diff --git a/tests/unit/WpCoreMiscDetermineLocalSlugTest.php b/tests/unit/WpCoreMiscDetermineLocalSlugTest.php
new file mode 100644
index 000000000..b69577044
--- /dev/null
+++ b/tests/unit/WpCoreMiscDetermineLocalSlugTest.php
@@ -0,0 +1,93 @@
+<?php
+/**
+ * Test vipgoci_wpcore_misc_determine_local_slug() function.
+ *
+ * @package Automattic/vip-go-ci
+ */
+
+declare(strict_types=1);
+
+namespace Vipgoci\Tests\Unit;
+
+use PHPUnit\Framework\TestCase;
+
+/**
+ * Class that implements the testing.
+ *
+ * @runTestsInSeparateProcesses
+ * @preserveGlobalState disabled
+ */
+final class WpCoreMiscDetermineLocalSlugTest extends TestCase {
+	/**
+	 * Path to git repository (does not need to exist).
+	 *
+	 * @var $repo_path
+	 */
+	private string $repo_path = '/tmp/git-repo-123';
+
+	/**
+	 * Setup function. Require files.
+	 *
+	 * @return void
+	 */
+	protected function setUp() :void {
+		require_once __DIR__ . '/../../defines.php';
+		require_once __DIR__ . '/../../wp-core-misc.php';
+	}
+
+	/**
+	 * Data provider for testDetermineLocalSlug()
+	 *
+	 * @return array Data.
+	 */
+	public function dataDetermineLocalSlug() :array {
+		require_once __DIR__ . '/../../defines.php';
+
+		$slug_prefix = 'vipgoci-addon-';
+
+		return array(
+			array( $slug_prefix . 'theme-test-theme1', VIPGOCI_ADDON_THEME, $this->repo_path . '/themes/test-theme1/style.css' ),
+			array( $slug_prefix . 'theme-test-theme2', VIPGOCI_ADDON_THEME, $this->repo_path . '/test-group/themes/test-theme2/style.css' ),
+			array( $slug_prefix . 'theme-test-theme3', VIPGOCI_ADDON_THEME, $this->repo_path . '/plugins/test-plugin/test-theme3/style.css' ),
+
+			array( $slug_prefix . 'plugin-hello-dolly/hello1.php', VIPGOCI_ADDON_PLUGIN, $this->repo_path . '/plugins/hello-dolly/hello1.php' ),
+			array( $slug_prefix . 'plugin-hello-dolly/hello2.php', VIPGOCI_ADDON_PLUGIN, $this->repo_path . '/themes/test-theme4/plugins/hello-dolly/hello2.php' ),
+			array( $slug_prefix . 'plugin-hello3.php', VIPGOCI_ADDON_PLUGIN, $this->repo_path . '/themes/test-theme5/plugins/hello3.php' ),
+			array( $slug_prefix . 'plugin-hello4.php', VIPGOCI_ADDON_PLUGIN, $this->repo_path . '/hello4.php' ),
+		);
+	}
+
+	/**
+	 * Test common usage of the function.
+	 *
+	 * @param string $expected_local_slug Expected "local" slug.
+	 * @param string $input_addon_type    Add-on type.
+	 * @param string $input_full_path     Full path to file.
+	 *
+	 * @dataProvider dataDetermineLocalSlug
+	 *
+	 * @covers ::vipgoci_wpcore_misc_determine_local_slug
+	 *
+	 * @return void
+	 */
+	public function testDetermineLocalSlug(
+		string $expected_local_slug,
+		string $input_addon_type,
+		string $input_full_path,
+	): void {
+		$input_relative_path = str_replace(
+			$this->repo_path . '/',
+			'',
+			$input_full_path
+		);
+
+		$this->assertSame(
+			$expected_local_slug,
+			vipgoci_wpcore_misc_determine_local_slug(
+				$input_addon_type,
+				$input_full_path,
+				$input_relative_path
+			)
+		);
+	}
+}
diff --git a/wp-core-misc.php b/wp-core-misc.php
index 2074b5572..5b1aab864 100644
--- a/wp-core-misc.php
+++ b/wp-core-misc.php
@@ -242,6 +242,66 @@ function vipgoci_wpcore_misc_get_addon_headers_and_type(
 	}
 }
 
+/**
+ * Determine "local" slug used when querying the WordPress.org API.
+ *
+ * @param string $addon_type    Addon type, plugin or theme.
+ * @param string $full_path     Full path to plugin or theme in git repository.
+ * @param string $relative_path Relative path to plugin or theme.
+ *
+ * @return string "local" slug.
+ */
+function vipgoci_wpcore_misc_determine_local_slug(
+	string $addon_type,
+	string $full_path,
+	string $relative_path
+) :string {
+	if ( VIPGOCI_ADDON_THEME === $addon_type ) {
+		// Special case for themes.
+		$key = basename( dirname( $full_path ) );
+	} elseif (
+		( VIPGOCI_ADDON_PLUGIN === $addon_type ) &&
+		( true === str_contains( $relative_path, '/' ) )
+	) {
+		$relative_path_dirname = dirname( $relative_path );
+
+		$relative_path_dirname_arr = array_reverse(
+			explode( '/', $relative_path_dirname )
+		);
+
+		$relative_path_dirname_dircount = count(
+			$relative_path_dirname_arr
+		);
+
+		/*
+		 * Only return "local" slug including directory if there are one or more
+		 * directories in path, but not when last directory name includes certain
+		 * names that will result in bogus results.
+		 */
+		if (
+			( $relative_path_dirname_dircount >= 1 ) &&
+			( false === in_array(
+				strtolower( $relative_path_dirname_arr[0] ),
+				array(
+					'plugins',
+					'themes',
+					'library',
+				),
+				true
+			) )
+		) {
+			$key = $relative_path_dirname_arr[0] . '/' .
+				basename( $relative_path );
+		} else {
+			$key = basename( $relative_path );
+		}
+	} else {
+		$key = basename( $relative_path );
+	}
+
+	return $addon_type . '-' . $key;
+}
+
 /**
  * Get list of plugins or themes found in $path, return as array of
  * key-value pairs.
@@ -351,14 +411,11 @@ function vipgoci_wpcore_misc_scan_directory_for_addons(
 		/*
 		 * Calculate 'local slug'.
 		 */
-		if ( VIPGOCI_ADDON_THEME === $addon_data['type'] ) {
-			// Special case for themes.
-			$wp_addon_key = $addon_data['type'] . '-' . basename( dirname( $tmp_path ) );
-		} elseif ( str_contains( $addon_file, '/' ) ) {
-			$wp_addon_key = $addon_data['type'] . '-' . dirname( $addon_file ) . '/' . basename( $addon_file );
-		} else {
-			$wp_addon_key = $addon_data['type'] . '-' . basename( $addon_file );
-		}
+		$wp_addon_key = vipgoci_wpcore_misc_determine_local_slug(
+			$addon_data['type'],
+			$tmp_path,
+			$addon_file
+		);
 
 		$wp_addons[ $wp_addon_key ] = $addon_data;
 	}