diff --git a/crates/uv-python/src/interpreter.rs b/crates/uv-python/src/interpreter.rs
index 7d1b53599..6eb7bcfa9 100644
--- a/crates/uv-python/src/interpreter.rs
+++ b/crates/uv-python/src/interpreter.rs
@@ -304,8 +304,14 @@ impl Interpreter {
         let Ok(installations) = ManagedPythonInstallations::from_settings(None) else {
             return false;
         };
+        let Ok(root) = installations.absolute_root() else {
+            return false;
+        };
+        let sys_base_prefix = dunce::canonicalize(&self.sys_base_prefix)
+            .unwrap_or_else(|_| self.sys_base_prefix.clone());
+        let root = dunce::canonicalize(&root).unwrap_or(root);
 
-        let Ok(suffix) = self.sys_base_prefix.strip_prefix(installations.root()) else {
+        let Ok(suffix) = sys_base_prefix.strip_prefix(&root) else {
             return false;
         };
 
diff --git a/crates/uv-python/src/managed.rs b/crates/uv-python/src/managed.rs
index 145ebe238..a0fe9b660 100644
--- a/crates/uv-python/src/managed.rs
+++ b/crates/uv-python/src/managed.rs
@@ -16,7 +16,8 @@ use tracing::{debug, warn};
 use windows::Win32::Storage::FileSystem::FILE_ATTRIBUTE_REPARSE_POINT;
 
 use uv_fs::{
-    LockedFile, LockedFileError, LockedFileMode, Simplified, replace_symlink, symlink_or_copy_file,
+    LockedFile, LockedFileError, LockedFileMode, Simplified, normalize_absolute_path,
+    replace_symlink, symlink_or_copy_file,
 };
 use uv_platform::{Error as PlatformError, Os};
 use uv_platform::{LibcDetectionError, Platform};
@@ -280,6 +281,16 @@ impl ManagedPythonInstallations {
     pub fn root(&self) -> &Path {
         &self.root
     }
+
+    pub(crate) fn absolute_root(&self) -> Result<PathBuf, Error> {
+        let root = if self.root.is_absolute() {
+            self.root.clone()
+        } else {
+            crate::current_dir()?.join(&self.root)
+        };
+
+        normalize_absolute_path(&root).map_err(|err| Error::AbsolutePath(self.root.clone(), err))
+    }
 }
 
 static EXTERNALLY_MANAGED: &str = "[externally-managed]
@@ -352,14 +363,14 @@ impl ManagedPythonInstallation {
     /// Returns `None` if the interpreter is not a managed installation.
     pub fn try_from_interpreter(interpreter: &Interpreter) -> Option<Self> {
         let managed_root = ManagedPythonInstallations::from_settings(None).ok()?;
+        let root = managed_root.absolute_root().ok()?;
 
         // Canonicalize both paths to handle Windows path format differences
         // (e.g., \\?\ prefix, different casing, junction vs actual path).
         // Fall back to the original path if canonicalization fails (e.g., target doesn't exist).
         let sys_base_prefix = dunce::canonicalize(interpreter.sys_base_prefix())
             .unwrap_or_else(|_| interpreter.sys_base_prefix().to_path_buf());
-        let root = dunce::canonicalize(managed_root.root())
-            .unwrap_or_else(|_| managed_root.root().to_path_buf());
+        let root = dunce::canonicalize(&root).unwrap_or(root);
 
         // Verify the interpreter's base prefix is within the managed root
         let suffix = sys_base_prefix.strip_prefix(&root).ok()?;
@@ -371,7 +382,7 @@ impl ManagedPythonInstallation {
         PythonInstallationKey::from_str(name).ok()?;
 
         // Construct the installation from the path within the managed root
-        let path = managed_root.root().join(name);
+        let path = root.join(name);
         Self::from_path(path).ok()
     }
 
@@ -1359,4 +1370,28 @@ mod tests {
             },
         );
     }
+
+    #[test]
+    fn test_relative_install_dir_resolves_against_pwd() {
+        let temp_dir = tempfile::tempdir().unwrap();
+        let workdir = temp_dir.path().join("workdir");
+        fs::create_dir(&workdir).unwrap();
+
+        temp_env::with_vars(
+            [
+                (
+                    uv_static::EnvVars::UV_PYTHON_INSTALL_DIR,
+                    Some(std::ffi::OsStr::new(".python-installs")),
+                ),
+                (uv_static::EnvVars::PWD, Some(workdir.as_os_str())),
+            ],
+            || {
+                let installations = ManagedPythonInstallations::from_settings(None).unwrap();
+                assert_eq!(
+                    installations.absolute_root().unwrap(),
+                    workdir.join(".python-installs")
+                );
+            },
+        );
+    }
 }
diff --git a/crates/uv/tests/it/sync.rs b/crates/uv/tests/it/sync.rs
index 031b5e33d..45f38af9f 100644
--- a/crates/uv/tests/it/sync.rs
+++ b/crates/uv/tests/it/sync.rs
@@ -6792,6 +6792,72 @@ fn sync_active_project_environment() -> Result<()> {
     Ok(())
 }
 
+#[test]
+#[cfg(feature = "test-python-managed")]
+fn sync_active_project_environment_with_relative_managed_python_dir() -> Result<()> {
+    let context = uv_test::test_context_with_versions!(&[])
+        .with_python_download_cache()
+        .with_empty_python_install_mirror();
+
+    let pyproject_toml = context.temp_dir.child("pyproject.toml");
+    pyproject_toml.write_str(
+        r#"
+        [project]
+        name = "project"
+        version = "0.1.0"
+        requires-python = ">=3.12"
+        dependencies = []
+        "#,
+    )?;
+
+    context
+        .venv()
+        .env(EnvVars::UV_PYTHON_INSTALL_DIR, ".python-installs")
+        .env(EnvVars::UV_PYTHON_PREFERENCE, "only-managed")
+        .env(EnvVars::UV_PYTHON_DOWNLOADS, "automatic")
+        .arg("foobar")
+        .assert()
+        .success();
+
+    context
+        .temp_dir
+        .child(".python-installs")
+        .assert(predicate::path::is_dir());
+
+    for _ in 0..2 {
+        let assert = context
+            .sync()
+            .env(EnvVars::UV_PYTHON_INSTALL_DIR, ".python-installs")
+            .env(EnvVars::UV_PYTHON_PREFERENCE, "only-managed")
+            .env(EnvVars::UV_PYTHON_DOWNLOADS, "automatic")
+            .env(EnvVars::VIRTUAL_ENV, "foobar")
+            .arg("--active")
+            .assert()
+            .success();
+
+        let stderr = String::from_utf8_lossy(&assert.get_output().stderr);
+        assert!(
+            !stderr.contains("Removed virtual environment at: foobar"),
+            "expected `uv sync --active` to reuse the active environment, stderr was:\n{stderr}"
+        );
+        assert!(
+            !stderr.contains("Creating virtual environment at: foobar"),
+            "expected `uv sync --active` to reuse the active environment, stderr was:\n{stderr}"
+        );
+    }
+
+    context
+        .temp_dir
+        .child(".venv")
+        .assert(predicate::path::missing());
+    context
+        .temp_dir
+        .child("foobar")
+        .assert(predicate::path::is_dir());
+
+    Ok(())
+}
+
 #[test]
 fn sync_active_script_environment() -> Result<()> {
     let context = uv_test::test_context_with_versions!(&["3.11", "3.12"])