diff --git a/bundle/config/mutator/populate_locations.go b/bundle/config/mutator/populate_locations.go
index cfdf6dd9c..c414a136b 100644
--- a/bundle/config/mutator/populate_locations.go
+++ b/bundle/config/mutator/populate_locations.go
@@ -2,11 +2,10 @@ package mutator
 
 import (
 	"context"
-	"path/filepath"
 
 	"github.com/databricks/cli/bundle"
 	"github.com/databricks/cli/libs/diag"
-	"github.com/databricks/cli/libs/dyn"
+	"github.com/databricks/cli/libs/dyn/dynloc"
 )
 
 type populateLocations struct{}
@@ -21,53 +20,21 @@ func (m *populateLocations) Name() string {
 	return "PopulateLocations"
 }
 
-func computeRelativeLocations(base string, v dyn.Value) []dyn.Location {
-	// Skip values that don't have locations.
-	// Examples include defaults or values that are set by the program itself.
-	locs := v.Locations()
-	if len(locs) == 0 {
-		return nil
-	}
-
-	// Convert absolute paths to relative paths.
-	for i := range locs {
-		rel, err := filepath.Rel(base, locs[i].File)
-		if err != nil {
-			return nil
-		}
-		// Convert the path separator to forward slashes.
-		// This makes it possible to compare output across platforms.
-		locs[i].File = filepath.ToSlash(rel)
-	}
-
-	return locs
-}
-
 func (m *populateLocations) Apply(ctx context.Context, b *bundle.Bundle) diag.Diagnostics {
-	loc := make(map[string][]dyn.Location)
-	_, err := dyn.Walk(b.Config.Value(), func(p dyn.Path, v dyn.Value) (dyn.Value, error) {
-		// Skip the root value.
-		if len(p) == 0 {
-			return v, nil
-		}
+	locs, err := dynloc.Build(
+		b.Config.Value(),
 
-		// Skip values that don't have locations.
-		// Examples include defaults or values that are set by the program itself.
-		locs := computeRelativeLocations(b.BundleRootPath, v)
-		if len(locs) > 0 {
-			// Semantics for a value having multiple locations can be found in [merge.Merge].
-			// We don't need to externalize these at the moment, so we limit the number
-			// of locations to 1 while still using a slice for the output. This allows us
-			// to include multiple entries in the future if we need to.
-			loc[p.String()] = locs[0:1]
-		}
+		// Make all paths relative to the bundle root.
+		dynloc.WithBasePath(b.BundleRootPath),
 
-		return v, nil
-	})
+		// Limit to maximum depth of 3.
+		// The intent is to capture locations of all resources but not their configurations.
+		dynloc.WithMaxDepth(3),
+	)
 	if err != nil {
 		return diag.FromErr(err)
 	}
 
-	b.Config.Locations = loc
+	b.Config.Locations = &locs
 	return nil
 }
diff --git a/bundle/config/root.go b/bundle/config/root.go
index fcbb4ff21..9904664eb 100644
--- a/bundle/config/root.go
+++ b/bundle/config/root.go
@@ -12,6 +12,7 @@ import (
 	"github.com/databricks/cli/libs/diag"
 	"github.com/databricks/cli/libs/dyn"
 	"github.com/databricks/cli/libs/dyn/convert"
+	"github.com/databricks/cli/libs/dyn/dynloc"
 	"github.com/databricks/cli/libs/dyn/merge"
 	"github.com/databricks/cli/libs/dyn/yamlloader"
 	"github.com/databricks/cli/libs/log"
@@ -72,7 +73,7 @@ type Root struct {
 
 	// Locations is an output-only field that holds configuration location
 	// information for every path in the configuration tree.
-	Locations map[string][]dyn.Location `json:"__locations,omitempty" bundle:"internal"`
+	Locations *dynloc.Locations `json:"__locations,omitempty" bundle:"internal"`
 }
 
