diff --git a/include/boost/wave/util/cpp_include_paths.hpp b/include/boost/wave/util/cpp_include_paths.hpp
index a438449d..e40d738f 100644
--- a/include/boost/wave/util/cpp_include_paths.hpp
+++ b/include/boost/wave/util/cpp_include_paths.hpp
@@ -178,6 +178,24 @@ class include_paths
     boost::filesystem::path current_dir;
     boost::filesystem::path current_rel_dir;
 
+    bool may_be_includable(const boost::filesystem::path& p) const
+    {
+        namespace fs = boost::filesystem;
+        if (!fs::exists(p) || fs::is_directory(p)) {
+            return false;
+        }
+        if (fs::is_symlink(p)) {
+            boost::system::error_code ec;
+            fs::file_status target = fs::status(p, ec);
+            if (ec || !fs::exists(target) || fs::is_directory(target)) {
+                return false;
+            }
+            return true;
+        } else {
+            return true;
+        }
+    }
+
 #if BOOST_WAVE_SUPPORT_PRAGMA_ONCE != 0
 public:
     bool has_pragma_once(std::string const &filename)
@@ -328,7 +346,7 @@ bool include_paths::find_include_file (std::string &s, std::string &dir,
             currpath /= create_path(s);      // append filename
         }
 
-        if (fs::exists(currpath)) {
+        if (may_be_includable(currpath)) {
             fs::path dirpath (create_path(s));
             if (!dirpath.has_root_directory()) {
                 dirpath = create_path((*it).second);
@@ -362,7 +380,7 @@ include_paths::find_include_file (std::string &s, std::string &dir,
                 currpath /= create_path(s);
             }
 
-            if (fs::exists(currpath) && 0 == current_file) {
+            if (0 == current_file && may_be_includable(currpath)) {
                 // if 0 != current_path (#include_next handling) it can't be
                 // the file in the current directory
                 fs::path dirpath(create_path(s));
diff --git a/test/testwave/testfiles/t_2_032.cpp b/test/testwave/testfiles/t_2_032.cpp
new file mode 100644
index 00000000..d890afb5
--- /dev/null
+++ b/test/testwave/testfiles/t_2_032.cpp
@@ -0,0 +1,17 @@
+/*=============================================================================
+    Boost.Wave: A Standard compliant C++ preprocessor library
+    http://www.boost.org/
+
+    Copyright (c) 2026 Rac75116. Distributed under the Boost
+    Software License, Version 1.0. (See accompanying file
+    LICENSE_1_0.txt or copy at http://www.boost.org/LICENSE_1_0.txt)
+=============================================================================*/
+
+// Verify include lookup ignores directories named like the header.
+
+//O -I$P(t_2_032_dir)
+//O -I$P(t_2_032_inc)
+
+//R #line 10 "t_2_032_target.hpp"
+//R t_2_032_target_from_file
+#include "t_2_032_target.hpp"
diff --git a/test/testwave/testfiles/t_2_032_dir/t_2_032_target.hpp/dummy b/test/testwave/testfiles/t_2_032_dir/t_2_032_target.hpp/dummy
new file mode 100644
index 00000000..e69de29b
diff --git a/test/testwave/testfiles/t_2_032_inc/t_2_032_target.hpp b/test/testwave/testfiles/t_2_032_inc/t_2_032_target.hpp
new file mode 100644
index 00000000..9261e986
--- /dev/null
+++ b/test/testwave/testfiles/t_2_032_inc/t_2_032_target.hpp
@@ -0,0 +1,10 @@
+/*=============================================================================
+    Boost.Wave: A Standard compliant C++ preprocessor library
+    http://www.boost.org/
+
+    Copyright (c) 2026 Rac75116. Distributed under the Boost
+    Software License, Version 1.0. (See accompanying file
+    LICENSE_1_0.txt or copy at http://www.boost.org/LICENSE_1_0.txt)
+=============================================================================*/
+
+t_2_032_target_from_file
diff --git a/test/testwave/testfiles/test.cfg b/test/testwave/testfiles/test.cfg
index 23b4e2c0..4598b18e 100644
--- a/test/testwave/testfiles/test.cfg
+++ b/test/testwave/testfiles/test.cfg
@@ -84,6 +84,7 @@ t_2_028.cpp
 t_2_029.cpp
 t_2_030.cpp
 t_2_031.cpp
+t_2_032.cpp
 
 #
 # t_3: Predefined macros