diff --git a/gradle.properties b/gradle.properties
index ba62080..1c38cb1 100644
--- a/gradle.properties
+++ b/gradle.properties
@@ -2,6 +2,6 @@ org.gradle.jvmargs=-Xmx4096m
 
 basename=sinclude
 sincludeTitle=Saxon XInclude
-sincludeVersion=4.2.0
+sincludeVersion=4.2.1
 
 saxonVersion=11.4
diff --git a/src/main/java/com/nwalsh/sinclude/XInclude.java b/src/main/java/com/nwalsh/sinclude/XInclude.java
index 6dce556..aaf77bd 100644
--- a/src/main/java/com/nwalsh/sinclude/XInclude.java
+++ b/src/main/java/com/nwalsh/sinclude/XInclude.java
@@ -172,6 +172,7 @@ public void expandXIncludes(File input, File output) throws SaxonApiException, X
         logger = new DebuggingLogger(node.getUnderlyingNode().getConfiguration().getLogger());
 
         TreeWalker walker = new TreeWalker();
+        walker.setXmlBase(input.toURI());
         walker.register(xi_include, new XiIncludeHandler(this));
         walker.register(xi_fallback, new XiFallbackHandler());
 
@@ -547,6 +548,8 @@ public XdmNode process(XdmNode node) {
 
     private class TreeWalker {
         private HashMap<QName,ElementHandler> handlers = new HashMap<>();
+        private URI overrideBaseURI = null;
+        private boolean root = true;
 
         public void register(QName name, ElementHandler handler) {
             if (handlers.containsKey(name)) {
@@ -555,6 +558,10 @@ public void register(QName name, ElementHandler handler) {
             handlers.put(name, handler);
         }
 
+        public void setXmlBase(URI base) {
+            overrideBaseURI = base;
+        }
+
         public XdmNode walk(XdmNode node) throws XPathException {
             XdmDestination destination = ReceiverUtils.makeDestination(node);
             Receiver receiver = ReceiverUtils.makeReceiver(node, destination);
@@ -565,7 +572,7 @@ public XdmNode walk(XdmNode node) throws XPathException {
             return destination.getXdmNode();
         }
 
-        public void traverse(Receiver receiver, XdmNode node) throws XPathException {
+        private void traverse(Receiver receiver, XdmNode node) throws XPathException {
             XdmSequenceIterator<XdmNode> iter = null;
 
             if (node.getNodeKind() == XdmNodeKind.DOCUMENT) {
@@ -584,7 +591,18 @@ public void traverse(Receiver receiver, XdmNode node) throws XPathException {
                 } else {
                     NodeInfo inode = node.getUnderlyingNode();
                     FingerprintedQName name = new FingerprintedQName(inode.getPrefix(), inode.getURI(), inode.getLocalPart());
-                    receiver.startElement(name, inode.getSchemaType(), inode.attributes(), inode.getAllNamespaces(), inode.saveLocation(), 0);
+
+                    final AttributeMap amap;
+                    if (root && fixupXmlBase && overrideBaseURI != null && inode.getAttributeValue(NS_XML, "base") == null) {
+                        FingerprintedQName xml_base = new FingerprintedQName("xml", NS_XML, "base");
+                        AttributeInfo base = new AttributeInfo(xml_base, BuiltInAtomicType.ANY_URI, overrideBaseURI.toString(), inode.saveLocation(), 0);
+                        amap = inode.attributes().put(base);
+                    } else {
+                        amap = inode.attributes();
+                    }
+                    root = false;
+
+                    receiver.startElement(name, inode.getSchemaType(), amap, inode.getAllNamespaces(), inode.saveLocation(), 0);
                     iter = node.axisIterator(Axis.CHILD);
                     while (iter.hasNext()) {
                         XdmNode item = iter.next();