diff --git a/Cargo.toml b/Cargo.toml
index b764b16058bbd..e1395480f8c9d 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -1193,6 +1193,17 @@ description = "Implements a custom AssetReader"
 category = "Assets"
 wasm = true
 
+[[example]]
+name = "embedded_asset"
+path = "examples/asset/embedded_asset.rs"
+doc-scrape-examples = true
+
+[package.metadata.example.embedded_asset]
+name = "Embedded Asset"
+description = "Embed an asset in the application binary and load it"
+category = "Assets"
+wasm = true
+
 [[example]]
 name = "hot_asset_reloading"
 path = "examples/asset/hot_asset_reloading.rs"
diff --git a/crates/bevy_asset/src/io/embedded/mod.rs b/crates/bevy_asset/src/io/embedded/mod.rs
index 80340ac9debbc..f832717cfb36f 100644
--- a/crates/bevy_asset/src/io/embedded/mod.rs
+++ b/crates/bevy_asset/src/io/embedded/mod.rs
@@ -107,20 +107,48 @@ impl EmbeddedAssetRegistry {
 #[macro_export]
 macro_rules! embedded_path {
     ($path_str: expr) => {{
-        embedded_path!("/src/", $path_str)
+        embedded_path!("src", $path_str)
     }};
 
     ($source_path: expr, $path_str: expr) => {{
         let crate_name = module_path!().split(':').next().unwrap();
-        let after_src = file!().split($source_path).nth(1).unwrap();
-        let file_path = std::path::Path::new(after_src)
-            .parent()
-            .unwrap()
-            .join($path_str);
-        std::path::Path::new(crate_name).join(file_path)
+        $crate::io::embedded::_embedded_asset_path(
+            crate_name,
+            $source_path.as_ref(),
+            file!().as_ref(),
+            $path_str.as_ref(),
+        )
     }};
 }
 
+/// Implementation detail of `embedded_path`, do not use this!
+///
+/// Returns an embedded asset path, given:
+///   - `crate_name`: name of the crate where the asset is embedded
+///   - `src_prefix`: path prefix of the crate's source directory, relative to the workspace root
+///   - `file_path`: `std::file!()` path of the source file where `embedded_path!` is called
+///   - `asset_path`: path of the embedded asset relative to `file_path`
+#[doc(hidden)]
+pub fn _embedded_asset_path(
+    crate_name: &str,
+    src_prefix: &Path,
+    file_path: &Path,
+    asset_path: &Path,
+) -> PathBuf {
+    let mut maybe_parent = file_path.parent();
+    let after_src = loop {
+        let Some(parent) = maybe_parent else {
+            panic!("Failed to find src_prefix {src_prefix:?} in {file_path:?}")
+        };
+        if parent.ends_with(src_prefix) {
+            break file_path.strip_prefix(parent).unwrap();
+        }
+        maybe_parent = parent.parent();
+    };
+    let asset_path = after_src.parent().unwrap().join(asset_path);
+    Path::new(crate_name).join(asset_path)
+}
+
 /// Creates a new `embedded` asset by embedding the bytes of the given path into the current binary
 /// and registering those bytes with the `embedded` [`AssetSource`].
 ///
@@ -191,7 +219,7 @@ macro_rules! embedded_path {
 #[macro_export]
 macro_rules! embedded_asset {
     ($app: ident, $path: expr) => {{
-        embedded_asset!($app, "/src/", $path)
+        embedded_asset!($app, "src", $path)
     }};
 