 // Load loads the bundle configuration file at the specified path.
diff --git a/libs/dyn/dynloc/locations.go b/libs/dyn/dynloc/locations.go
new file mode 100644
index 000000000..74efa9ee9
--- /dev/null
+++ b/libs/dyn/dynloc/locations.go
@@ -0,0 +1,124 @@
+package dynloc
+
+import (
+	"path/filepath"
+
+	"github.com/databricks/cli/libs/dyn"
+)
+
+const (
+	// Version is the version of the location information structure.
+	// Increment if the structure changes.
+	Version = 1
+)
+
+// Locations is a structure that holds location information for (a subset of) a [dyn.Value] value.
+type Locations struct {
+	// Version is the version of the location information.
+	Version int `json:"version"`
+
+	// Files is a list of file paths.
+	Files []string `json:"files"`
+
+	// Locations maps the string representation of a [dyn.Path] to a list of 3-tuples that represent the index
+	// of the file in the [Files] array, followed by the line and column number.
+	// A single [dyn.Path] can have multiple locations (e.g. the effective location and original definition).
+	Locations map[string][][]int `json:"locations"`
+
+	// fileToIndex maps file paths to their index in the [Files] array.
+	// This is used to avoid duplicate entries in the [Files] array and keep the
+	// map with locations as compact as possible.
+	fileToIndex map[string]int
+
+	// maxDepth is the maximum depth of the [dyn.Path] keys in the [Locations] map.
+	maxDepth int
+
+	// basePath is the base path used to compute relative paths.
+	basePath string
+}
+
+func (l *Locations) addLocation(p dyn.Path, file string, line, col int) error {
+	var err error
+
+	// Compute the relative path. The base path may be empty.
+	file, err = filepath.Rel(l.basePath, file)
+	if err != nil {
+		return err
+	}
+
+	// Convert the path separator to forward slashes.
+	// This makes it possible to compare output across platforms.
+	file = filepath.ToSlash(file)
+
+	// If the file is not yet in the list, add it.
+	if _, ok := l.fileToIndex[file]; !ok {
+		l.fileToIndex[file] = len(l.Files)
+		l.Files = append(l.Files, file)
+	}
+
+	// Add the location to the map.
+	l.Locations[p.String()] = append(
+		l.Locations[p.String()],
+		[]int{l.fileToIndex[file], line, col},
+	)
+
+	return nil
+}
+
+// Option is a functional option for the [Build] function.
+type Option func(l *Locations)
+
+// WithMaxDepth sets the maximum depth of the [dyn.Path] keys in the [Locations] map.
+func WithMaxDepth(depth int) Option {
+	return func(l *Locations) {
+		l.maxDepth = depth
+	}
+}
+
+// WithBasePath sets the base path used to compute relative paths.
+func WithBasePath(basePath string) Option {
+	return func(l *Locations) {
+		l.basePath = basePath
+	}
+}
+
+// Build constructs a [Locations] object from a [dyn.Value].
+func Build(v dyn.Value, opts ...Option) (Locations, error) {
+	l := Locations{
+		Version:   Version,
+		Files:     make([]string, 0),
+		Locations: make(map[string][][]int),
+
+		// Internal state.
+		fileToIndex: make(map[string]int),
+	}
+
+	// Apply options.
+	for _, opt := range opts {
+		opt(&l)
+	}
+
+	// Traverse the value and collect locations.
+	_, err := dyn.Walk(v, func(p dyn.Path, v dyn.Value) (dyn.Value, error) {
+		// Skip the root value.
+		if len(p) == 0 {
+			return v, nil
+		}
+
+		// Skip if the path depth exceeds the maximum depth.
+		if l.maxDepth > 0 && len(p) > l.maxDepth {
+			return v, dyn.ErrSkip
+		}
+
+		for _, loc := range v.Locations() {
+			err := l.addLocation(p, loc.File, loc.Line, loc.Column)
+			if err != nil {
+				return dyn.InvalidValue, err
+			}
+		}
+
+		return v, nil
+	})
+
+	return l, err
+}
diff --git a/libs/dyn/dynloc/locations_test.go b/libs/dyn/dynloc/locations_test.go
new file mode 100644
index 000000000..a1858b89e
