diff --git a/Language/Haskell/GhcMod/PathsAndFiles.hs b/Language/Haskell/GhcMod/PathsAndFiles.hs
index 08bff0d..ccd0acf 100644
--- a/Language/Haskell/GhcMod/PathsAndFiles.hs
+++ b/Language/Haskell/GhcMod/PathsAndFiles.hs
@@ -30,7 +30,7 @@ type FileName = String
 -- or 'GMETooManyCabalFiles'
 findCabalFiles :: FilePath -> IO (Maybe FilePath)
 findCabalFiles directory = do
-    -- Look for cabal files in all parent directories of @dir@
+    -- Look for cabal files in @dir@ and all it's parent directories
     dcs <- getCabalFiles `zipMapM` parents directory
     -- Extract first non-empty list, which represents a directory with cabal
     -- files.
@@ -42,7 +42,16 @@ findCabalFiles directory = do
 -- | @getCabalFiles dir@. Find all files ending in @.cabal@ in @dir@.
 getCabalFiles :: DirPath -> IO [FileName]
 getCabalFiles dir =
-    filter ((==) ".cabal" . takeExtension) <$> getDirectoryContents dir
+    filterM isCabalFile =<< getDirectoryContents dir
+ where
+   isCabalFile f = do
+     exists <- doesFileExist f
+     return (exists && takeExtension' f == ".cabal")
+
+   takeExtension' p = if takeFileName p == takeExtension p
+                        then ""
+                        else takeExtension p
+
 
 makeAbsolute :: DirPath -> [FileName] -> [FilePath]
 makeAbsolute dir fs = (dir </>) `map` fs
diff --git a/test/PathsAndFilesSpec.hs b/test/PathsAndFilesSpec.hs
index aa46f12..aa2a253 100644
--- a/test/PathsAndFilesSpec.hs
+++ b/test/PathsAndFilesSpec.hs
@@ -8,6 +8,7 @@ import Language.Haskell.GhcMod.GhcPkg
 #endif
 
 import System.Directory
+import System.Environment
 import System.FilePath ((</>))
 import Test.Hspec
 
@@ -28,3 +29,7 @@ spec = do
 
         it "returns Nothing if the sandbox config file is broken" $ do
             getSandboxDb "test/data/broken-sandbox" `shouldReturn` Nothing
+
+    describe "getCabalFiles" $ do
+        it "doesn't think $HOME/.cabal is a cabal file" $ do
+            (getCabalFiles =<< getEnv "HOME") `shouldReturn` []