diff --git a/app/services/projects/participants_service.rb b/app/services/projects/participants_service.rb
index 6040391fd947dedeb3fff66000eb0defab11042e..96c363c8d1a989d99ca379d856b9cee17303e1d9 100644
--- a/app/services/projects/participants_service.rb
+++ b/app/services/projects/participants_service.rb
@@ -36,7 +36,7 @@ module Projects
     def groups
       current_user.authorized_groups.sort_by(&:path).map do |group|
         count = group.users.count
-        { username: group.path, name: group.name, count: count, avatar_url: group.avatar.url }
+        { username: group.path, name: group.name, count: count, avatar_url: group.avatar_url }
       end
     end
 
diff --git a/changelogs/unreleased/fix-broken-url-on-group-avatar.yml b/changelogs/unreleased/fix-broken-url-on-group-avatar.yml
new file mode 100644
index 0000000000000000000000000000000000000000..7ce22b4826e740fcfe2d812f1d440d76b4b71466
--- /dev/null
+++ b/changelogs/unreleased/fix-broken-url-on-group-avatar.yml
@@ -0,0 +1,4 @@
+---
+title: Fix broken url on group avatar
+merge_request: 8464
+author: hogewest
diff --git a/spec/services/projects/participants_service_spec.rb b/spec/services/projects/participants_service_spec.rb
new file mode 100644
index 0000000000000000000000000000000000000000..063b3bd76eb4e5d85cf7e5a519da1d5fe200a383
--- /dev/null
+++ b/spec/services/projects/participants_service_spec.rb
@@ -0,0 +1,32 @@
+require 'spec_helper'
+
+describe Projects::ParticipantsService, services: true do
+  describe '#groups' do
+    describe 'avatar_url' do
+      let(:project) { create(:empty_project, :public) }
+      let(:group) { create(:group, avatar: fixture_file_upload(Rails.root + 'spec/fixtures/dk.png')) }
+      let(:user) { create(:user) }
+      let(:base_url) { Settings.send(:build_base_gitlab_url) }
+      let!(:group_member) { create(:group_member, group: group, user: user) }
+
+      it 'should return an url for the avatar' do
+        participants = described_class.new(project, user)
+        groups = participants.groups
+
+        expect(groups.size).to eq 1
+        expect(groups.first[:avatar_url]).to eq "#{base_url}/uploads/group/avatar/#{group.id}/dk.png"
+      end
+
+      it 'should return an url for the avatar with relative url' do
+        stub_config_setting(relative_url_root: '/gitlab')
+        stub_config_setting(url: Settings.send(:build_gitlab_url))
+
+        participants = described_class.new(project, user)
+        groups = participants.groups
+
+        expect(groups.size).to eq 1
+        expect(groups.first[:avatar_url]).to eq "#{base_url}/gitlab/uploads/group/avatar/#{group.id}/dk.png"
+      end
+    end
+  end
+end