diff --git a/lib/commands/command-current.bash b/lib/commands/command-current.bash
index f4724626e..eab5ad3ab 100644
--- a/lib/commands/command-current.bash
+++ b/lib/commands/command-current.bash
@@ -1,6 +1,8 @@
 # -*- sh -*-
 # shellcheck source=lib/functions/plugins.bash
 . "$(dirname "$(dirname "$0")")/lib/functions/plugins.bash"
+# shellcheck source=lib/functions/versions.bash
+. "$(dirname "$(dirname "$0")")/lib/functions/versions.bash"
 
 # shellcheck disable=SC2059
 plugin_current_command() {
@@ -21,7 +23,8 @@ plugin_current_command() {
   local description=""
 
   IFS=' ' read -r -a versions <<<"$full_version"
-  for version in "${versions[@]}"; do
+  for version_spec in "${versions[@]}"; do
+    version="$(resolve_version_spec "$version_spec")"
     if ! (check_if_version_exists "$plugin_name" "$version"); then
       version_not_installed="$version"
     fi
diff --git a/lib/commands/command-env.bash b/lib/commands/command-env.bash
index 30cf7ec4e..8c34169e1 100644
--- a/lib/commands/command-env.bash
+++ b/lib/commands/command-env.bash
@@ -1,4 +1,6 @@
 # -*- sh -*-
+# shellcheck source=lib/functions/versions.bash
+. "$(dirname "$(dirname "$0")")/lib/functions/versions.bash"
 
 shim_env_command() {
   local shim_name="$1"
diff --git a/lib/commands/command-exec.bash b/lib/commands/command-exec.bash
index cb56b36c3..0d4e8d829 100644
--- a/lib/commands/command-exec.bash
+++ b/lib/commands/command-exec.bash
@@ -1,4 +1,6 @@
 # -*- sh -*-
+# shellcheck source=lib/functions/versions.bash
+. "$(dirname "$(dirname "$0")")/lib/functions/versions.bash"
 
 shim_exec_command() {
   local shim_name
diff --git a/lib/commands/command-which.bash b/lib/commands/command-which.bash
index 8696dbf3e..661c19873 100644
--- a/lib/commands/command-which.bash
+++ b/lib/commands/command-which.bash
@@ -1,4 +1,6 @@
 # -*- sh -*-
+# shellcheck source=lib/functions/versions.bash
+. "$(dirname "$(dirname "$0")")/lib/functions/versions.bash"
 
 which_command() {
   local shim_name
diff --git a/lib/functions/versions.bash b/lib/functions/versions.bash
index 7d1d941d6..f9f6ebf8b 100644
--- a/lib/functions/versions.bash
+++ b/lib/functions/versions.bash
@@ -37,15 +37,7 @@ version_command() {
   declare -a resolved_versions
   local item
   for item in "${!versions[@]}"; do
-    IFS=':' read -r -a version_info <<<"${versions[$item]}"
-    if [ "${version_info[0]}" = "latest" ] && [ -n "${version_info[1]}" ]; then
-      version=$(latest_command "$plugin_name" "${version_info[1]}")
-    elif [ "${version_info[0]}" = "latest" ] && [ -z "${version_info[1]}" ]; then
-      version=$(latest_command "$plugin_name")
-    else
-      # if branch handles ref: || path: || normal versions
-      version="${versions[$item]}"
-    fi
+    version="$(resolve_version_spec "${versions[$item]}")"
 
     # check_if_version_exists should probably handle if either param is empty string
     if [ -z "$version" ]; then
@@ -79,6 +71,22 @@ version_command() {
   fi
 }
 
