diff --git a/docs/config.html b/docs/config.html
index 021d0798f..d1d86f38e 100644
--- a/docs/config.html
+++ b/docs/config.html
@@ -1211,6 +1211,24 @@ <h3 class="mt1 f6 lh-title" id="size.timeoutname">TimeoutName</h3>
   </ul>
 </section>
 
+<section class="mt4">
+  <h2 id="format" class="title-2">[Format]</h2>
+
+  <ul class="bulleted-list">
+    <li>
+      <div>
+        <h3 class="mt1 f6 lh-title" id="format.shortenabsolutelabelstorelative">
+          ShortenAbsoluteLabelsToRelative <span class="normal">(bool)</span>
+        </h3>
+
+        <p>
+          Shortens absolute labels to relative when running <code class="code">plz format</code> if the label is in the same package as the associated target.
+        </p>
+      </div>
+    </li>
+  </ul>
+</section>
+
 <section class="mt4">
   <h2 id="test" class="title-2">[Test]</h2>
 
diff --git a/src/core/config.go b/src/core/config.go
index b6fc6e260..0e035a53f 100644
--- a/src/core/config.go
+++ b/src/core/config.go
@@ -546,6 +546,9 @@ type Configuration struct {
 		StoreCommand               string       `help:"Use a custom command to store cache entries."`
 		RetrieveCommand            string       `help:"Use a custom command to retrieve cache entries."`
 	} `help:"Please has several built-in caches that can be configured in its config file.\n\nThe simplest one is the directory cache which by default is written into the .plz-cache directory. This allows for fast retrieval of code that has been built before (for example, when swapping Git branches).\n\nThere is also a remote RPC cache which allows using a centralised server to store artifacts. A typical pattern here is to have your CI system write artifacts into it and give developers read-only access so they can reuse its work.\n\nFinally there's a HTTP cache which is very similar, but a little obsolete now since the RPC cache outperforms it and has some extra features. Otherwise the two have similar semantics and share quite a bit of implementation.\n\nPlease has server implementations for both the RPC and HTTP caches."`
+	Format struct {
+		ShortenAbsoluteLabelsToRelative bool `help:"Shortens absolute labels to relative if the label is in the same package as the associated target."`
+	} `help:"A config section describing settings related to the 'format' sub command."`
 	Test struct {
 		Timeout                  cli.Duration `help:"Default timeout applied to all tests. Can be overridden on a per-rule basis."`
 		DisableCoverage          []string     `help:"Disables coverage for tests that have any of these labels spcified."`
diff --git a/src/format/BUILD b/src/format/BUILD
index 1a6fbed01..919ff2b03 100644
--- a/src/format/BUILD
+++ b/src/format/BUILD
@@ -5,6 +5,7 @@ go_library(
     visibility = ["//src/..."],
     deps = [
         "///third_party/go/github.com_please-build_buildtools//build",
+        "///third_party/go/github.com_please-build_buildtools//tables",
         "///third_party/go/golang.org_x_sync//errgroup",
         "//src/cli/logging",
         "//src/core",
diff --git a/src/format/fmt.go b/src/format/fmt.go
index 3f4d43856..8ea466bb4 100644
--- a/src/format/fmt.go
+++ b/src/format/fmt.go
@@ -11,6 +11,7 @@ import (
 	"sync/atomic"
 
 	"github.com/please-build/buildtools/build"
+	"github.com/please-build/buildtools/tables"
 	"golang.org/x/sync/errgroup"
 
 	"github.com/thought-machine/please/src/cli/logging"
@@ -27,7 +28,7 @@ var log = logging.Log
 // The returned bool is true if any changes were needed.
 func Format(config *core.Configuration, filenames []string, rewrite, quiet bool) (bool, error) {
 	if len(filenames) == 0 {
-		return formatAll(plz.FindAllBuildFiles(config, core.RepoRoot, ""), config.Please.NumThreads, rewrite, quiet)
+		return formatAll(config, plz.FindAllBuildFiles(config, core.RepoRoot, ""), rewrite, quiet)
 	}
 	ch := make(chan string)
 	go func() {
@@ -36,17 +37,17 @@ func Format(config *core.Configuration, filenames []string, rewrite, quiet bool)
 		}
 		close(ch)
 	}()
-	return formatAll(ch, config.Please.NumThreads, rewrite, quiet)
+	return formatAll(config, ch, rewrite, quiet)
 }
 
-func formatAll(filenames <-chan string, parallelism int, rewrite, quiet bool) (bool, error) {
+func formatAll(config *core.Configuration, filenames <-chan string, rewrite, quiet bool) (bool, error) {
 	var changed int64
 	var g errgroup.Group
-	g.SetLimit(parallelism)
+	g.SetLimit(config.Please.NumThreads)
 	for filename := range filenames {
 		filename := filename
 		g.Go(func() error {
-			c, err := format(filename, rewrite, quiet)
+			c, err := format(config, filename, rewrite, quiet)
 			if c {
 				atomic.AddInt64(&changed, 1)
 			}
@@ -57,7 +58,7 @@ func formatAll(filenames <-chan string, parallelism int, rewrite, quiet bool) (b
 	return changed > 0, err
 }
 
