diff --git a/crates/goose/src/acp/server.rs b/crates/goose/src/acp/server.rs
index 5597d52f8e..2a703b590c 100644
--- a/crates/goose/src/acp/server.rs
+++ b/crates/goose/src/acp/server.rs
@@ -61,6 +61,7 @@ use rmcp::model::{
 use serde::Deserialize;
 use std::collections::{HashMap, HashSet};
 use std::panic::AssertUnwindSafe;
+use std::path::{Path, PathBuf};
 use std::sync::Arc;
 use strum::{EnumMessage, VariantNames};
 use tokio::sync::{Mutex, OnceCell};
@@ -86,6 +87,7 @@ pub type AcpProviderFactory = Arc<
             String,
             crate::model::ModelConfig,
             Vec<ExtensionConfig>,
+            Option<PathBuf>,
         ) -> BoxFuture<'static, Result<Arc<dyn Provider>>>
         + Send
         + Sync,
@@ -1044,6 +1046,20 @@ fn build_usage_update(session: &Session, context_limit: usize) -> UsageUpdate {
     UsageUpdate::new(used, context_limit as u64)
 }
 
+fn validate_absolute_cwd(cwd: &Path) -> Result<(), agent_client_protocol::Error> {
+    if !cwd.is_absolute() {
+        return Err(
+            agent_client_protocol::Error::invalid_params().data("cwd must be an absolute path")
+        );
+    }
+
+    if !cwd.exists() || !cwd.is_dir() {
+        return Err(agent_client_protocol::Error::invalid_params().data("invalid directory path"));
+    }
+
+    Ok(())
+}
+
 impl GooseAcpAgent {
     pub fn permission_manager(&self) -> Arc<PermissionManager> {
         Arc::clone(&self.permission_manager)
@@ -1093,8 +1109,15 @@ impl GooseAcpAgent {
         provider_name: &str,
         model_config: crate::model::ModelConfig,
         extensions: Vec<ExtensionConfig>,
+        working_dir: Option<PathBuf>,
     ) -> Result<Arc<dyn Provider>> {
-        (self.provider_factory)(provider_name.to_string(), model_config, extensions).await
+        (self.provider_factory)(
+            provider_name.to_string(),
+            model_config,
+            extensions,
+            working_dir,
+        )
+        .await
     }
 
     async fn prepare_session_init_config(
@@ -1131,7 +1154,12 @@ impl GooseAcpAgent {
                     );
                     Config::global().invalidate_secrets_cache();
                     match self
-                        .create_provider(provider_name, model_config.clone(), ext_state)
+                        .create_provider(
+                            provider_name,
+                            model_config.clone(),
+                            ext_state,
+                            Some(goose_session.working_dir.clone()),
+                        )
                         .await
                     {
                         Ok(provider) => {
@@ -1348,9 +1376,14 @@ impl GooseAcpAgent {
                 );
                 let provider = match prebuilt_provider {
                     Some(provider) => provider,
-                    None => provider_factory(provider_name.to_string(), model_config, ext_state)
-                        .await
-                        .map_err(|e| e.to_string())?,
+                    None => provider_factory(
+                        provider_name.to_string(),
+                        model_config,
+                        ext_state,
+                        Some(goose_session.working_dir.clone()),
+                    )
+                    .await
+                    .map_err(|e| e.to_string())?,
                 };
                 agent
                     .update_provider(provider.clone(), &goose_session.id)
@@ -1440,15 +1473,17 @@ impl GooseAcpAgent {
                 }
 
                 let ext_manager = &agent.extension_manager;
+                let working_dir = goose_session.working_dir.clone();
                 let extension_futures = extensions
                     .into_iter()
                     .map(|ext| {
                         let ext_manager = Arc::clone(ext_manager);
                         let sid_inner = sid_str.clone();
+                        let working_dir = working_dir.clone();
                         async move {
                             let name = ext.name().to_string();
                             if let Err(e) = ext_manager
-                                .add_extension(ext, None, None, sid_inner.as_deref())
+                                .add_extension(ext, Some(working_dir), None, sid_inner.as_deref())
                                 .await
                             {
                                 warn!(extension = %name, error = %e, "extension load failed");
@@ -2412,6 +2447,7 @@ impl GooseAcpAgent {
     ) -> Result<NewSessionResponse, agent_client_protocol::Error> {
         debug!(?args, "new session request");
         let t_start = std::time::Instant::now();
+        validate_absolute_cwd(&args.cwd)?;
 
