We are using a $defs section in our schemas. Schemas within the $defs section are referenced via local file references, and these schemas can themselves have cross references to other files. The ref parser is correctly injecting a$defs cross-reference but replacing the $defs with %24defs (i.e. it is applying URL encoding). I don’t think this behaviour is correct: while $ is a reserved character in the URIs RFC, it is designated as a sub-delimiter

For example in the parent file:

{ “properties”: { “foo”: “string” }, ”$defs”: { “myschema”: { “$ref”: “./myschema.json” }, ”otherschema”: { “$ref”: “./otherschema.json” } } } 

And the myschema.json file:

{ “allOf”: [ { “$ref”: “./otherschema.json” }, { “properties”: { “someProp”: “string” } } ] } 

Flattening results in:

{ “properties”: { “foo”: “string” }, ”$defs”: { “myschema”: { “allOf”: [ { “$ref”: “#/%24defs/otherschema.” }, { “properties”: { “someProp”: “string” } } ] }, ”otherschema”: { “properties”: { “otherProp”: “string” } } } }