diff --git a/CHANGELOG.md b/CHANGELOG.md
index c896e33e..de5b6505 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -37,6 +37,7 @@ The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/).
   `/sys/firmware/devicetree/base/serial-number`
 - Replace slice in templates with sprig substr. #1093
 - Fix an invalid format issue for the GitHub nightly build action. #1258
+- Fix broken `/etc/warewulf/excludes` handling #1266
 
 ## v4.5.4, 2024-06-12
 
diff --git a/CONTRIBUTORS.md b/CONTRIBUTORS.md
index 6c61e512..056ec931 100644
--- a/CONTRIBUTORS.md
+++ b/CONTRIBUTORS.md
@@ -34,3 +34,4 @@
 * Andreas Henkel <henkel@uni-mainz.de>
 * Timothy Middelkoop <tmiddelkoop@internet2.edu>
 * Shane Nehring <snehring@iastate.edu>
+* Tobias Ribizel <mail@ribizel.de>
diff --git a/internal/pkg/util/util.go b/internal/pkg/util/util.go
index 9f314c37..890f2fa8 100644
--- a/internal/pkg/util/util.go
+++ b/internal/pkg/util/util.go
@@ -260,6 +260,10 @@ func FindFilterFiles(
 	ignorePattern []string,
 	ignore_xdev bool) (ofiles []string, err error) {
 	wwlog.Debug("Finding files: %s include: %s ignore: %s", path, includePattern, ignorePattern)
+	// preprocess patterns to remove leading (and trailing) /, as we are handling relative paths
+	for i, pattern := range ignorePattern {
+		ignorePattern[i] = strings.Trim(pattern, "/")
+	}
 	cwd, err := os.Getwd()
 	if err != nil {
 		return ofiles, err
@@ -319,6 +323,7 @@ func FindFilterFiles(
 				}
 				for _, ignored_pat := range ignorePattern {
 					if ignored, _ := filepath.Match(ignored_pat, location); ignored {
+						wwlog.Debug("Ignored %s due to pattern %s", location, ignored_pat)
 						return filepath.SkipDir
 					}
 				}
diff --git a/internal/pkg/util/util_test.go b/internal/pkg/util/util_test.go
new file mode 100644
index 00000000..c1d3abb3
--- /dev/null
+++ b/internal/pkg/util/util_test.go
@@ -0,0 +1,50 @@
+package util
+
+import (
+	"os"
+	"path/filepath"
+	"reflect"
+	"sort"
+	"testing"
+
+	"github.com/warewulf/warewulf/internal/pkg/wwlog"
+)
+
+func TryCreatePath(t *testing.T, elem ...string) {
+	err := os.MkdirAll(filepath.Join(elem...), os.ModePerm)
+	if err != nil {
+		t.Errorf("Failed creating dir: %v", err)
+		t.FailNow()
+	}
+}
+
+func Test_FindFilterFiles(t *testing.T) {
+	wwlog.SetLogLevel(wwlog.DEBUG)
+	dir, err := os.MkdirTemp(os.TempDir(), "warewulf-test")
+	if err != nil {
+		t.Errorf("Failed creating tmpdir: %v", err)
+		t.FailNow()
+	}
+	defer os.RemoveAll(dir)
+	TryCreatePath(t, dir, "boot")
+	TryCreatePath(t, dir, "usr", "local")
+	TryCreatePath(t, dir, "usr", "bin")
+	TryCreatePath(t, dir, "usr", "usr", "local")
+	TryCreatePath(t, dir, "bin")
+	TryCreatePath(t, dir, "lib")
+
+	files, err := FindFilterFiles(dir, []string{"boot", "usr", "bin"}, []string{"/b*/", "/usr/local"}, true)
+
+	if err != nil {
+		t.Errorf("FindFilerFiles failed: %v", err)
+		t.FailNow()
+	}
+
+	expected := []string{"usr", "usr/bin", "usr/usr", "usr/usr/local"}
+	sort.Strings(expected)
+	sort.Strings(files)
+	if !reflect.DeepEqual(files, expected) {
+		t.Errorf("expected %v, got %v", expected, files)
+		t.FailNow()
+	}
+}