         let requested_provider = args
             .meta
@@ -2664,6 +2700,7 @@ impl GooseAcpAgent {
         args: LoadSessionRequest,
     ) -> Result<LoadSessionResponse, agent_client_protocol::Error> {
         debug!(?args, "load session request");
+        validate_absolute_cwd(&args.cwd)?;
 
         let session_id = args.session_id.0.to_string();
         let sid = sid_short(&session_id);
@@ -2835,6 +2872,11 @@ impl GooseAcpAgent {
             .apply()
             .await
             .internal_err_ctx("Failed to update session working directory")?;
+        let goose_session = self
+            .session_manager
+            .get_session(&session_id, false)
+            .await
+            .internal_err_ctx("Failed to reload session")?;
 
         // Register the session with a Loading handle.
         let (agent_tx, agent_rx) = tokio::sync::watch::channel::<AgentSetupSignal>(None);
@@ -3137,8 +3179,18 @@ impl GooseAcpAgent {
         let model_config = crate::model::ModelConfig::new(model_id)
             .invalid_params_err_ctx("Invalid model config")?
             .with_canonical_limits(&provider_name);
+        let session = self
+            .session_manager
+            .get_session(session_id, false)
+            .await
+            .internal_err_ctx("Failed to get session")?;
         let provider = self
-            .create_provider(&provider_name, model_config, extensions)
+            .create_provider(
+                &provider_name,
+                model_config,
+                extensions,
+                Some(session.working_dir),
+            )
             .await
             .internal_err_ctx("Failed to create provider")?;
         agent
@@ -3264,8 +3316,18 @@ impl GooseAcpAgent {
 
         let extensions =
             EnabledExtensionsState::for_session(&self.session_manager, session_id, &config).await;
+        let session = self
+            .session_manager
+            .get_session(session_id, false)
+            .await
+            .internal_err_ctx("Failed to get session")?;
         let new_provider = self
-            .create_provider(&resolved_provider_name, model_config, extensions)
+            .create_provider(
+                &resolved_provider_name,
+                model_config,
+                extensions,
+                Some(session.working_dir),
+            )
             .await
             .internal_err_ctx("Failed to create provider")?;
         agent
@@ -3332,6 +3394,7 @@ impl GooseAcpAgent {
         cx: &ConnectionTo<Client>,
         args: ForkSessionRequest,
     ) -> Result<ForkSessionResponse, agent_client_protocol::Error> {
+        validate_absolute_cwd(&args.cwd)?;
         let source_session_id = &*args.session_id.0;
 
         let new_session = self
diff --git a/crates/goose/src/acp/server/providers.rs b/crates/goose/src/acp/server/providers.rs
index c4729fcbcc..964b16d464 100644
--- a/crates/goose/src/acp/server/providers.rs
+++ b/crates/goose/src/acp/server/providers.rs
@@ -703,7 +703,7 @@ impl GooseAcpAgent {
                     let model_config =
                         crate::model::ModelConfig::new(&metadata.metadata().default_model)?
                             .with_canonical_limits(&provider_id);
-                    provider_factory(provider_id.clone(), model_config, Vec::new()).await
+                    provider_factory(provider_id.clone(), model_config, Vec::new(), None).await
                 })
                 .catch_unwind()
                 .await;
diff --git a/crates/goose/src/acp/server/sessions.rs b/crates/goose/src/acp/server/sessions.rs
index 517c78f2b1..02cb742ede 100644
--- a/crates/goose/src/acp/server/sessions.rs
+++ b/crates/goose/src/acp/server/sessions.rs
@@ -11,11 +11,7 @@ impl GooseAcpAgent {
                 .data("working directory cannot be empty"));
         }
         let path = std::path::PathBuf::from(&working_dir);
-        if !path.exists() || !path.is_dir() {
-            return Err(
-                agent_client_protocol::Error::invalid_params().data("invalid directory path")
-            );
-        }
+        validate_absolute_cwd(&path)?;
         let session_id = &req.session_id;
         self.session_manager
             .update(session_id)
diff --git a/crates/goose/src/acp/server_factory.rs b/crates/goose/src/acp/server_factory.rs
index 05c745c39c..079287d967 100644
--- a/crates/goose/src/acp/server_factory.rs
+++ b/crates/goose/src/acp/server_factory.rs
@@ -34,12 +34,26 @@ impl AcpServer {
             .unwrap_or(crate::config::GooseMode::Auto);
         let disable_session_naming = config.get_goose_disable_session_naming().unwrap_or(false);
 