     ($app: ident, $source_path: expr, $path: expr) => {{
@@ -269,3 +297,111 @@ macro_rules! load_internal_binary_asset {
         );
     }};
 }
+
+#[cfg(test)]
+mod tests {
+    use super::_embedded_asset_path;
+    use std::path::Path;
+
+    // Relative paths show up if this macro is being invoked by a local crate.
+    // In this case we know the relative path is a sub- path of the workspace
+    // root.
+
+    #[test]
+    fn embedded_asset_path_from_local_crate() {
+        let asset_path = _embedded_asset_path(
+            "my_crate",
+            "src".as_ref(),
+            "src/foo/plugin.rs".as_ref(),
+            "the/asset.png".as_ref(),
+        );
+        assert_eq!(asset_path, Path::new("my_crate/foo/the/asset.png"));
+    }
+
+    // A blank src_path removes the embedded's file path altogether only the
+    // asset path remains.
+    #[test]
+    fn embedded_asset_path_from_local_crate_blank_src_path_questionable() {
+        let asset_path = _embedded_asset_path(
+            "my_crate",
+            "".as_ref(),
+            "src/foo/some/deep/path/plugin.rs".as_ref(),
+            "the/asset.png".as_ref(),
+        );
+        assert_eq!(asset_path, Path::new("my_crate/the/asset.png"));
+    }
+
+    #[test]
+    #[should_panic(expected = "Failed to find src_prefix \"NOT-THERE\" in \"src")]
+    fn embedded_asset_path_from_local_crate_bad_src() {
+        let _asset_path = _embedded_asset_path(
+            "my_crate",
+            "NOT-THERE".as_ref(),
+            "src/foo/plugin.rs".as_ref(),
+            "the/asset.png".as_ref(),
+        );
+    }
+
+    #[test]
+    fn embedded_asset_path_from_local_example_crate() {
+        let asset_path = _embedded_asset_path(
+            "example_name",
+            "examples/foo".as_ref(),
+            "examples/foo/example.rs".as_ref(),
+            "the/asset.png".as_ref(),
+        );
+        assert_eq!(asset_path, Path::new("example_name/the/asset.png"));
+    }
+
+    // Absolute paths show up if this macro is being invoked by an external
+    // dependency, e.g. one that's being checked out from a crates repo or git.
+    #[test]
+    fn embedded_asset_path_from_external_crate() {
+        let asset_path = _embedded_asset_path(
+            "my_crate",
+            "src".as_ref(),
+            "/path/to/crate/src/foo/plugin.rs".as_ref(),
+            "the/asset.png".as_ref(),
+        );
+        assert_eq!(asset_path, Path::new("my_crate/foo/the/asset.png"));
+    }
+
+    #[test]
+    fn embedded_asset_path_from_external_crate_root_src_path() {
+        let asset_path = _embedded_asset_path(
+            "my_crate",
+            "/path/to/crate/src".as_ref(),
+            "/path/to/crate/src/foo/plugin.rs".as_ref(),
+            "the/asset.png".as_ref(),
+        );
+        assert_eq!(asset_path, Path::new("my_crate/foo/the/asset.png"));
+    }
+
+    // Although extraneous slashes are permitted at the end, e.g., "src////",
+    // one or more slashes at the beginning are not.
+    #[test]
+    #[should_panic(expected = "Failed to find src_prefix \"////src\" in")]
+    fn embedded_asset_path_from_external_crate_extraneous_beginning_slashes() {
+        let asset_path = _embedded_asset_path(
+            "my_crate",
+            "////src".as_ref(),
+            "/path/to/crate/src/foo/plugin.rs".as_ref(),
+            "the/asset.png".as_ref(),
+        );
+        assert_eq!(asset_path, Path::new("my_crate/foo/the/asset.png"));
+    }
+
+    // We don't handle this edge case because it is ambiguous with the
+    // information currently available to the embedded_path macro.
+    #[test]
+    fn embedded_asset_path_from_external_crate_is_ambiguous() {
+        let asset_path = _embedded_asset_path(
+            "my_crate",
+            "src".as_ref(),
+            "/path/to/.cargo/registry/src/crate/src/src/plugin.rs".as_ref(),
+            "the/asset.png".as_ref(),
+        );
+        // Really, should be "my_crate/src/the/asset.png"
+        assert_eq!(asset_path, Path::new("my_crate/the/asset.png"));
+    }
+}
diff --git a/examples/README.md b/examples/README.md
index e616e6c7a12fc..531a418d4f4ec 100644
--- a/examples/README.md
+++ b/examples/README.md
@@ -193,6 +193,7 @@ Example | Description
 [Asset Processing](../examples/asset/processing/asset_processing.rs) | Demonstrates how to process and load custom assets
 [Custom Asset](../examples/asset/custom_asset.rs) | Implements a custom asset loader
 [Custom Asset IO](../examples/asset/custom_asset_reader.rs) | Implements a custom AssetReader
+[Embedded Asset](../examples/asset/embedded_asset.rs) | Embed an asset in the application binary and load it
 [Hot Reloading of Assets](../examples/asset/hot_asset_reloading.rs) | Demonstrates automatic reloading of assets when modified on disk
 
 ## Async Tasks
diff --git a/examples/asset/bevy_pixel_light.png b/examples/asset/bevy_pixel_light.png
new file mode 100644
index 0000000000000..f6225fe25eabb
Binary files /dev/null and b/examples/asset/bevy_pixel_light.png differ
diff --git a/examples/asset/embedded_asset.rs b/examples/asset/embedded_asset.rs
new file mode 100644
index 0000000000000..af865b6007f5e
--- /dev/null
+++ b/examples/asset/embedded_asset.rs
@@ -0,0 +1,53 @@
+//! Example of loading an embedded asset.
+
+use bevy::asset::{embedded_asset, io::AssetSourceId, AssetPath};
+use bevy::prelude::*;
+use std::path::Path;
+
+fn main() {
+    App::new()
+        .add_plugins((DefaultPlugins, EmbeddedAssetPlugin))
+        .add_systems(Startup, setup)
+        .run();
+}
+
+struct EmbeddedAssetPlugin;
+
+impl Plugin for EmbeddedAssetPlugin {
+    fn build(&self, app: &mut App) {
+        // We get to choose some prefix relative to the workspace root which
+        // will be ignored in "embedded://" asset paths.
+        let omit_prefix = "examples/asset";
+        // Path to asset must be relative to this file, because that's how
+        // include_bytes! works.
+        embedded_asset!(app, omit_prefix, "bevy_pixel_light.png");
+    }
+}
+
+fn setup(mut commands: Commands, asset_server: Res<AssetServer>) {
+    commands.spawn(Camera2dBundle::default());
+
+    // Each example is its own crate (with name from [[example]] in Cargo.toml).
+    let crate_name = "embedded_asset";
+
+    // The actual file path relative to workspace root is
+    // "examples/asset/bevy_pixel_light.png".
+    //
+    // We omit the "examples/asset" from the embedded_asset! call and replace it
+    // with the crate name.
+    let path = Path::new(crate_name).join("bevy_pixel_light.png");
+    let source = AssetSourceId::from("embedded");
+    let asset_path = AssetPath::from_path(&path).with_source(source);
+
+    // You could also parse this URL-like string representation for the asset
+    // path.
+    assert_eq!(
+        asset_path,
+        "embedded://embedded_asset/bevy_pixel_light.png".into()
+    );
+
+    commands.spawn(SpriteBundle {
+        texture: asset_server.load(asset_path),
+        ..default()
+    });
+}