diff --git a/.eslintrc b/.eslintrc
index 8020549c6fd..23887170377 100644
--- a/.eslintrc
+++ b/.eslintrc
@@ -204,7 +204,7 @@
       }
     },
     {
-      files: ["**/amd/src/*.js"],
+      files: ["**/amd/src/*.js", "**/amd/src/**/*.js"],
       // We support es6 now. Woot!
       env: {
         es6: true
diff --git a/Gruntfile.js b/Gruntfile.js
index 765a5a2aad2..771bed1f101 100644
--- a/Gruntfile.js
+++ b/Gruntfile.js
@@ -64,7 +64,14 @@ module.exports = function(grunt) {
     var inAMD = path.basename(cwd) == 'amd';
 
     // Globbing pattern for matching all AMD JS source files.
-    var amdSrc = [inAMD ? cwd + '/src/*.js' : '**/amd/src/*.js'];
+    var amdSrc = [];
+    if (inAMD) {
+        amdSrc.push(cwd + "/src/*.js");
+        amdSrc.push(cwd + "/src/**/*.js");
+    } else {
+        amdSrc.push("**/amd/src/*.js");
+        amdSrc.push("**/amd/src/**/*.js");
+    }
 
     /**
      * Function to generate the destination for the uglify task
diff --git a/lib/classes/requirejs.php b/lib/classes/requirejs.php
index 934b52a9df5..4f45dacb071 100644
--- a/lib/classes/requirejs.php
+++ b/lib/classes/requirejs.php
@@ -114,11 +114,14 @@ class core_requirejs {
                 // Skip it - RecursiveDirectoryIterator fatals if the directory is not readable as an iterator.
                 continue;
             }
-            $items = new RecursiveDirectoryIterator($srcdir);
+            $srcdir = realpath($srcdir);
+            $directory = new RecursiveDirectoryIterator($srcdir);
+            $items = new RecursiveIteratorIterator($directory);
             foreach ($items as $item) {
                 $extension = $item->getExtension();
                 if ($extension === 'js') {
-                    $filename = str_replace('.min', '', $item->getBaseName('.js'));
+                    $filename = substr($item->getRealpath(), strlen($srcdir) + 1);
+                    $filename = str_replace('.min', '', $filename);
                     // We skip lazy loaded modules unless specifically requested.
                     if ($includelazy || strpos($filename, '-lazy') === false) {
                         $modulename = $component . '/' . $filename;
diff --git a/lib/jssourcemap.php b/lib/jssourcemap.php
index 3a1c0d59c0a..a39a451b64c 100644
--- a/lib/jssourcemap.php
+++ b/lib/jssourcemap.php
@@ -44,11 +44,6 @@ $file = '/' . min_clean_param($file, 'SAFEPATH');
 // Only load js files from the js modules folder from the components.
 [$unused, $component, $module] = explode('/', $file, 3);
 
-// No subdirs allowed - only flat module structure please.
-if (strpos('/', $module) !== false) {
-    die('Invalid module');
-}
-
 // When running a lazy load, we only deal with one file so we can just return the working sourcemap.
 $jsfiles = core_requirejs::find_one_amd_module($component, $module, false);
 $jsfile = reset($jsfiles);
diff --git a/lib/requirejs.php b/lib/requirejs.php
index 047fa3f8824..49c0db77c46 100644
--- a/lib/requirejs.php
+++ b/lib/requirejs.php
@@ -52,11 +52,6 @@ $file = '/' . min_clean_param($file, 'SAFEPATH');
 $jsfiles = array();
 list($unused, $component, $module) = explode('/', $file, 3);
 
-// No subdirs allowed - only flat module structure please.
-if (strpos('/', $module) !== false) {
-    die('Invalid module');
-}
-
 // Use the caching only for meaningful revision numbers which prevents future cache poisoning.
 if ($rev > 0 and $rev < (time() + 60 * 60)) {
     // This is "production mode".
diff --git a/lib/upgrade.txt b/lib/upgrade.txt
index 4c55269eb64..c4aa0a3ffed 100644
--- a/lib/upgrade.txt
+++ b/lib/upgrade.txt
@@ -26,6 +26,17 @@ information provided here is intended especially for developers.
   are now public. If you are overriding these then you will need to change your methods to public in your class.
 * $CFG->httpswwwroot has been removed. It is no longer necessary as loginhttps has already been removed and it's no longer being
   used anywhere in core.
+* It is now possible to use sub-directories for AMD modules.
+  The standard rules for Level 2 namespaces also apply to AMD modules.
+  The sub-directory used must be either an valid component, or placed inside a 'local' directory to ensure that it does not conflict with other components.
+
+    The following are all valid module names and locations in your plugin:
+      mod_forum/view: mod/forum/amd/src/view.js
+      mod_forum/local/views/post: mod/forum/amd/src/local/views/post
+      mod_forum/form/checkbox-toggle: mod/forum/amd/src/form/checkbox-toggle.js
+
+    The following are all invalid module names and locations in your plugin:
+      mod_forum/views/post: mod/forum/amd/src/views/post
 
 === 3.7 ===