-        let provider_factory: AcpProviderFactory =
-            Arc::new(move |provider_name, model_config, extensions| {
+        let provider_factory: AcpProviderFactory = Arc::new(
+            move |provider_name, model_config, extensions, working_dir| {
                 Box::pin(async move {
-                    crate::providers::create(&provider_name, model_config, extensions).await
+                    match working_dir {
+                        Some(working_dir) => {
+                            crate::providers::create_with_working_dir(
+                                &provider_name,
+                                model_config,
+                                extensions,
+                                working_dir,
+                            )
+                            .await
+                        }
+                        None => {
+                            crate::providers::create(&provider_name, model_config, extensions).await
+                        }
+                    }
                 })
-            });
+            },
+        );
 
         let agent = GooseAcpAgent::new(GooseAcpAgentOptions {
             provider_factory,
diff --git a/crates/goose/src/providers/amp_acp.rs b/crates/goose/src/providers/amp_acp.rs
index 5d6339b13f..8640c446f8 100644
--- a/crates/goose/src/providers/amp_acp.rs
+++ b/crates/goose/src/providers/amp_acp.rs
@@ -10,7 +10,7 @@ use crate::config::search_path::SearchPaths;
 use crate::config::{Config, GooseMode};
 use crate::model::ModelConfig;
 use crate::providers::acp_tooling::{acp_adapter_installed, acp_inventory_identity};
-use crate::providers::base::{ProviderDef, ProviderMetadata};
+use crate::providers::base::{current_working_dir, ProviderDef, ProviderMetadata};
 use crate::providers::inventory::InventoryIdentityInput;
 
 const AMP_ACP_PROVIDER_NAME: &str = "amp-acp";
@@ -45,6 +45,14 @@ impl ProviderDef for AmpAcpProvider {
     fn from_env(
         model: ModelConfig,
         extensions: Vec<crate::config::ExtensionConfig>,
+    ) -> BoxFuture<'static, Result<AcpProvider>> {
+        Self::from_env_with_working_dir(model, extensions, current_working_dir())
+    }
+
+    fn from_env_with_working_dir(
+        model: ModelConfig,
+        extensions: Vec<crate::config::ExtensionConfig>,
+        working_dir: PathBuf,
     ) -> BoxFuture<'static, Result<AcpProvider>> {
         Box::pin(async move {
             let config = Config::global();
@@ -65,7 +73,7 @@ impl ProviderDef for AmpAcpProvider {
                 args: vec![],
                 env: vec![],
                 env_remove: vec![],
-                work_dir: std::env::current_dir().unwrap_or_else(|_| PathBuf::from(".")),
+                work_dir: working_dir,
                 mcp_servers: extension_configs_to_mcp_servers(&extensions),
                 session_mode_id: Some(mode_mapping[&goose_mode].clone()),
                 mode_mapping,
diff --git a/crates/goose/src/providers/base.rs b/crates/goose/src/providers/base.rs
index f7a61090f1..cfa0418721 100644
--- a/crates/goose/src/providers/base.rs
+++ b/crates/goose/src/providers/base.rs
@@ -26,6 +26,7 @@ use utoipa::ToSchema;
 use once_cell::sync::Lazy;
 use regex::Regex;
 use std::ops::{Add, AddAssign};
+use std::path::PathBuf;
 use std::pin::Pin;
 use std::sync::LazyLock;
 use std::sync::Mutex;
@@ -766,6 +767,10 @@ impl Usage {
     }
 }
 
+pub(crate) fn current_working_dir() -> PathBuf {
+    std::env::current_dir().unwrap_or_else(|_| PathBuf::from("."))
+}
+
 pub trait ProviderDef: Send + Sync {
     type Provider: Provider + 'static;
 
@@ -780,6 +785,19 @@ pub trait ProviderDef: Send + Sync {
     where
         Self: Sized;
 
