMatch(basename))
+            // First represent inputFilePath as a path relative to inputRootPath. Not using Path.GetRelativePath
+            // because it doesn't handle cases like inputFilePath="\\something.cs".
+            var inputFilePathAbsolute = Path.GetFullPath(Path.Combine(inputRootPath, inputFilePath));
+            var inputRootPathWithTrailingSeparator = inputRootPath.EndsWith(Path.DirectorySeparatorChar)
+                ? inputRootPath
+                : (inputRootPath + Path.DirectorySeparatorChar);
+            var inputFilePathRelative = inputFilePathAbsolute.StartsWith(inputRootPathWithTrailingSeparator)
+                ? inputFilePathAbsolute.Substring(inputRootPathWithTrailingSeparator.Length)
+                : throw new RazorCompilerException($"File is not within source root directory: '{inputFilePath}'");
+
+            // Use the set of directory names in the relative path as namespace
+            var inputDirname = Path.GetDirectoryName(inputFilePathRelative);
+            var resultNamespace = inputDirname
+                .Replace(Path.DirectorySeparatorChar, '.')
+                .Replace(" ", string.Empty);
+
+            // Use the filename as class name
+            var inputBasename = Path.GetFileNameWithoutExtension(inputFilePathRelative);
+            if (!ClassNameRegex.IsMatch(inputBasename))
             {
-                throw new RazorCompilerException($"Invalid name '{basename}'. The name must be valid for a C# class name.");
+                throw new RazorCompilerException($"Invalid name '{inputBasename}'. The name must be valid for a C# class name.");
             }
 
-            return basename;
+            return (resultNamespace, inputBasename);
         }
     }
 }
diff --git a/test/Microsoft.Blazor.Build.Test/RazorCompilerTest.cs b/test/Microsoft.Blazor.Build.Test/RazorCompilerTest.cs
index f8985451b7..9e50e3fdd3 100644
--- a/test/Microsoft.Blazor.Build.Test/RazorCompilerTest.cs
+++ b/test/Microsoft.Blazor.Build.Test/RazorCompilerTest.cs
@@ -21,7 +21,8 @@ namespace Microsoft.Blazor.Build.Test
         {
             // Arrange/Act
             var result = CompileToCSharp(
-                "x:\\dir\\subdir\\Filename with spaces.cshtml",
+                "x:\\dir\\subdir",
+                "Filename with spaces.cshtml",
                 "ignored code",
                 "ignored namespace");
 
@@ -34,28 +35,55 @@ namespace Microsoft.Blazor.Build.Test
                 });
         }
 
-        [Fact]
-        public void CreatesClassWithCorrectNameAndNamespace()
+        [Theory]
+        [InlineData("\\unrelated.cs")]
+        [InlineData("..\\outsideroot.cs")]
+        public void RejectsFilenameOutsideRoot(string filename)
         {
             // Arrange/Act
+            var result = CompileToCSharp(
+                "x:\\dir\\subdir",
+                filename,
+                "ignored code",
+                "ignored namespace");
+
+            // Assert
+            Assert.Collection(result.Diagnostics,
+                item =>
+                {
+                    Assert.Equal(RazorCompilerDiagnostic.DiagnosticType.Error, item.Type);
+                    Assert.StartsWith($"File is not within source root directory: '{filename}'", item.Message);
+                });
+        }
+
+        [Theory]
+        [InlineData("ItemAtRoot.cs", "Test.Base", "ItemAtRoot")]
+        [InlineData(".\\ItemAtRoot.cs", "Test.Base", "ItemAtRoot")]
+        [InlineData("x:\\dir\\subdir\\ItemAtRoot.cs", "Test.Base", "ItemAtRoot")]
+        [InlineData("Dir1\\MyFile.cs", "Test.Base.Dir1", "MyFile")]
+        [InlineData("Dir1\\Dir2\\MyFile.cs", "Test.Base.Dir1.Dir2", "MyFile")]
+        public void CreatesClassWithCorrectNameAndNamespace(string relativePath, string expectedNamespace, string expectedClassName)
+        {
+            // Arrange/Acts
             var result = CompileToAssembly(
-                "x:\\dir\\subdir\\Filename.cshtml",
+                "x:\\dir\\subdir",
+                relativePath,
                 "{* No code *}",
-                "MyCompany.MyNamespace");
+                "Test.Base");
 
             // Assert
             Assert.Empty(result.Diagnostics);
             Assert.Collection(result.Assembly.GetTypes(),
                 type =>
                 {
-                    Assert.Equal("Filename", type.Name);
-                    Assert.Equal("MyCompany.MyNamespace", type.Namespace);
+                    Assert.Equal(expectedNamespace, type.Namespace);
+                    Assert.Equal(expectedClassName, type.Name);
                 });
         }
 
-        private static CompileToAssemblyResult CompileToAssembly(string cshtmlFilename, string cshtmlContent, string outputNamespace)
+        private static CompileToAssemblyResult CompileToAssembly(string cshtmlRootPath, string cshtmlRelativePath, string cshtmlContent, string outputNamespace)
         {
-            var csharpResult = CompileToCSharp(cshtmlFilename, cshtmlContent, outputNamespace);
+            var csharpResult = CompileToCSharp(cshtmlRootPath, cshtmlRelativePath, cshtmlContent, outputNamespace);
             if (csharpResult.Diagnostics.Any())
             {
                 var diagnosticsLog = string.Join(Environment.NewLine,
@@ -82,16 +110,17 @@ namespace Microsoft.Blazor.Build.Test
             {
                 compilation.Emit(peStream);
 
+                var diagnostics = compilation.GetDiagnostics();
                 return new CompileToAssemblyResult
                 {
-                    Diagnostics = compilation.GetDiagnostics(),
+                    Diagnostics = diagnostics,
                     VerboseLog = csharpResult.VerboseLog,
-                    Assembly = Assembly.Load(peStream.ToArray())
+                    Assembly = diagnostics.Any() ? null : Assembly.Load(peStream.ToArray())
                 };
             }
         }
 
-        private static CompileToCSharpResult CompileToCSharp(string cshtmlFilename, string cshtmlContent, string outputNamespace)
+        private static CompileToCSharpResult CompileToCSharp(string cshtmlRootPath, string cshtmlRelativePath, string cshtmlContent, string outputNamespace)
         {
             using (var resultStream = new MemoryStream())
             using (var resultWriter = new StreamWriter(resultStream))
@@ -100,7 +129,8 @@ namespace Microsoft.Blazor.Build.Test
             using (var inputReader = new StringReader(cshtmlContent))
             {
                 var diagnostics = new RazorCompiler().CompileSingleFile(
-                    cshtmlFilename,
+                    cshtmlRootPath,
+                    cshtmlRelativePath,
                     inputReader,
                     outputNamespace,
                     resultWriter,