diff --git a/packages/@angular/cli/utilities/project.ts b/packages/@angular/cli/utilities/project.ts
index f3667a89a512..3a661598c85a 100644
--- a/packages/@angular/cli/utilities/project.ts
+++ b/packages/@angular/cli/utilities/project.ts
@@ -2,11 +2,10 @@ import * as fs from 'fs';
 import * as os from 'os';
 import * as path from 'path';
 import { findUp } from './find-up';
+import { normalize } from '@angular-devkit/core';
 
 export function insideProject(): boolean {
-  const possibleConfigFiles = ['angular.json', '.angular.json'];
-
-  return findUp(possibleConfigFiles, process.cwd()) !== null;
+  return getProjectDetails() !== null;
 }
 
 export interface ProjectDetails {
@@ -31,7 +30,7 @@ export function getProjectDetails(): ProjectDetails | null {
   const possibleDir = path.dirname(configFilePath);
 
   const homedir = os.homedir();
-  if (possibleDir === homedir) {
+  if (normalize(possibleDir) === normalize(homedir)) {
     const packageJsonPath = path.join(possibleDir, 'package.json');
     if (!fs.existsSync(packageJsonPath)) {
       // No package.json
diff --git a/tests/e2e/tests/basic/in-project-logic.ts b/tests/e2e/tests/basic/in-project-logic.ts
new file mode 100644
index 000000000000..fea6d3fd7a1c
--- /dev/null
+++ b/tests/e2e/tests/basic/in-project-logic.ts
@@ -0,0 +1,15 @@
+import {writeFile, deleteFile} from '../../utils/fs';
+import {ng} from '../../utils/process';
+import * as os from 'os';
+import {join} from 'path';
+
+
+export default function() {
+  const homedir = os.homedir();
+  const globalConfigPath = join(homedir, '.angular.json');
+  return Promise.resolve()
+    .then(() => writeFile(globalConfigPath, '{"version":1}'))
+    .then(() => process.chdir(homedir))
+    .then(() => ng('new', 'proj-name', '--dry-run'))
+    .then(() => deleteFile(globalConfigPath));
+}