diff --git a/src/filesystem/__tests__/lib.test.ts b/src/filesystem/__tests__/lib.test.ts
index cc13ef0353..bc7fb86e84 100644
--- a/src/filesystem/__tests__/lib.test.ts
+++ b/src/filesystem/__tests__/lib.test.ts
@@ -204,6 +204,30 @@ describe('Lib Functions', () => {
         await expect(validatePath(newFilePath))
           .rejects.toThrow('Parent directory does not exist');
       });
+
+      it('resolves relative paths against allowed directories instead of process.cwd()', async () => {
+        const relativePath = 'test-file.txt';
+        const originalCwd = process.cwd;
+        
+        // Mock process.cwd to return a directory outside allowed directories
+        const disallowedCwd = process.platform === 'win32' ? 'C:\\Windows\\System32' : '/root';
+        (process as any).cwd = jest.fn(() => disallowedCwd);
+        
+        try {
+          const result = await validatePath(relativePath);
+          
+          // Result should be resolved against first allowed directory, not process.cwd()
+          const expectedPath = process.platform === 'win32' 
+            ? path.resolve('C:\\Users\\test', relativePath)
+            : path.resolve('/home/user', relativePath);
+          
+          expect(result).toBe(expectedPath);
+          expect(result).not.toContain(disallowedCwd);
+        } finally {
+          // Restore original process.cwd
+          process.cwd = originalCwd;
+        }
+      });
     });
   });
 
diff --git a/src/filesystem/lib.ts b/src/filesystem/lib.ts
index 240ca0d476..17e4654cd5 100644
--- a/src/filesystem/lib.ts
+++ b/src/filesystem/lib.ts
@@ -72,12 +72,35 @@ export function createUnifiedDiff(originalContent: string, newContent: string, f
   );
 }
 
+// Helper function to resolve relative paths against allowed directories
+function resolveRelativePathAgainstAllowedDirectories(relativePath: string): string {
+  if (allowedDirectories.length === 0) {
+    // Fallback to process.cwd() if no allowed directories are set
+    return path.resolve(process.cwd(), relativePath);
+  }
+
+  // Try to resolve relative path against each allowed directory
+  for (const allowedDir of allowedDirectories) {
+    const candidate = path.resolve(allowedDir, relativePath);
+    const normalizedCandidate = normalizePath(candidate);
+    
+    // Check if the resulting path lies within any allowed directory
+    if (isPathWithinAllowedDirectories(normalizedCandidate, allowedDirectories)) {
+      return candidate;
+    }
+  }
+  
+  // If no valid resolution found, use the first allowed directory as base
+  // This provides a consistent fallback behavior
+  return path.resolve(allowedDirectories[0], relativePath);
+}
+
 // Security & Validation Functions
 export async function validatePath(requestedPath: string): Promise<string> {
   const expandedPath = expandHome(requestedPath);
   const absolute = path.isAbsolute(expandedPath)
     ? path.resolve(expandedPath)
-    : path.resolve(process.cwd(), expandedPath);
+    : resolveRelativePathAgainstAllowedDirectories(expandedPath);
 
   const normalizedRequested = normalizePath(absolute);