diff --git a/cmake/RunTests.cmake b/cmake/RunTests.cmake
index 2885256904..62cff6eebd 100644
--- a/cmake/RunTests.cmake
+++ b/cmake/RunTests.cmake
@@ -11,7 +11,7 @@ endif()
 set(ENV{NVIM_TEST} "1")
 # Set LC_ALL to meet expectations of some locale-sensitive tests.
 set(ENV{LC_ALL} "en_US.UTF-8")
-set(ENV{VIMRUNTIME} ${WORKING_DIR}/runtime)
+set(ENV{VIMRUNTIME} ${ROOT_DIR}/runtime)
 set(TEST_XDG_PREFIX ${BUILD_DIR}/Xtest_xdg${TEST_SUFFIX})
 set(ENV{XDG_CONFIG_HOME} ${TEST_XDG_PREFIX}/config)
 set(ENV{XDG_DATA_HOME} ${TEST_XDG_PREFIX}/share)
@@ -21,6 +21,13 @@ unset(ENV{XDG_DATA_DIRS})
 unset(ENV{NVIM})  # Clear $NVIM in case tests are running from Nvim. #11009
 unset(ENV{TMUX})  # Nvim TUI shouldn't think it's running in tmux. #34173
 
+# Prepare for running tests in ${TEST_XDG_PREFIX}.
+file(MAKE_DIRECTORY ${TEST_XDG_PREFIX})
+file(CREATE_LINK ${ROOT_DIR}/runtime ${TEST_XDG_PREFIX}/runtime SYMBOLIC)
+file(CREATE_LINK ${ROOT_DIR}/src ${TEST_XDG_PREFIX}/src SYMBOLIC)
+file(CREATE_LINK ${ROOT_DIR}/test ${TEST_XDG_PREFIX}/test SYMBOLIC)
+file(CREATE_LINK ${ROOT_DIR}/README.md ${TEST_XDG_PREFIX}/README.md SYMBOLIC)
+
 # TODO(dundargoc): The CIRRUS_CI environment variable isn't passed to here from
 # the main CMakeLists.txt, so we have to manually pass it to this script and
 # re-set the environment variable. Investigate if we can avoid manually setting
@@ -50,7 +57,7 @@ endif()
 
 # Force $TEST_PATH to workdir-relative path ("test/…").
 if(IS_ABSOLUTE ${TEST_PATH})
-  file(RELATIVE_PATH TEST_PATH "${WORKING_DIR}" "${TEST_PATH}")
+  file(RELATIVE_PATH TEST_PATH "${ROOT_DIR}" "${TEST_PATH}")
 endif()
 
 separate_arguments(BUSTED_ARGS NATIVE_COMMAND $ENV{BUSTED_ARGS})
@@ -69,7 +76,7 @@ endif()
 
 # TMPDIR: for testutil.tmpname() and Nvim tempname().
 set(ENV{TMPDIR} "${BUILD_DIR}/Xtest_tmpdir${TEST_SUFFIX}")
-execute_process(COMMAND ${CMAKE_COMMAND} -E make_directory $ENV{TMPDIR})
+file(MAKE_DIRECTORY $ENV{TMPDIR})
 
 # HISTFILE: do not write into user's ~/.bash_history
 set(ENV{HISTFILE} "/dev/null")
@@ -88,17 +95,17 @@ endif()
 execute_process(
   # Note: because of "-ll" (low-level interpreter mode), some modules like
   # _core/editor.lua are not loaded.
-  COMMAND ${NVIM_PRG} -ll ${WORKING_DIR}/test/lua_runner.lua ${DEPS_INSTALL_DIR}/share/lua/5.1/ busted -v -o test.busted.outputHandlers.nvim
+  COMMAND ${NVIM_PRG} -ll ${ROOT_DIR}/test/lua_runner.lua ${DEPS_INSTALL_DIR}/share/lua/5.1/ busted -v -o test.busted.outputHandlers.nvim
     -Xoutput "{\"test_path\": \"${TEST_PATH}\", \"summary_file\": \"${TEST_SUMMARY_FILE}\"}"
     --lazy --helper=${TEST_DIR}/${TEST_TYPE}/preload.lua
     --lpath=${BUILD_DIR}/?.lua
-    --lpath=${WORKING_DIR}/src/?.lua
-    --lpath=${WORKING_DIR}/runtime/lua/?.lua
+    --lpath=${ROOT_DIR}/src/?.lua
+    --lpath=${ROOT_DIR}/runtime/lua/?.lua
     --lpath=?.lua
     ${BUSTED_ARGS}
     ${TEST_PATH}
   TIMEOUT $ENV{TEST_TIMEOUT}
-  WORKING_DIRECTORY ${WORKING_DIR}
+  WORKING_DIRECTORY ${TEST_XDG_PREFIX}
   RESULT_VARIABLE res
   ${EXTRA_ARGS})
 
