diff --git a/src/nvim/file_search.c b/src/nvim/file_search.c
index 796d66f74c..7b9d97e4ee 100644
--- a/src/nvim/file_search.c
+++ b/src/nvim/file_search.c
@@ -1396,7 +1396,10 @@ char *find_file_in_path_option(char *ptr, size_t len, int options, int first, ch
     // filename on the first call.
     if (first == true) {
       if (path_with_url(*file_to_find)) {
-        file_name = xstrdup(*file_to_find);
+        file_name =
+          strncmp(*file_to_find, "file:/", 6) == 0 ?
+          xstrdup(handle_file_path_prefix(*file_to_find)) :
+          xstrdup(*file_to_find);
         goto theend;
       }
 
diff --git a/src/nvim/path.c b/src/nvim/path.c
index 15a8762da1..d3064f5e31 100644
--- a/src/nvim/path.c
+++ b/src/nvim/path.c
@@ -2467,3 +2467,73 @@ void path_guess_exepath(const char *argv0, char *buf, size_t bufsize)
     xstrlcpy(buf, argv0, bufsize);
   }
 }
+
+/// Handles file path that starts with `file:[/|///]`
+///
+/// One and three slashes mean that file location is localhost/local.
+/// Example:
+/// - file:/path/to/file refers to /path/to/file
+/// - file:///path/to/file refers to /path/to/file (host is omitted)
+/// But, with two slashes, it refers to a file location on a host machine.
+/// - file://host/path/to/file
+/// Example:
+/// - file://localhost/path/to/file refers to /path/to/file locally
+/// When encountering two slashes, don't alter file_path.
+///
+/// Reference:
+/// https://en.wikipedia.org/wiki/File_URI_scheme#Number_of_slash_characters
+///
+/// @param[in]  file_path     Full name of file path starts with "file:/"
+///
+/// @return either truncated version of file path or its input.
+char *handle_file_path_prefix(char *file_path)
+{
+  const char *reader = file_path + 5;  // file: <- start there
+  int slash_count = 0;
+  while (reader[0] == '/') {
+    slash_count += 1;
+    reader += 1;
+  }
+  if (slash_count == 1 || slash_count == 3) {
+#ifdef MSWIN
+    return decode_window_filepath(file_path, slash_count);
+#else
+    return strchr(file_path, '/');
+#endif
+  }
+  return file_path;
+}
+
+/// Decode hexcode that could be part of file path.
+///
+/// Convert hex code, such as "%3A" into ":"
+/// Example: 'file:///C%3A/My%20Docuemnts' -> 'file:///C:/My Documents'
+///
+/// @param[in]  file_path     Full name of file path starts with "file:/"
+/// @param[in]  slash_count   count of slashes after "file"
+///
+/// @return either truncated version of file path or its input.
+char *decode_window_filepath(char *file_path, int slash_count)
+{
+  char *buf = xmalloc(MAXPATHL);
+  char *starting_point = file_path + 5 + slash_count;
+  int buf_counter = 0;
+  for (char *ptr = starting_point; ptr != NULL; ptr++) {
+    if (ptr[0] == '%'
+        && (('0' <= ptr[1] && ptr[1] <= '9') || ('A' <= ptr[1] && ptr[1] <= 'F'))
+        && (('0' <= ptr[2] && ptr[2] <= '9') || ('A' <= ptr[2] && ptr[2] <= 'F'))) {
+      // Deal with hex code
+      char hex_code[2] = { ptr[1], ptr[2] };
+      buf[buf_counter] = (char)strtol(hex_code, NULL, 16);
+      ptr += 3;
+    } else {
+      // Copy the character
+      buf[buf_counter] = ptr[0];
+    }
+    buf_counter += 1;
+  }
+
+  xstrlcpy(file_path, buf, (unsigned long)buf_counter);  // truncate
+
+  return file_path;
+}
diff --git a/test/functional/core/path_spec.lua b/test/functional/core/path_spec.lua
index 97c32f7de6..3aee2b1e96 100644
--- a/test/functional/core/path_spec.lua
+++ b/test/functional/core/path_spec.lua
@@ -13,7 +13,7 @@ local write_file = helpers.write_file
 
 local function join_path(...)
   local pathsep = (is_os('win') and '\\' or '/')
-  return table.concat({...}, pathsep)
+  return table.concat({ ... }, pathsep)
 end
 
 describe('path collapse', function()
@@ -103,6 +103,31 @@ describe('file search', function()
     eq('filename_with_unicode_ααα', eval('expand("%:t")'))
   end)
 
+  it('finds "file:[/|///]" URI on the local filesystem #24032', function()
+    local iswin = is_os('win')
+    local function test_gf(input, expected_default, expected_win)
+      local expected = (iswin and expected_win or expected_default)
+      command('%delete')
+      insert(input)
+      command('norm! 0')
+      feed('gf')
+      eq(expected, eval('expand("%:p")'))
+    end
+
+    test_gf("file:/a", "/a")
+    test_gf("file:/foo/bar/slash.txt", "/foo/bar/slash.txt")
+    test_gf("file:///foo/bar/3slashes.txt", "///foo/bar/3slashes.txt")
+    test_gf("file:/c:/test/window/slash.txt", "/c:/test/window/slash.txt")
+    test_gf("file:///c:/test/window/3slash.txt", "///c:/test/window/3slash.txt")
+    -- Test out window cases.
+    test_gf("file:///c%3A/test%20with%20%25/path", "///c%3A/test%20with%20%25/path", [[c:\test with %\path]])
+    test_gf("file:///c%3A/documents%20and%24zero%/", "///c%3A/documents%20and%24zero%/", [[c:/documents and$zero$]])
+
+    test_gf("http://foo/bar/file:/with/url", "http://foo/bar/file:/with/url")
+    test_gf("file://host/foo/bar/2slashes.txt", "file://host/foo/bar/2slashes.txt")
+    test_gf("file://host/c:/2slashes.txt", "file://host/c:/2slashes.txt")
+  end)
+
   it('gf/<cfile> matches Windows drive-letter filepaths (without ":" in &isfname)', function()
     local iswin = is_os('win')
     local function test_cfile(input, expected, expected_win)