+    fn from_env_with_working_dir(
+        model: ModelConfig,
+        extensions: Vec<ExtensionConfig>,
+        _working_dir: PathBuf,
+    ) -> BoxFuture<'static, Result<Self::Provider>>
+    where
+        Self: Sized,
+    {
+        // ACP subprocess providers must override this so session cwd is preserved.
+        // Non-subprocess providers can rely on the default because cwd is irrelevant.
+        Self::from_env(model, extensions)
+    }
+
     fn supports_inventory_refresh() -> bool
     where
         Self: Sized,
diff --git a/crates/goose/src/providers/claude_acp.rs b/crates/goose/src/providers/claude_acp.rs
index 282b7e0dd9..415889af63 100644
--- a/crates/goose/src/providers/claude_acp.rs
+++ b/crates/goose/src/providers/claude_acp.rs
@@ -10,7 +10,7 @@ use crate::config::search_path::SearchPaths;
 use crate::config::{Config, GooseMode};
 use crate::model::ModelConfig;
 use crate::providers::acp_tooling::{acp_adapter_installed, acp_inventory_identity};
-use crate::providers::base::{ProviderDef, ProviderMetadata};
+use crate::providers::base::{current_working_dir, ProviderDef, ProviderMetadata};
 use crate::providers::inventory::InventoryIdentityInput;
 
 const CLAUDE_ACP_PROVIDER_NAME: &str = "claude-acp";
@@ -43,6 +43,14 @@ impl ProviderDef for ClaudeAcpProvider {
     fn from_env(
         model: ModelConfig,
         extensions: Vec<crate::config::ExtensionConfig>,
+    ) -> BoxFuture<'static, Result<AcpProvider>> {
+        Self::from_env_with_working_dir(model, extensions, current_working_dir())
+    }
+
+    fn from_env_with_working_dir(
+        model: ModelConfig,
+        extensions: Vec<crate::config::ExtensionConfig>,
+        working_dir: PathBuf,
     ) -> BoxFuture<'static, Result<AcpProvider>> {
         Box::pin(async move {
             let config = Config::global();
@@ -69,7 +77,7 @@ impl ProviderDef for ClaudeAcpProvider {
                 env: vec![],
                 // Prevent nested-session detection in claude-agent-acp (wraps Claude Code)
                 env_remove: vec!["CLAUDECODE".to_string()],
-                work_dir: std::env::current_dir().unwrap_or_else(|_| PathBuf::from(".")),
+                work_dir: working_dir,
                 mcp_servers: extension_configs_to_mcp_servers(&extensions),
                 session_mode_id: Some(mode_mapping[&goose_mode].clone()),
                 mode_mapping,
diff --git a/crates/goose/src/providers/codex_acp.rs b/crates/goose/src/providers/codex_acp.rs
index 4ef6ffef97..5c3f46b363 100644
--- a/crates/goose/src/providers/codex_acp.rs
+++ b/crates/goose/src/providers/codex_acp.rs
@@ -10,7 +10,7 @@ use crate::config::search_path::SearchPaths;
 use crate::config::{Config, GooseMode};
 use crate::model::ModelConfig;
 use crate::providers::acp_tooling::{acp_adapter_installed, acp_inventory_identity};
-use crate::providers::base::{ProviderDef, ProviderMetadata};
+use crate::providers::base::{current_working_dir, ProviderDef, ProviderMetadata};
 use crate::providers::inventory::InventoryIdentityInput;
 
 const CODEX_ACP_PROVIDER_NAME: &str = "codex-acp";
@@ -42,6 +42,14 @@ impl ProviderDef for CodexAcpProvider {
     fn from_env(
         model: ModelConfig,
         extensions: Vec<crate::config::ExtensionConfig>,
+    ) -> BoxFuture<'static, Result<AcpProvider>> {
+        Self::from_env_with_working_dir(model, extensions, current_working_dir())
+    }
+
+    fn from_env_with_working_dir(
+        model: ModelConfig,
+        extensions: Vec<crate::config::ExtensionConfig>,
+        working_dir: PathBuf,
     ) -> BoxFuture<'static, Result<AcpProvider>> {
         Box::pin(async move {
             let config = Config::global();
@@ -49,7 +57,6 @@ impl ProviderDef for CodexAcpProvider {
             let resolved_command = SearchPaths::builder()
                 .with_npm()
                 .resolve(CODEX_ACP_PROVIDER_NAME)?;
-            let work_dir = std::env::current_dir().unwrap_or_else(|_| PathBuf::from("."));
             let env = vec![];
             let goose_mode = config.get_goose_mode().unwrap_or(GooseMode::Auto);
             let mcp_servers = extension_configs_to_mcp_servers(&extensions);
@@ -88,7 +95,7 @@ impl ProviderDef for CodexAcpProvider {
                 args,
                 env,
                 env_remove: vec![],
-                work_dir,
+                work_dir: working_dir,
                 mcp_servers,
                 // Disabled until https://github.com/zed-industries/codex-acp/issues/179 is fixed.
                 session_mode_id: None,
diff --git a/crates/goose/src/providers/copilot_acp.rs b/crates/goose/src/providers/copilot_acp.rs
index 35bed3dec0..7f02c7b81d 100644
--- a/crates/goose/src/providers/copilot_acp.rs
+++ b/crates/goose/src/providers/copilot_acp.rs
@@ -10,7 +10,7 @@ use crate::config::search_path::SearchPaths;
 use crate::config::{Config, GooseMode};
 use crate::model::ModelConfig;
 use crate::providers::acp_tooling::{acp_adapter_installed, acp_inventory_identity};
-use crate::providers::base::{ProviderDef, ProviderMetadata};
+use crate::providers::base::{current_working_dir, ProviderDef, ProviderMetadata};
 use crate::providers::inventory::InventoryIdentityInput;
 