diff --git a/test/CMakeLists.txt b/test/CMakeLists.txt
index 3ed2c6d22c..5ede98ed1e 100644
--- a/test/CMakeLists.txt
+++ b/test/CMakeLists.txt
@@ -10,7 +10,7 @@ set(TEST_OPTIONS
       -D DEPS_INSTALL_DIR=${DEPS_INSTALL_DIR}
       -D NVIM_PRG=$<TARGET_FILE:nvim_bin>
       -D TEST_DIR=${TEST_DIR}
-      -D WORKING_DIR=${PROJECT_SOURCE_DIR})
+      -D ROOT_DIR=${PROJECT_SOURCE_DIR})
 
 check_lua_module(${LUA_PRG} "ffi" LUA_HAS_FFI)
 if(LUA_HAS_FFI)
diff --git a/test/functional/core/startup_spec.lua b/test/functional/core/startup_spec.lua
index 39e943922f..c8e7ec6612 100644
--- a/test/functional/core/startup_spec.lua
+++ b/test/functional/core/startup_spec.lua
@@ -1780,7 +1780,7 @@ describe('inccommand on ex mode', function()
       '-c',
       'set termguicolors background=dark',
       '-E',
-      'test/README.md',
+      'README.md',
     }, {
       term = true,
       env = { VIMRUNTIME = os.getenv('VIMRUNTIME') },
diff --git a/test/functional/editor/ftplugin_spec.lua b/test/functional/editor/ftplugin_spec.lua
index b7f323b38c..78ceb30390 100644
--- a/test/functional/editor/ftplugin_spec.lua
+++ b/test/functional/editor/ftplugin_spec.lua
@@ -25,18 +25,18 @@ local function lua_includeexpr(module)
 end
 
 describe("ftplugin: Lua 'includeexpr'", function()
-  local repo_root = ''
+  local repo_root = vim.fs.normalize(t.paths.test_source_path)
   local temp_dir = ''
 
   setup(function()
-    repo_root = vim.fs.normalize(assert(vim.uv.cwd()))
     temp_dir = t.tmpname(false)
     n.clear()
+    n.api.nvim_set_current_dir(repo_root)
   end)
 
   teardown(function()
     n.expect_exit(n.command, 'qall!')
-    n.rmdir('runtime/lua/foo/')
+    n.rmdir(repo_root .. '/runtime/lua/foo/')
   end)
 
   before_each(function()
diff --git a/test/functional/legacy/008_autocommands_spec.lua b/test/functional/legacy/008_autocommands_spec.lua
index b7b411d631..a25862918a 100644
--- a/test/functional/legacy/008_autocommands_spec.lua
+++ b/test/functional/legacy/008_autocommands_spec.lua
@@ -77,7 +77,7 @@ describe('autocommands that delete and unload buffers:', function()
     command('set nohidden')
     command('silent! edit Xxx2')
     command('silent! edit Xxx1')
-    command('silent! edit Makefile') -- an existing file
+    command('silent! edit README.md') -- an existing file
     command('silent! split new2')
     expect_exit(command, 'silent! quit')
     eq('VimLeave done', string.match(read_file(test_file), '^%s*(.-)%s*$'))
diff --git a/test/functional/options/autochdir_spec.lua b/test/functional/options/autochdir_spec.lua
index a409262d84..612ede4681 100644
--- a/test/functional/options/autochdir_spec.lua
+++ b/test/functional/options/autochdir_spec.lua
@@ -9,16 +9,16 @@ local mkdir = t.mkdir
 
 describe("'autochdir'", function()
   it('given on the shell gets processed properly', function()
-    local targetdir = 'test/functional/fixtures'
+    local start_dir = vim.uv.cwd()
+    local target_dir = t.paths.test_source_path .. '/test/functional/fixtures'
 
-    -- By default 'autochdir' is off, thus getcwd() returns the repo root.
-    clear(targetdir .. '/tty-test.c')
-    local rootdir = fn.getcwd()
-    local expected = rootdir .. '/' .. targetdir
+    -- By default 'autochdir' is off, thus getcwd() returns the initial directory.
+    clear(target_dir .. '/tty-test.c')
+    eq(start_dir, fn.getcwd())
 
     -- With 'autochdir' on, we should get the directory of tty-test.c.
-    clear('--cmd', 'set autochdir', targetdir .. '/tty-test.c')
-    eq(t.is_os('win') and expected:gsub('/', '\\') or expected, fn.getcwd())
+    clear('--cmd', 'set autochdir', target_dir .. '/tty-test.c')
+    eq(t.is_os('win') and target_dir:gsub('/', '\\') or target_dir, fn.getcwd())
   end)
 
   it('is not overwritten by getwinvar() call #17609', function()
diff --git a/test/functional/plugin/pack_spec.lua b/test/functional/plugin/pack_spec.lua
index c63769b82f..f14684b763 100644
--- a/test/functional/plugin/pack_spec.lua
+++ b/test/functional/plugin/pack_spec.lua
@@ -1083,8 +1083,8 @@ describe('vim.pack', function()
     end)
 
     it('is not affected by special environment variables', function()
-      fn.setenv('GIT_WORK_TREE', fn.getcwd())
-      fn.setenv('GIT_DIR', vim.fs.joinpath(fn.getcwd(), '.git'))
+      fn.setenv('GIT_WORK_TREE', t.paths.test_source_path)
+      fn.setenv('GIT_DIR', vim.fs.joinpath(t.paths.test_source_path, '.git'))
       local ref_environ = fn.environ()
 
