diff --git a/compiler/propagate/labels.cpp b/compiler/propagate/labels.cpp
index 1717378304..a25073a0fd 100644
--- a/compiler/propagate/labels.cpp
+++ b/compiler/propagate/labels.cpp
@@ -25,6 +25,8 @@
 #include "description.hh"
 #include "global.hh"
 
+#include <vector>
+
 using namespace std;
 
 //=========================== PATHNAME ===============================
@@ -288,3 +290,111 @@ bool matchGroup(Tree gpath, Tree lpath, Tree& rpath)
         return false;
     }
 }
+
+/**
+ * @brief Normalize a group label with type prefix against current path.
+ * This function properly handles relative path components (.., .) in group labels.
+ * 
+ * @param groupType 0=vertical, 1=horizontal, 2=tab
+ * @param label The group label (may contain relative path components like "../name")
+ * @param currentPath The current path context (bottom-up list)
+ * @return The normalized path to use for contents of this group
+ */
+Tree normalizeGroupPath(int groupType, Tree label, Tree currentPath)
+{
+    // Safety check
+    if (!label) {
+        return cons(cons(tree(groupType), tree("")), currentPath);
+    }
+    
+    // Convert the label tree to a string
+    Sym s;
+    if (!isSym(label->node(), &s)) {
+        // If it's not a symbol, treat it as pre-parsed
+        return cons(cons(tree(groupType), label), currentPath);
+    }
+    
+    // Get the label string
+    const char* labelStr = name(s);
+    if (!labelStr || labelStr[0] == 0) {
+        // Empty label
+        return cons(cons(tree(groupType), tree("")), currentPath);
+    }
+    
+    // Parse the label to extract path components
+    Tree parsedPath = label2path(labelStr);
+    
+    if (!parsedPath || isNil(parsedPath)) {
+        // Empty parsed path, shouldn't happen but be safe
+        return cons(cons(tree(groupType), label), currentPath);
+    }
+    
+    // If the parsed path is just a single name (no / separators), 
+    // encode it with the group type and add to current path
+    if (isNil(tl(parsedPath))) {
+        Tree name = hd(parsedPath);
+        // Check if it's a special path component
+        if (isPathRoot(name) || isPathParent(name) || isPathCurrent(name)) {
+            // Just apply the path operation
+            return concatPath(parsedPath, currentPath);
+        } else {
+            // It's a simple name, encode it with group type
+            return cons(cons(tree(groupType), name), currentPath);
+        }
+    }
+    
+    // The parsed path has multiple components: [elem1, elem2, ..., finalName]
+    // We need to split off the final name and apply the rest (prefix) to currentPath.
+    // Strategy: Build a list of all elements except the last, then process them.
+    
+    // Collect all elements except the last into a vector for easier processing
+    std::vector<Tree> elements;
+    Tree temp = parsedPath;
+    while (!isNil(temp)) {
+        elements.push_back(hd(temp));
+        temp = tl(temp);
+    }
+    
+    if (elements.empty()) {
+        // Should not happen, but be safe
+        return cons(cons(tree(groupType), label), currentPath);
+    }
+    
+    // The last element is the final name
+    Tree finalName = elements.back();
+    
+    // Build the prefix path (all elements except the last) in correct order
+    Tree pathPrefix = gGlobal->nil;
+    for (size_t i = 0; i + 1 < elements.size(); i++) {
+        pathPrefix = cons(elements[i], pathPrefix);
+    }
+    
+    // Reverse pathPrefix to get correct top-down order
+    Tree reversedPrefix = gGlobal->nil;
+    while (!isNil(pathPrefix)) {
+        reversedPrefix = cons(hd(pathPrefix), reversedPrefix);
+        pathPrefix = tl(pathPrefix);
+    }
+    
+    // Apply the prefix to current path (this handles .. and .)
+    // concatPath resolves relative path elements (.., .) against the current path
+    Tree adjustedPath = concatPath(reversedPrefix, currentPath);
+    
+    // Check if adjustedPath is a bare path marker (not a list)
+    // This happens when ".." tries to go beyond the root of an empty path.
+    // In this case, concatPath returns a single pathParent marker.
+    // We wrap it in a list to maintain the path structure invariant.
+    if (adjustedPath && !isNil(adjustedPath) && !isList(adjustedPath)) {
+        // adjustedPath is a single marker (like pathParent), wrap it in a list
+        adjustedPath = cons(adjustedPath, gGlobal->nil);
+    }
+    
+    // Now add the final name with group type encoding
+    if (isPathRoot(finalName) || isPathParent(finalName) || isPathCurrent(finalName)) {
+        // This shouldn't normally happen (path ending in .. or .), but handle it
+        return concatPath(cons(finalName, gGlobal->nil), adjustedPath);
+    } else {
+        // Encode the final name with the group type
+        return cons(cons(tree(groupType), finalName), adjustedPath);
+    }
+}
diff --git a/compiler/propagate/labels.hh b/compiler/propagate/labels.hh
index 46828c5069..0bd5c6048f 100644
--- a/compiler/propagate/labels.hh
+++ b/compiler/propagate/labels.hh
@@ -34,4 +34,8 @@ Tree normalizePath(Tree path);
 Tree superNormalizePath(Tree path);
 bool matchGroup(Tree gpath, Tree lpath, Tree& rpath);
 
