diff --git a/src/PowerShellEditorServices/Server/PsesLanguageServer.cs b/src/PowerShellEditorServices/Server/PsesLanguageServer.cs
index e6480adac..82abc2b72 100644
--- a/src/PowerShellEditorServices/Server/PsesLanguageServer.cs
+++ b/src/PowerShellEditorServices/Server/PsesLanguageServer.cs
@@ -113,15 +113,6 @@ public async Task StartAsync()
                                     break;
                                 }
                             }
-
-                            // Set the working directory of the PowerShell session to the workspace path
-                            if (workspaceService.WorkspacePath != null
-                                && Directory.Exists(workspaceService.WorkspacePath))
-                            {
-                                await serviceProvider.GetService<PowerShellContextService>().SetWorkingDirectoryAsync(
-                                    workspaceService.WorkspacePath,
-                                    isPathAlreadyEscaped: false).ConfigureAwait(false);
-                            }
                         });
             }).ConfigureAwait(false);
 
diff --git a/src/PowerShellEditorServices/Services/Workspace/Handlers/ConfigurationHandler.cs b/src/PowerShellEditorServices/Services/Workspace/Handlers/ConfigurationHandler.cs
index bf39a1f3f..8d94f1a7b 100644
--- a/src/PowerShellEditorServices/Services/Workspace/Handlers/ConfigurationHandler.cs
+++ b/src/PowerShellEditorServices/Services/Workspace/Handlers/ConfigurationHandler.cs
@@ -14,6 +14,7 @@
 using OmniSharp.Extensions.LanguageServer.Protocol.Client.Capabilities;
 using OmniSharp.Extensions.LanguageServer.Protocol.Models;
 using OmniSharp.Extensions.LanguageServer.Protocol.Workspace;
+using System.IO;
 
 namespace Microsoft.PowerShell.EditorServices.Handlers
 {
@@ -26,6 +27,7 @@ internal class PsesConfigurationHandler : IDidChangeConfigurationHandler
         private DidChangeConfigurationCapability _capability;
         private bool _profilesLoaded;
         private bool _consoleReplStarted;
+        private bool _cwdSet;
 
         public PsesConfigurationHandler(
             ILoggerFactory factory,
@@ -66,6 +68,26 @@ public async Task<Unit> Handle(DidChangeConfigurationParams request, Cancellatio
                 _workspaceService.WorkspacePath,
                 _logger);
 
+            if (!this._cwdSet)
+            {
+                if (!string.IsNullOrEmpty(_configurationService.CurrentSettings.Cwd)
+                    && Directory.Exists(_configurationService.CurrentSettings.Cwd))
+                {
+                    await _powerShellContextService.SetWorkingDirectoryAsync(
+                        _configurationService.CurrentSettings.Cwd,
+                        isPathAlreadyEscaped: false).ConfigureAwait(false);
+
+                } else if (_workspaceService.WorkspacePath != null
+                    && Directory.Exists(_workspaceService.WorkspacePath))
+                {
+                    await _powerShellContextService.SetWorkingDirectoryAsync(
+                        _workspaceService.WorkspacePath,
+                        isPathAlreadyEscaped: false).ConfigureAwait(false);
+                }
+
+                this._cwdSet = true;
+            }
+
             if (!this._profilesLoaded &&
                 _configurationService.CurrentSettings.EnableProfileLoading &&
                 oldLoadProfiles != _configurationService.CurrentSettings.EnableProfileLoading)
diff --git a/src/PowerShellEditorServices/Services/Workspace/LanguageServerSettings.cs b/src/PowerShellEditorServices/Services/Workspace/LanguageServerSettings.cs
index 705c79866..2e2441619 100644
--- a/src/PowerShellEditorServices/Services/Workspace/LanguageServerSettings.cs
+++ b/src/PowerShellEditorServices/Services/Workspace/LanguageServerSettings.cs
@@ -30,6 +30,8 @@ internal class LanguageServerSettings
 
         public PesterSettings Pester { get; set; }
 
+        public string Cwd { get; set; }
+
         public LanguageServerSettings()
         {
             this.ScriptAnalysis = new ScriptAnalysisSettings();
@@ -56,6 +58,7 @@ public void Update(
                     this.CodeFormatting = new CodeFormattingSettings(settings.CodeFormatting);
                     this.CodeFolding.Update(settings.CodeFolding, logger);
                     this.Pester = new PesterSettings(settings.Pester);
+                    this.Cwd = settings.Cwd;
                 }
             }
         }