--- /dev/null
+++ b/libs/dyn/dynloc/locations_test.go
@@ -0,0 +1,100 @@
+package dynloc
+
+import (
+	"bytes"
+	"os"
+	"path/filepath"
+	"testing"
+
+	"github.com/databricks/cli/libs/dyn"
+	"github.com/databricks/cli/libs/dyn/merge"
+	"github.com/databricks/cli/libs/dyn/yamlloader"
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+)
+
+func load(t *testing.T, path string) dyn.Value {
+	matches, err := filepath.Glob(path + "/*.yml")
+	require.NoError(t, err)
+	require.NotEmpty(t, matches)
+
+	// Load all files.
+	vout := dyn.NilValue
+	for _, match := range matches {
+		buf, err := os.ReadFile(match)
+		require.NoError(t, err)
+
+		v, err := yamlloader.LoadYAML(match, bytes.NewBuffer(buf))
+		require.NoError(t, err)
+
+		vout, err = merge.Merge(vout, v)
+		require.NoError(t, err)
+	}
+
+	return vout
+}
+
+func TestLocations_Default(t *testing.T) {
+	v := load(t, "testdata/default")
+	locs, err := Build(v)
+	require.NoError(t, err)
+	assert.Equal(t, 1, locs.Version)
+	assert.Equal(t, []string{"testdata/default/a.yml", "testdata/default/b.yml"}, locs.Files)
+	assert.Equal(t, map[string][][]int{
+		"a":   {{0, 2, 3}},
+		"a.b": {{0, 2, 6}},
+		"b":   {{1, 2, 3}},
+		"b.c": {{1, 2, 6}},
+	}, locs.Locations)
+}
+
+func TestLocations_DefaultWithBasePath(t *testing.T) {
+	v := load(t, "testdata/default")
+	locs, err := Build(v, WithBasePath("testdata/default"))
+	require.NoError(t, err)
+	assert.Equal(t, 1, locs.Version)
+	assert.Equal(t, []string{"a.yml", "b.yml"}, locs.Files)
+	assert.Equal(t, map[string][][]int{
+		"a":   {{0, 2, 3}},
+		"a.b": {{0, 2, 6}},
+		"b":   {{1, 2, 3}},
+		"b.c": {{1, 2, 6}},
+	}, locs.Locations)
+}
+
+func TestLocations_Override(t *testing.T) {
+	v := load(t, "testdata/override")
+	locs, err := Build(v)
+	require.NoError(t, err)
+	assert.Equal(t, 1, locs.Version)
+	assert.Equal(t, []string{"testdata/override/a.yml", "testdata/override/b.yml"}, locs.Files)
+
+	// Note: specific ordering of locations is described in [merge.Merge].
+	assert.Equal(t, map[string][][]int{
+		"a": {
+			{0, 2, 3},
+			{1, 2, 3},
+		},
+		"a.b": {
+			{1, 2, 6},
+			{0, 2, 6},
+		},
+	}, locs.Locations)
+}
+
+func TestLocations_MaxDepth(t *testing.T) {
+	v := load(t, "testdata/depth")
+
+	var locs Locations
+	var err error
+
+	// Test with no max depth.
+	locs, err = Build(v)
+	require.NoError(t, err)
+	assert.Len(t, locs.Locations, 5)
+
+	// Test with max depth and see that the number of locations is reduced.
+	locs, err = Build(v, WithMaxDepth(3))
+	require.NoError(t, err)
+	assert.Len(t, locs.Locations, 3)
+}
diff --git a/libs/dyn/dynloc/testdata/default/a.yml b/libs/dyn/dynloc/testdata/default/a.yml
new file mode 100644
index 000000000..e9a726411
--- /dev/null
+++ b/libs/dyn/dynloc/testdata/default/a.yml
@@ -0,0 +1,2 @@
+a:
+  b: 42
diff --git a/libs/dyn/dynloc/testdata/default/b.yml b/libs/dyn/dynloc/testdata/default/b.yml
new file mode 100644
index 000000000..667086eba
--- /dev/null
+++ b/libs/dyn/dynloc/testdata/default/b.yml
@@ -0,0 +1,2 @@
+b:
+  c: 43
diff --git a/libs/dyn/dynloc/testdata/depth/a.yml b/libs/dyn/dynloc/testdata/depth/a.yml
new file mode 100644
index 000000000..5591d6b57
--- /dev/null
+++ b/libs/dyn/dynloc/testdata/depth/a.yml
@@ -0,0 +1,5 @@
+a:
+  b:
+    c:
+      d:
+        e: 42
diff --git a/libs/dyn/dynloc/testdata/override/a.yml b/libs/dyn/dynloc/testdata/override/a.yml
new file mode 100644
index 000000000..e9a726411
--- /dev/null
+++ b/libs/dyn/dynloc/testdata/override/a.yml
@@ -0,0 +1,2 @@
+a:
+  b: 42
diff --git a/libs/dyn/dynloc/testdata/override/b.yml b/libs/dyn/dynloc/testdata/override/b.yml
new file mode 100644
index 000000000..da53fd2da
--- /dev/null
+++ b/libs/dyn/dynloc/testdata/override/b.yml
@@ -0,0 +1,2 @@
+a:
+  b: 43