 const COPILOT_ACP_PROVIDER_NAME: &str = "copilot-acp";
@@ -46,6 +46,14 @@ impl ProviderDef for CopilotAcpProvider {
     fn from_env(
         model: ModelConfig,
         extensions: Vec<crate::config::ExtensionConfig>,
+    ) -> BoxFuture<'static, Result<AcpProvider>> {
+        Self::from_env_with_working_dir(model, extensions, current_working_dir())
+    }
+
+    fn from_env_with_working_dir(
+        model: ModelConfig,
+        extensions: Vec<crate::config::ExtensionConfig>,
+        working_dir: PathBuf,
     ) -> BoxFuture<'static, Result<AcpProvider>> {
         Box::pin(async move {
             let config = Config::global();
@@ -75,7 +83,7 @@ impl ProviderDef for CopilotAcpProvider {
                 args,
                 env: vec![],
                 env_remove: vec![],
-                work_dir: std::env::current_dir().unwrap_or_else(|_| PathBuf::from(".")),
+                work_dir: working_dir,
                 mcp_servers: extension_configs_to_mcp_servers(&extensions),
                 session_mode_id: Some(mode_mapping[&goose_mode].clone()),
                 mode_mapping,
diff --git a/crates/goose/src/providers/init.rs b/crates/goose/src/providers/init.rs
index b8ea286080..2061c5ebed 100644
--- a/crates/goose/src/providers/init.rs
+++ b/crates/goose/src/providers/init.rs
@@ -1,3 +1,4 @@
+use std::path::PathBuf;
 use std::sync::{Arc, RwLock};
 
 #[cfg(feature = "aws-providers")]
@@ -160,6 +161,18 @@ pub async fn create(
     entry.create(model, extensions).await
 }
 
+pub async fn create_with_working_dir(
+    name: &str,
+    model: ModelConfig,
+    extensions: Vec<ExtensionConfig>,
+    working_dir: PathBuf,
+) -> Result<Arc<dyn Provider>> {
+    let entry = get_from_registry(name).await?;
+    entry
+        .create_with_working_dir(model, extensions, working_dir)
+        .await
+}
+
 pub async fn create_with_default_model(
     name: impl AsRef<str>,
     extensions: Vec<ExtensionConfig>,
diff --git a/crates/goose/src/providers/mod.rs b/crates/goose/src/providers/mod.rs
index 23e993a8d9..44f7dd0a96 100644
--- a/crates/goose/src/providers/mod.rs
+++ b/crates/goose/src/providers/mod.rs
@@ -59,6 +59,7 @@ pub mod xai;
 
 pub use init::{
     cleanup_provider, create, create_with_default_model, create_with_named_model,
-    get_from_registry, inventory_identity, providers, refresh_custom_providers,
+    create_with_working_dir, get_from_registry, inventory_identity, providers,
+    refresh_custom_providers,
 };
 pub use retry::{retry_operation, RetryConfig};
diff --git a/crates/goose/src/providers/pi_acp.rs b/crates/goose/src/providers/pi_acp.rs
index b02278f97d..52215d56fc 100644
--- a/crates/goose/src/providers/pi_acp.rs
+++ b/crates/goose/src/providers/pi_acp.rs
@@ -10,7 +10,7 @@ use crate::config::search_path::SearchPaths;
 use crate::config::{Config, GooseMode};
 use crate::model::ModelConfig;
 use crate::providers::acp_tooling::{acp_adapter_installed, acp_inventory_identity};
-use crate::providers::base::{ProviderDef, ProviderMetadata};
+use crate::providers::base::{current_working_dir, ProviderDef, ProviderMetadata};
 use crate::providers::inventory::InventoryIdentityInput;
 
