diff --git a/docs/extends.md b/docs/extends.md
index aef1524a76..7a92b771a3 100644
--- a/docs/extends.md
+++ b/docs/extends.md
@@ -233,11 +233,13 @@ manually keep both environments in sync.
 ### Reference
 
 You can use `extends` on any service together with other configuration keys. It
-always expects a dictionary that should always contain two keys: `file` and
-`service`.
+always expects a dictionary that should always contain the key: `service` and optionally the `file` key.
 
-The `file` key specifies which file to look in. It can be an absolute path or a
-relative one—if relative, it's treated as relative to the current file.
+The `file` key specifies the location of a Compose configuration file defining
+the extension. The `file` value can be an absolute or relative path. If you
+specify a relative path, Docker Compose treats it as relative to the location
+of the current file. If you don't specify a `file`, Compose looks in the
+current configuration file.
 
 The `service` key specifies the name of the service to extend, for example `web`
 or `database`.
diff --git a/docs/yml.md b/docs/yml.md
index 4bab73b2b1..be91138b91 100644
--- a/docs/yml.md
+++ b/docs/yml.md
@@ -217,6 +217,9 @@ and adds `ports` and `links` configuration. It overrides one of the defined
 environment variables (DEBUG) with a new value, and the other one
 (SEND_EMAILS) is left untouched.
 
+The `file` key is optional, if it is not set then Compose will look for the
+service within the current file.
+
 For more on `extends`, see the [tutorial](extends.md#example) and
 [reference](extends.md#reference).