+resolve_version_spec() {
+  local version_spec=$1
+
+  IFS=':' read -r -a version_info <<<"$version_spec"
+  if [ "${version_info[0]}" = "latest" ] && [ -n "${version_info[1]}" ]; then
+    version=$(latest_command "$plugin_name" "${version_info[1]}")
+  elif [ "${version_info[0]}" = "latest" ] && [ -z "${version_info[1]}" ]; then
+    version=$(latest_command "$plugin_name")
+  else
+    # if branch handles ref: || path: || normal versions
+    version="$version_spec"
+  fi
+
+  printf "%s\n" "$version"
+}
+
 list_all_command() {
   local plugin_name=$1
   local query=$2
diff --git a/lib/utils.bash b/lib/utils.bash
index 21978a929..8b40bf548 100644
--- a/lib/utils.bash
+++ b/lib/utils.bash
@@ -736,7 +736,8 @@ select_version() {
     version_and_path=$(find_versions "$plugin_name" "$search_path")
     IFS='|' read -r version_string _path <<<"$version_and_path"
     IFS=' ' read -r -a usable_plugin_versions <<<"$version_string"
-    for plugin_version in "${usable_plugin_versions[@]}"; do
+    for version_spec in "${usable_plugin_versions[@]}"; do
+      plugin_version="$(resolve_version_spec "$version_spec")"
       for plugin_and_version in "${shim_versions[@]}"; do
         local plugin_shim_name
         local plugin_shim_version
diff --git a/test/current_command.bats b/test/current_command.bats
index 687bc9da8..b61d2afb9 100755
--- a/test/current_command.bats
+++ b/test/current_command.bats
@@ -47,6 +47,16 @@ teardown() {
   [ "$output" = "$expected" ]
 }
 
+@test "current should not error on version specifications like 'latest:'" {
+  cd "$PROJECT_DIR"
+  echo "dummy 1.2.0 latest:1.1" >>"$PROJECT_DIR/.tool-versions"
+  expected="dummy           1.2.0 latest:1.1 $PROJECT_DIR/.tool-versions"
+
+  run asdf current "dummy"
+  [ "$status" -eq 0 ]
+  [ "$output" = "$expected" ]
+}
+
 @test "current should derive from the legacy file if enabled" {
   cd "$PROJECT_DIR"
   echo 'legacy_version_file = yes' >"$HOME/.asdfrc"
diff --git a/test/install_command.bats b/test/install_command.bats
index bad99898a..0160ef9e4 100644
--- a/test/install_command.bats
+++ b/test/install_command.bats
@@ -45,6 +45,14 @@ teardown() {
   [ "$(cat "$ASDF_DIR/installs/dummy/1.2.0/version")" = "1.2.0" ]
 }
 
+@test "install_command installs the 'latest:' version in .tool-versions" {
+  cd "$PROJECT_DIR"
+  echo -n 'dummy latest:1.1' >".tool-versions"
+  run asdf install dummy
+  [ "$status" -eq 0 ]
+  [ "$(cat "$ASDF_DIR/installs/dummy/1.1.0/version")" = "1.1.0" ]
+}
+
 @test "install_command set ASDF_CONCURRENCY" {
   run asdf install dummy 1.0.0
   [ "$status" -eq 0 ]
diff --git a/test/shim_exec.bats b/test/shim_exec.bats
index 5c6d0673e..076f5b86e 100644
--- a/test/shim_exec.bats
+++ b/test/shim_exec.bats
@@ -141,6 +141,19 @@ teardown() {
   echo "$output" | grep -q "This is Dummy 3.0! hello world" 2>/dev/null
 }
 
+@test "shim exec should respect 'latest:' in .tool-versions" {
+  run asdf install dummy 1.0.0
+  run asdf install dummy 1.1.0
+  run asdf install dummy 2.0.0
+
+  echo "dummy latest:1.1" >"$PROJECT_DIR/.tool-versions"
+
+  run "$ASDF_DIR/shims/dummy" world hello
+  [ "$status" -eq 0 ]
+
+  echo "$output" | grep -q "This is Dummy 1.1.0! hello world" 2>/dev/null
+}
+
 @test "shim exec should only use the first version found for a plugin" {
   run asdf install dummy 3.0
 
diff --git a/test/test_helpers.bash b/test/test_helpers.bash
index 6f4468e1b..3ae79ae9a 100644
--- a/test/test_helpers.bash
+++ b/test/test_helpers.bash
@@ -4,6 +4,8 @@ bats_require_minimum_version 1.7.0
 
 # shellcheck source=lib/utils.bash
 . "$(dirname "$BATS_TEST_DIRNAME")"/lib/utils.bash
+# shellcheck source=lib/functions/versions.bash
+. "$(dirname "$BATS_TEST_DIRNAME")"/lib/functions/versions.bash
 
 setup_asdf_dir() {
   if [ "$BATS_TEST_NAME" = 'test_shim_exec_should_use_path_executable_when_specified_version_path-3a-3cpath-3e' ]; then