 const PI_ACP_PROVIDER_NAME: &str = "pi-acp";
@@ -44,6 +44,14 @@ impl ProviderDef for PiAcpProvider {
     fn from_env(
         model: ModelConfig,
         extensions: Vec<crate::config::ExtensionConfig>,
+    ) -> BoxFuture<'static, Result<AcpProvider>> {
+        Self::from_env_with_working_dir(model, extensions, current_working_dir())
+    }
+
+    fn from_env_with_working_dir(
+        model: ModelConfig,
+        extensions: Vec<crate::config::ExtensionConfig>,
+        working_dir: PathBuf,
     ) -> BoxFuture<'static, Result<AcpProvider>> {
         Box::pin(async move {
             let config = Config::global();
@@ -62,7 +70,7 @@ impl ProviderDef for PiAcpProvider {
                 args: vec![],
                 env: vec![],
                 env_remove: vec![],
-                work_dir: std::env::current_dir().unwrap_or_else(|_| PathBuf::from(".")),
+                work_dir: working_dir,
                 mcp_servers: extension_configs_to_mcp_servers(&extensions),
                 session_mode_id: Some(mode_mapping[&goose_mode].clone()),
                 mode_mapping,
diff --git a/crates/goose/src/providers/provider_registry.rs b/crates/goose/src/providers/provider_registry.rs
index 2684bfd5f0..a534057e2f 100644
--- a/crates/goose/src/providers/provider_registry.rs
+++ b/crates/goose/src/providers/provider_registry.rs
@@ -5,10 +5,15 @@ use crate::model::ModelConfig;
 use anyhow::Result;
 use futures::future::BoxFuture;
 use std::collections::HashMap;
+use std::path::PathBuf;
 use std::sync::Arc;
 
 pub type ProviderConstructor = Arc<
-    dyn Fn(ModelConfig, Vec<ExtensionConfig>) -> BoxFuture<'static, Result<Arc<dyn Provider>>>
+    dyn Fn(
+            ModelConfig,
+            Vec<ExtensionConfig>,
+            Option<PathBuf>,
+        ) -> BoxFuture<'static, Result<Arc<dyn Provider>>>
         + Send
         + Sync,
 >;
@@ -75,7 +80,7 @@ impl ProviderEntry {
     ) -> Result<Arc<dyn Provider>> {
         let default_model = &self.metadata.default_model;
         let model_config = self.normalize_model_config(ModelConfig::new(default_model.as_str())?);
-        (self.constructor)(model_config, extensions).await
+        (self.constructor)(model_config, extensions, None).await
     }
 
     pub async fn create(
@@ -84,7 +89,17 @@ impl ProviderEntry {
         extensions: Vec<ExtensionConfig>,
     ) -> Result<Arc<dyn Provider>> {
         let model = self.normalize_model_config(model);
-        (self.constructor)(model, extensions).await
+        (self.constructor)(model, extensions, None).await
+    }
+
+    pub async fn create_with_working_dir(
+        &self,
+        model: ModelConfig,
+        extensions: Vec<ExtensionConfig>,
+        working_dir: PathBuf,
+    ) -> Result<Arc<dyn Provider>> {
+        let model = self.normalize_model_config(model);
+        (self.constructor)(model, extensions, Some(working_dir)).await
     }
 }
 
@@ -111,9 +126,14 @@ impl ProviderRegistry {
             name,
             ProviderEntry {
                 metadata,
-                constructor: Arc::new(|model, extensions| {
+                constructor: Arc::new(|model, extensions, working_dir| {
                     Box::pin(async move {
-                        let provider = F::from_env(model, extensions).await?;
+                        let provider = match working_dir {
+                            Some(working_dir) => {
+                                F::from_env_with_working_dir(model, extensions, working_dir).await?
+                            }
+                            None => F::from_env(model, extensions).await?,
+                        };
                         Ok(Arc::new(provider) as Arc<dyn Provider>)
                     })
                 }),
@@ -220,7 +240,7 @@ impl ProviderRegistry {
             config.name.clone(),
             ProviderEntry {
                 metadata: custom_metadata,
-                constructor: Arc::new(move |model, _extensions| {
+                constructor: Arc::new(move |model, _extensions, _working_dir| {
                     let result = constructor(model);
                     Box::pin(async move {
                         let provider = result?;
diff --git a/crates/goose/tests/acp_common_tests/mod.rs b/crates/goose/tests/acp_common_tests/mod.rs
index cad6f9336e..90c225d834 100644
--- a/crates/goose/tests/acp_common_tests/mod.rs
+++ b/crates/goose/tests/acp_common_tests/mod.rs
@@ -93,7 +93,7 @@ impl Provider for NamingProvider {
 }
 
