diff --git a/CHANGELOG.md b/CHANGELOG.md
index ef7b4fd..0462263 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,6 +1,13 @@
 # Changelog
 
 
+## 3.10.3 (2024-08-16)
+
+### Fix
+
+* Handled MkDocs path directives in configurations (fixes #103) [Michele Tessaro]
+
+
 ## 3.10.2 (2024-08-09)
 
 ### Fix
diff --git a/plantuml_markdown/plantuml_markdown.py b/plantuml_markdown/plantuml_markdown.py
index bce989f..9d50e1e 100644
--- a/plantuml_markdown/plantuml_markdown.py
+++ b/plantuml_markdown/plantuml_markdown.py
@@ -122,7 +122,7 @@ class PlantUMLPreprocessor(markdown.preprocessors.Preprocessor):
         (?P=indent)(?P=fence)[ ]*$
         ''', re.MULTILINE | re.DOTALL | re.VERBOSE)
     # (?P<indent>[ ]*)(?P<fence>(?:~{3}|`{3}))[ ]*(\{?\.?(plant)?uml)[ ]*\n(?P<code>.*?)(?<=\n)(?P=indent)(?P=fence)$
-    FENCED_CODE_RE = re.compile(r'(?P<fence>(?:~{4,}|`{4,})).*?(?P=fence)',
+    FENCED_CODE_RE = re.compile(r'(?P<fence>(~{4,}|`{4,})).*?(?P=fence)',
                                 re.MULTILINE | re.DOTALL | re.VERBOSE)
 
     def __init__(self, md):
@@ -146,9 +146,12 @@ def run(self, lines: List[str]) -> List[str]:
         self._fallback_to_get = bool(self.config['fallback_to_get'])
         self._base_dir = self.config['base_dir']
 
-        if isinstance(self._base_dir, str):
+        if not isinstance(self._base_dir, list):
             self._base_dir = [self._base_dir]
 
+        # make sure they are strings (can be DocsDirPlaceholder is !relative is used in mkdocs.yml)
+        self._base_dir = [str(v) for v in self._base_dir]
+
         self._config_path = self.config['config']
 
         if self.config['config']:
diff --git a/setup.py b/setup.py
index b102465..4489e93 100644
--- a/setup.py
+++ b/setup.py
@@ -15,7 +15,7 @@
 
 setuptools.setup(
     name="plantuml-markdown",
-    version="3.10.2",
+    version="3.10.3",
     author="Michele Tessaro",
     author_email="michele.tessaro.tex@gmail.com",
     description="A PlantUML plugin for Markdown",
diff --git a/test-requirements.txt b/test-requirements.txt
index 86fe314..ef6b22b 100644
--- a/test-requirements.txt
+++ b/test-requirements.txt
@@ -1,4 +1,5 @@
 httpservermock
+mkdocs
 mock
 nose2
 pymdown-extensions
diff --git a/test/data/docs/example.puml b/test/data/docs/example.puml
new file mode 100644
index 0000000..8acbb1f
--- /dev/null
+++ b/test/data/docs/example.puml
@@ -0,0 +1,5 @@
+@startuml
+
+A -> B
+
+@enduml
diff --git a/test/data/mkdocs.yml b/test/data/mkdocs.yml
new file mode 100644
index 0000000..90e850a
--- /dev/null
+++ b/test/data/mkdocs.yml
@@ -0,0 +1,6 @@
+site_name: MkDocs test
+
+docs_dir: data/docs
+markdown_extensions:
+  - plantuml_markdown:
+      base_dir: !relative $docs_dir
diff --git a/test/test_plantuml.py b/test/test_plantuml.py
index 75ca467..70765ed 100644
--- a/test/test_plantuml.py
+++ b/test/test_plantuml.py
@@ -9,6 +9,8 @@
 
 from unittest import TestCase, SkipTest
 from httpservermock import MethodName, MockHTTPResponse, ServedBaseHTTPServerMock
+from mkdocs.config.defaults import MkDocsConfig
+from mkdocs.utils.yaml import DocsDirPlaceholder
 
 
 class PlantumlTest(TestCase):
@@ -610,6 +612,42 @@ def test_source(self):
                                     r"\s+`-+'\s+`-'\n"
                                     r'</code></pre>', re.DOTALL))
 
+    def test_source_mkdocs(self):
+        """
+        Test that source works with MkDocs config directives like `!relative`
+        """
+        include_path = os.path.join(os.path.dirname(os.path.abspath(__file__)), 'data')
+        mkdocs_config = MkDocsConfig()
+        # load the MkDocs config
+        with open(os.path.join(include_path, 'mkdocs.yml'), 'r') as f:
+            mkdocs_config.load_file(f)
+
+        configs = {
+            'plantuml_markdown': {
+                'base_dir': [
+                    '/tmp',                             # fake path where file to include is not present
+                    DocsDirPlaceholder(mkdocs_config),  # passes the `!relative $docs_dir`
+                ]
+            }
+        }
+        self.md = markdown.Markdown(extensions=['plantuml_markdown'],
+                                    extension_configs=configs)
+
+        text = self.text_builder.diagram(" ")\
+            .source("example.puml")\
+            .format("txt")\
+            .build()
+        self.assertRegex(self.md.convert(text),
+                         re.compile(r'<pre><code class="text">\s+,-+\.\s+,-\.\n'
+                                    r'\s+\|.*\|\s+\|B\|'
+                                    r'.*'
+                                    r'\s+\|.*\|\s+'
+                                    r'\s+\|\s*-+&gt;\|\s+'
+                                    r'.*'
+                                    r'\s+\|.*\|\s+\|B\|'
+                                    r'.*'
+                                    r'</code></pre>', re.DOTALL))
+
     def _server_render(self, filename: str, text: Union[str, Callable[[str], str]],
                        expected='<pre><code class="text">A -&gt; B -&gt; C</code></pre>',
                        server='server'):