diff --git a/NEWS.md b/NEWS.md
index 9d61d6aaa..48c095fa8 100644
--- a/NEWS.md
+++ b/NEWS.md
@@ -1,5 +1,11 @@
 # sandpaper 0.11.9 (in development)
 
+BUG FIX
+-------
+
+* Links to assets in instructor view no longer render a 404. (reported:
+  @brownsarahm, #404; fixed: @zkamvar, #408)
+
 CONTINUOUS INTEGRATION
 ----------------------
 
diff --git a/R/utils-xml.R b/R/utils-xml.R
index 19cbc24e3..f8be4d5ce 100644
--- a/R/utils-xml.R
+++ b/R/utils-xml.R
@@ -40,12 +40,12 @@ fix_codeblocks <- function(nodes = NULL) {
 add_code_heading <- function(codes = NULL, labels = "OUTPUT") {
   if (length(codes) == 0) return(codes)
   xml2::xml_set_attr(codes, "tabindex", "0")
-  heads <- xml2::xml_add_sibling(codes, "h3", labels, class = "code-label", 
+  heads <- xml2::xml_add_sibling(codes, "h3", labels, class = "code-label",
     .where = "before")
   for (head in heads) {
-    xml2::xml_add_child(head, "i", 
+    xml2::xml_add_child(head, "i",
       "aria-hidden" = "true", "data-feather" = "chevron-left")
-    xml2::xml_add_child(head, "i", 
+    xml2::xml_add_child(head, "i",
       "aria-hidden" = "true", "data-feather" = "chevron-right")
   }
   invisible(codes)
@@ -97,7 +97,7 @@ fix_setup_link <- function(nodes = NULL) {
   if (length(nodes) == 0) return(nodes)
   links <- xml2::xml_find_all(nodes, ".//a")
   hrefs <- xml2::url_parse(xml2::xml_attr(links, "href"))
-  setup_links <- hrefs$scheme == "" & 
+  setup_links <- hrefs$scheme == "" &
     hrefs$server == "" &
     hrefs$path == "setup.html"
   xml2::xml_set_attr(links[setup_links], "href", "index.html#setup")
@@ -115,9 +115,21 @@ use_learner <- function(nodes = NULL) {
 use_instructor <- function(nodes = NULL) {
   if (length(nodes) == 0) return(nodes)
   copy <- xml2::read_html(as.character(nodes))
-  # lnk <- xml2::xml_find_all(copy, ".//a[not(starts-with(@href, 'http'))]")
+  # find all local links and transform non-html and nested links ---------
+  lnk <- xml2::xml_find_all(copy,
+    ".//a[@href][not(contains(@href, '://')) and not(starts-with(@href, '#'))]"
+  )
+  lnk_hrefs <- xml2::xml_attr(lnk, "href")
+  lnk_paths <- xml2::url_parse(lnk_hrefs)$path
+  # links without HTML extension
+  not_html <- !fs::path_ext(lnk_paths) %in% c("html", "")
+  # links that are not in the root directory (e.g. files/a.html, but not ./a.html)
+  is_nested <- lengths(strsplit(sub("^[.][/]", "", lnk_paths), "/")) > 1
+  is_above <- not_html | is_nested
+  lnk_hrefs[is_above] <- fs::path("../", lnk_hrefs[is_above])
+  xml2::xml_set_attr(lnk, "href", lnk_hrefs)
+  # find all images and refer back to source
   img <- xml2::xml_find_all(copy, ".//img[not(starts-with(@src, 'http'))]")
-  # xml2::xml_set_attr(lnk, "href", fs::path("instructor/", xml2::xml_attr(lnk, "href")))
   xml2::xml_set_attr(img, "src", fs::path("../", xml2::xml_attr(img, "src")))
   as.character(copy)
 }
diff --git a/tests/testthat/_snaps/utils-xml.md b/tests/testthat/_snaps/utils-xml.md
new file mode 100644
index 000000000..b6fbe9db0
--- /dev/null
+++ b/tests/testthat/_snaps/utils-xml.md
@@ -0,0 +1,34 @@
+# paths in instructor view that are nested or not HTML get diverted
+
+    Code
+      xml2::xml_find_all(html_test, ".//a[@href]")
+    Output
+      {xml_nodeset (10)}
+       [1] <a href="index.html">a</a>
+       [2] <a href="./index.html">b</a>
+       [3] <a href="fig/thing.png">c</a>
+       [4] <a href="./fig/thang.jpg">d</a>
+       [5] <a href="data/thing.csv">e</a>
+       [6] <a href="files/papers/thing.pdf">f</a>
+       [7] <a href="files/confirmation.html">g</a>
+       [8] <a href="#what-the">h</a>
+       [9] <a href="other-page.html#section">i</a>
+      [10] <a href="other-page">j</a>
+
+---
+
+    Code
+      xml2::xml_find_all(res, ".//a[@href]")
+    Output
+      {xml_nodeset (10)}
+       [1] <a href="index.html">a</a>
+       [2] <a href="./index.html">b</a>
+       [3] <a href="../fig/thing.png">c</a>
+       [4] <a href=".././fig/thang.jpg">d</a>
+       [5] <a href="../data/thing.csv">e</a>
+       [6] <a href="../files/papers/thing.pdf">f</a>
+       [7] <a href="../files/confirmation.html">g</a>
+       [8] <a href="#what-the">h</a>
+       [9] <a href="other-page.html#section">i</a>
+      [10] <a href="other-page">j</a>
+
diff --git a/tests/testthat/test-utils-xml.R b/tests/testthat/test-utils-xml.R
index 018b80120..30e8d60b1 100644
--- a/tests/testthat/test-utils-xml.R
+++ b/tests/testthat/test-utils-xml.R
@@ -1,4 +1,30 @@
 
+
+test_that("paths in instructor view that are nested or not HTML get diverted", {
+  html_test <- xml2::read_html(commonmark::markdown_html(c(
+    "<a id='what-the'></a><h2>h</h2>\n",
+    "[a](index.html)",
+    "[b](./index.html)",
+    "[c](fig/thing.png)",           # asset
+    "[d](./fig/thang.jpg)",         # asset
+    "[e](data/thing.csv)",          # asset
+    "[f](files/papers/thing.pdf)",  # asset
+    "[g](files/confirmation.html)", # asset
+    "[h](#what-the)",
+    "[i](other-page.html#section)",
+    "[j](other-page)"
+  )))
+  res <- xml2::read_html(use_instructor(html_test))
+  # refs are transformed according to our rules
+  refs <- xml2::xml_text(xml2::xml_find_all(res, ".//@href"))
+  expect_equal(startsWith(refs, "../"),
+    c(FALSE, FALSE, TRUE, TRUE, TRUE, TRUE, TRUE, FALSE, FALSE, FALSE))
+  expect_snapshot(xml2::xml_find_all(html_test, ".//a[@href]"))
+  expect_snapshot(xml2::xml_find_all(res, ".//a[@href]"))
+})
+
+
+
 test_that("empty args result in nothing happening", {
   expect_null(fix_nodes())
   expect_null(fix_setup_link())