+// Normalize a group label with type prefix against current path
+// groupType: 0=vertical, 1=horizontal, 2=tab
+Tree normalizeGroupPath(int groupType, Tree label, Tree currentPath);
+
 #endif
diff --git a/compiler/propagate/propagate.cpp b/compiler/propagate/propagate.cpp
index d18a9ca66e..ce99e58c27 100644
--- a/compiler/propagate/propagate.cpp
+++ b/compiler/propagate/propagate.cpp
@@ -431,15 +431,15 @@ static siglist realPropagate(Tree slotenv, Tree path, Tree box, const siglist& l
     // User Interface Groups
 
     else if (isBoxVGroup(box, label, t1)) {
-        return propagate(slotenv, cons(cons(tree(0), label), path), t1, lsig);
+        return propagate(slotenv, normalizeGroupPath(0, label, path), t1, lsig);
     }
 
     else if (isBoxHGroup(box, label, t1)) {
-        return propagate(slotenv, cons(cons(tree(1), label), path), t1, lsig);
+        return propagate(slotenv, normalizeGroupPath(1, label, path), t1, lsig);
     }
 
     else if (isBoxTGroup(box, label, t1)) {
-        return propagate(slotenv, cons(cons(tree(2), label), path), t1, lsig);
+        return propagate(slotenv, normalizeGroupPath(2, label, path), t1, lsig);
     }
 
     // Block Diagram Composition Algebra
diff --git a/tests/codegen-tests/relative-group-paths-string.dsp b/tests/codegen-tests/relative-group-paths-string.dsp
new file mode 100644
index 0000000000..4487849b78
--- /dev/null
+++ b/tests/codegen-tests/relative-group-paths-string.dsp
@@ -0,0 +1,11 @@
+// Companion test for relative-group-paths.dsp
+// This uses the string literal form that was already working
+// Both tests should produce identical UI structure
+
+import("stdfaust.lib");
+
+// Using explicit path in slider string (already working)
+freq = vslider("../h:FREQ/Freq",200,200,1000,0.01);
+
+// The freq slider should be shared between V1 and V2
+process = hgroup("V1", os.osc(freq)), hgroup("V2", os.osc(freq));
diff --git a/tests/codegen-tests/relative-group-paths.dsp b/tests/codegen-tests/relative-group-paths.dsp
new file mode 100644
index 0000000000..4cb1d82161
--- /dev/null
+++ b/tests/codegen-tests/relative-group-paths.dsp
@@ -0,0 +1,20 @@
+// Regression test for issue #1063: relative paths in group labels
+// https://github.com/grame-cncm/faust/issues/1063
+//
+// This test verifies that relative path components (.., .) in group labels
+// are resolved correctly against the parent path context.
+//
+// Both forms should produce the same resolved label for the slider:
+// 1. Using explicit path in slider: vslider("../h:FREQ/Freq", ...)
+// 2. Using hgroup with relative path: hgroup("../FREQ", vslider("Freq", ...))
+//
+// Expected behavior: In both cases, the slider should be shared between
+// V1 and V2 groups, appearing in a FREQ group at the same level as V1/V2.
+
+import("stdfaust.lib");
+
+// Using hgroup with relative path (previously broken, now fixed)
+freq = hgroup("../FREQ", vslider("Freq",200,200,1000,0.01));
+
+// The freq slider should be shared between V1 and V2
+process = hgroup("V1", os.osc(freq)), hgroup("V2", os.osc(freq));
diff --git a/tests/codegen-tests/relative_group_paths_explicit.dsp b/tests/codegen-tests/relative_group_paths_explicit.dsp
new file mode 100644
index 0000000000..958bfae396
--- /dev/null
+++ b/tests/codegen-tests/relative_group_paths_explicit.dsp
@@ -0,0 +1,5 @@
+import("stdfaust.lib");
+
+// Explicit path form that previously worked
+freq_explicit = vslider("../h:FREQ/Freq", 200, 200, 1000, 0.01);
+process = hgroup("V1", os.osc(freq_explicit)), hgroup("V2", os.osc(freq_explicit));
\ No newline at end of file
diff --git a/tests/codegen-tests/relative_group_paths_grouped.dsp b/tests/codegen-tests/relative_group_paths_grouped.dsp
new file mode 100644
index 0000000000..5ec6dc65ee
--- /dev/null
+++ b/tests/codegen-tests/relative_group_paths_grouped.dsp
@@ -0,0 +1,5 @@
+import("stdfaust.lib");
+
+// Relative-group form that previously failed: group uses relative path segment
+freq_grouped = hgroup("../FREQ", vslider("Freq", 200, 200, 1000, 0.01));
+process = hgroup("V1", os.osc(freq_grouped)), hgroup("V2", os.osc(freq_grouped));