-func format(filename string, rewrite, quiet bool) (bool, error) {
+func format(config *core.Configuration, filename string, rewrite, quiet bool) (bool, error) {
 	before, err := os.ReadFile(filename)
 	if err != nil {
 		return true, err
@@ -67,7 +68,19 @@ func format(filename string, rewrite, quiet bool) (bool, error) {
 		return true, err
 	}
 	simplify(f)
-	after := build.Format(f)
+	after := build.FormatWithRewriter(
+		&build.Rewriter{
+			IsLabelArg:                      tables.IsLabelArg,
+			LabelDenyList:                   tables.LabelDenylist,
+			IsSortableListArg:               tables.IsSortableListArg,
+			SortableDenylist:                tables.SortableDenylist,
+			SortableAllowlist:               tables.SortableAllowlist,
+			NamePriority:                    tables.NamePriority,
+			StripLabelLeadingSlashes:        tables.StripLabelLeadingSlashes,
+			ShortenAbsoluteLabelsToRelative: config.Format.ShortenAbsoluteLabelsToRelative,
+		},
+		f,
+	)
 	if bytes.Equal(before, after) {
 		log.Debug("%s is already in canonical format", filename)
 		return false, nil
diff --git a/src/format/fmt_test.go b/src/format/fmt_test.go
index dc120b40d..c327cbcfc 100644
--- a/src/format/fmt_test.go
+++ b/src/format/fmt_test.go
@@ -17,18 +17,30 @@ const testDir = "src/format/test_data"
 func TestFormat(t *testing.T) {
 	files, err := os.ReadDir(testDir)
 	assert.NoError(t, err)
+
+	patchConfigByFile := map[string]func(*core.Configuration) {
+		"shorten_labels":  func(c *core.Configuration) {
+			c.Format.ShortenAbsoluteLabelsToRelative = true
+		},
+	}
+
 	for _, file := range files {
 		if test, isBefore := strings.CutSuffix(file.Name(), ".before.build"); isBefore {
 			t.Run(test, func(t *testing.T) {
 				before := filepath.Join(testDir, test+".before.build")
 				after := filepath.Join(testDir, test+".after.build")
 
-				changed, err := Format(core.DefaultConfiguration(), []string{before}, false, true)
+				config := core.DefaultConfiguration()
+				if patchConfig := patchConfigByFile[test]; patchConfig != nil {
+					patchConfig(config)
+				}
+
+				changed, err := Format(config, []string{before}, false, true)
 				assert.NoError(t, err)
 				assert.True(t, changed)
 
 				// N.B. this rewrites the file; be careful if you're adding more tests here.
-				changed, err = Format(core.DefaultConfiguration(), []string{before}, true, false)
+				changed, err = Format(config, []string{before}, true, false)
 				assert.NoError(t, err)
 				assert.True(t, changed)
 
diff --git a/src/format/test_data/shorten_labels.after.build b/src/format/test_data/shorten_labels.after.build
new file mode 100644
index 000000000..e1895664d
--- /dev/null
+++ b/src/format/test_data/shorten_labels.after.build
@@ -0,0 +1,7 @@
+go_library(
+    name = "name",
+    srcs = [
+        "src.go",
+    ],
+    deps = [":test_data"],
+)
diff --git a/src/format/test_data/shorten_labels.before.build b/src/format/test_data/shorten_labels.before.build
new file mode 100644
index 000000000..8ad091dfd
--- /dev/null
+++ b/src/format/test_data/shorten_labels.before.build
@@ -0,0 +1,14 @@
+go_library(
+    name = "name",
+    srcs = [
+        "src.go",
+    ],
+    deps = [
+        "//src/format/test_data:test_data",
+        "//src/format/test_data:test_data",
+        "//src/format/test_data",
+        "//src/format/test_data",
+        ":test_data",
+        ":test_data",
+    ],
+)
diff --git a/src/format/test_data/shorten_labels_no_config.after.build b/src/format/test_data/shorten_labels_no_config.after.build
new file mode 100644
index 000000000..c0c218cb9
--- /dev/null
+++ b/src/format/test_data/shorten_labels_no_config.after.build
@@ -0,0 +1,10 @@
+go_library(
+    name = "name",
+    srcs = [
+        "src.go",
+    ],
+    deps = [
+        ":test_data",
+        "//src/format/test_data",
+    ],
+)
diff --git a/src/format/test_data/shorten_labels_no_config.before.build b/src/format/test_data/shorten_labels_no_config.before.build
new file mode 100644
index 000000000..8ad091dfd
--- /dev/null
+++ b/src/format/test_data/shorten_labels_no_config.before.build
@@ -0,0 +1,14 @@
+go_library(
+    name = "name",
+    srcs = [
+        "src.go",
+    ],
+    deps = [
+        "//src/format/test_data:test_data",
+        "//src/format/test_data:test_data",
+        "//src/format/test_data",
+        "//src/format/test_data",
+        ":test_data",
+        ":test_data",
+    ],
+)