 fn naming_provider_factory() -> AcpProviderFactory {
-    Arc::new(|_provider_name, model_config, _extensions| {
+    Arc::new(|_provider_name, model_config, _extensions, _working_dir| {
         Box::pin(async move { Ok(Arc::new(NamingProvider { model_config }) as Arc<dyn Provider>) })
     })
 }
@@ -448,7 +448,7 @@ pub async fn run_fs_write_text_file_true<C: Connection>() {
 
 pub async fn run_initialize_doesnt_hit_provider<C: Connection>() {
     let provider_factory: AcpProviderFactory =
-        Arc::new(|_, _, _| Box::pin(async { Err(anyhow::anyhow!("no provider configured")) }));
+        Arc::new(|_, _, _, _| Box::pin(async { Err(anyhow::anyhow!("no provider configured")) }));
 
     let openai = OpenAiFixture::new(vec![], C::expected_session_id()).await;
     let config = TestConnectionConfig {
diff --git a/crates/goose/tests/acp_custom_requests_test.rs b/crates/goose/tests/acp_custom_requests_test.rs
index de0117a210..e0ec073f9a 100644
--- a/crates/goose/tests/acp_custom_requests_test.rs
+++ b/crates/goose/tests/acp_custom_requests_test.rs
@@ -12,6 +12,7 @@ use goose::model::ModelConfig;
 use goose::providers::base::{MessageStream, Provider};
 use goose::providers::errors::ProviderError;
 use goose_test_support::{EnforceSessionId, IgnoreSessionId};
+use std::path::PathBuf;
 use std::sync::{Arc, Mutex};
 
 use common_tests::fixtures::OpenAiFixture;
@@ -49,7 +50,7 @@ impl Provider for MockProvider {
 }
 
 fn mock_provider_factory() -> AcpProviderFactory {
-    Arc::new(|provider_name, model_config, _extensions| {
+    Arc::new(|provider_name, model_config, _extensions, _working_dir| {
         Box::pin(async move {
             let recommended_models = match provider_name.as_str() {
                 "anthropic" => vec![
@@ -112,6 +113,106 @@ fn test_custom_get_extensions() {
     });
 }
 
+#[test]
+fn test_new_session_passes_cwd_to_provider_factory() {
+    run_test(async move {
+        let openai = OpenAiFixture::new(vec![], Arc::new(EnforceSessionId::default())).await;
+        let cwd = tempfile::tempdir().unwrap();
+        let expected_cwd = cwd.path().to_path_buf();
+        let captured_cwds = Arc::new(Mutex::new(Vec::<Option<PathBuf>>::new()));
+        let factory_cwds = Arc::clone(&captured_cwds);
+        let provider_factory: AcpProviderFactory = Arc::new(
+            move |provider_name, model_config, _extensions, working_dir| {
+                factory_cwds.lock().unwrap().push(working_dir);
+                Box::pin(async move {
+                    Ok(Arc::new(MockProvider {
+                        name: provider_name,
+                        model_config,
+                        recommended_models: Vec::new(),
+                    }) as Arc<dyn Provider>)
+                })
+            },
+        );
+
+        let mut conn = AcpServerConnection::new(
+            TestConnectionConfig {
+                cwd: Some(cwd),
+                provider_factory: Some(provider_factory),
+                ..Default::default()
+            },
+            openai,
+        )
+        .await;
+
+        conn.new_session().await.unwrap();
+
+        let captured_cwd = tokio::time::timeout(std::time::Duration::from_secs(1), async {
+            loop {
+                if let Some(cwd) = captured_cwds.lock().unwrap().first().cloned() {
+                    break cwd;
+                }
+                tokio::time::sleep(std::time::Duration::from_millis(10)).await;
+            }
+        })
+        .await
+        .expect("provider factory was not called");
+
+        assert_eq!(captured_cwd, Some(expected_cwd));
+    });
+}
+
+#[test]
+fn test_load_session_passes_load_cwd_to_provider_factory() {
+    run_test(async move {
+        let openai = OpenAiFixture::new(vec![], Arc::new(EnforceSessionId::default())).await;
+        let initial_cwd = tempfile::tempdir().unwrap();
+        let captured_cwds = Arc::new(Mutex::new(Vec::<Option<PathBuf>>::new()));
+        let factory_cwds = Arc::clone(&captured_cwds);
+        let provider_factory: AcpProviderFactory = Arc::new(
+            move |provider_name, model_config, _extensions, working_dir| {
+                factory_cwds.lock().unwrap().push(working_dir);
+                Box::pin(async move {
+                    Ok(Arc::new(MockProvider {
+                        name: provider_name,
+                        model_config,
+                        recommended_models: Vec::new(),
+                    }) as Arc<dyn Provider>)
+                })
+            },
+        );
+
+        let mut conn = AcpServerConnection::new(
+            TestConnectionConfig {
+                cwd: Some(initial_cwd),
+                provider_factory: Some(provider_factory),
+                ..Default::default()
+            },
+            openai,
+        )
+        .await;
+
+        let SessionData { session, .. } = conn.new_session().await.unwrap();
+        let session_id = session.session_id().0.to_string();
+        let SessionData {
+            session: loaded, ..
+        } = conn.load_session(&session_id, vec![]).await.unwrap();
+        let expected_cwd = loaded.work_dir();
+
+        let captured_cwd = tokio::time::timeout(std::time::Duration::from_secs(1), async {
+            loop {
+                if let Some(cwd) = captured_cwds.lock().unwrap().get(1).cloned() {
+                    break cwd;
+                }
+                tokio::time::sleep(std::time::Duration::from_millis(10)).await;
+            }
+        })
+        .await
+        .expect("provider factory was not called for load session");
+
+        assert_eq!(captured_cwd, Some(expected_cwd));
+    });
+}
+
 #[test]
 fn test_custom_list_builtin_skill_sources() {
     run_test(async move {
diff --git a/crates/goose/tests/acp_fixtures/mod.rs b/crates/goose/tests/acp_fixtures/mod.rs
index 01023fdf13..17a307d27d 100644
--- a/crates/goose/tests/acp_fixtures/mod.rs
+++ b/crates/goose/tests/acp_fixtures/mod.rs
@@ -173,17 +173,21 @@ pub async fn spawn_acp_server_in_process(
     }
     let provider_factory = provider_factory.unwrap_or_else(|| {
         let base_url = openai_base_url.to_string();
-        Arc::new(move |_provider_name, model_config, _extensions| {
-            let base_url = base_url.clone();
-            Box::pin(async move {
-                let api_client =
-                    ApiClient::new(base_url, ApiAuthMethod::BearerToken("test-key".to_string()))
-                        .unwrap();
-                let provider: Arc<dyn Provider> =
-                    Arc::new(OpenAiProvider::new(api_client, model_config));
-                Ok(provider)
-            })
-        })
+        Arc::new(
+            move |_provider_name, model_config, _extensions, _working_dir| {
+                let base_url = base_url.clone();
+                Box::pin(async move {
+                    let api_client = ApiClient::new(
+                        base_url,
+                        ApiAuthMethod::BearerToken("test-key".to_string()),
+                    )
+                    .unwrap();
+                    let provider: Arc<dyn Provider> =
+                        Arc::new(OpenAiProvider::new(api_client, model_config));
+                    Ok(provider)
+                })
+            },
+        )
     });
 
     let agent = GooseAcpAgent::new(GooseAcpAgentOptions {
diff --git a/crates/goose/tests/acp_secret_cache_invalidation_test.rs b/crates/goose/tests/acp_secret_cache_invalidation_test.rs
index 0c7f5e5e05..f2cf3377da 100644
--- a/crates/goose/tests/acp_secret_cache_invalidation_test.rs
+++ b/crates/goose/tests/acp_secret_cache_invalidation_test.rs
@@ -47,7 +47,7 @@ impl Provider for MockProvider {
 }
 
 fn mock_provider_factory() -> goose::acp::server::AcpProviderFactory {
-    Arc::new(|provider_name, model_config, _extensions| {
+    Arc::new(|provider_name, model_config, _extensions, _working_dir| {
         Box::pin(async move {
             Ok(Arc::new(MockProvider {
                 name: provider_name,