       vim_pack_add({ repos_src.basic })
@@ -1889,8 +1889,8 @@ describe('vim.pack', function()
     end)
 
     it('is not affected by special environment variables', function()
-      fn.setenv('GIT_WORK_TREE', fn.getcwd())
-      fn.setenv('GIT_DIR', vim.fs.joinpath(fn.getcwd(), '.git'))
+      fn.setenv('GIT_WORK_TREE', t.paths.test_source_path)
+      fn.setenv('GIT_DIR', vim.fs.joinpath(t.paths.test_source_path, '.git'))
       local ref_environ = fn.environ()
 
       vim_pack_add({ repos_src.fetch })
diff --git a/test/functional/provider/clipboard_spec.lua b/test/functional/provider/clipboard_spec.lua
index b4de1fbd7c..5666927d6e 100644
--- a/test/functional/provider/clipboard_spec.lua
+++ b/test/functional/provider/clipboard_spec.lua
@@ -144,7 +144,11 @@ describe('clipboard', function()
 
   it('`:redir @+>` with invalid g:clipboard shows exactly one error #7184', function()
     command("let g:clipboard = 'bogus'")
-    command('redir @+> | :silent echo system("cat CONTRIBUTING.md") | redir END')
+    n.exec([[
+      redir @+>
+        silent echo system("cat test/functional/fixtures/tty-test.c")
+      redir END
+    ]])
     screen:expect([[
       ^                                                                        |
       {1:~                                                                       }|*2
@@ -301,8 +305,12 @@ describe('clipboard (with fake clipboard.vim)', function()
 
   it('`:redir @+>` invokes clipboard once-per-message', function()
     eq(0, eval('g:clip_called_set'))
-    command('redir @+> | :silent echo system("cat CONTRIBUTING.md") | redir END')
-    -- Assuming CONTRIBUTING.md has >100 lines.
+    n.exec([[
+      redir @+>
+        silent echo system("cat test/functional/fixtures/tty-test.c")
+      redir END
+    ]])
+    -- Assuming tty-test.c has >100 lines.
     assert(eval('g:clip_called_set') > 100)
   end)
 
@@ -311,7 +319,11 @@ describe('clipboard (with fake clipboard.vim)', function()
     -- NOT propagate to the clipboard. This is consistent with Vim.
     command('set clipboard=unnamedplus')
     eq(0, eval('g:clip_called_set'))
-    command('redir @"> | :silent echo system("cat CONTRIBUTING.md") | redir END')
+    n.exec([[
+      redir @">
+        silent echo system("cat test/functional/fixtures/tty-test.c")
+      redir END
+    ]])
     eq(0, eval('g:clip_called_set'))
   end)
 
diff --git a/test/functional/terminal/ex_terminal_spec.lua b/test/functional/terminal/ex_terminal_spec.lua
index 587b96bcd8..958c558998 100644
--- a/test/functional/terminal/ex_terminal_spec.lua
+++ b/test/functional/terminal/ex_terminal_spec.lua
@@ -202,6 +202,12 @@ local function test_terminal_with_fake_shell(backslash)
     api.nvim_set_option_value('shell', shell_path, {})
     api.nvim_set_option_value('shellcmdflag', 'EXE', {})
     api.nvim_set_option_value('shellxquote', '', {}) -- win: avoid extra quotes
+    t.mkdir('Xsomedir')
+    t.write_file('Xsomedir/Xuniquefile', '')
+  end)
+
+  after_each(function()
+    n.rmdir('Xsomedir')
   end)
 
   it('with no argument, acts like jobstart(…,{term=true})', function()
@@ -290,7 +296,7 @@ local function test_terminal_with_fake_shell(backslash)
     command('autocmd! nvim.terminal TermClose')
     feed_command('terminal')
     eq('term://', string.match(eval('bufname("%")'), '^term://'))
-    eq('scripts/shadacat.py', eval('findfile("scripts/shadacat.py", ".")'))
+    eq('Xsomedir/Xuniquefile', eval('findfile("Xsomedir/Xuniquefile", ".")'))
   end)
 
   it('works with :find', function()
@@ -304,26 +310,26 @@ local function test_terminal_with_fake_shell(backslash)
     ]])
     eq('term://', string.match(eval('bufname("%")'), '^term://'))
     feed([[<C-\><C-N>]])
-    feed_command([[find */shadacat.py]])
+    feed_command([[find */Xuniquefile]])
     if is_os('win') then
-      eq('scripts\\shadacat.py', eval('bufname("%")'))
+      eq('Xsomedir\\Xuniquefile', eval('bufname("%")'))
     else
-      eq('scripts/shadacat.py', eval('bufname("%")'))
+      eq('Xsomedir/Xuniquefile', eval('bufname("%")'))
     end
   end)
 
   it('works with gf', function()
-    feed_command([[terminal echo "scripts/shadacat.py"]])
+    feed_command([[terminal echo "Xsomedir/Xuniquefile"]])
     screen:expect([[
-      ^ready $ echo "scripts/shadacat.py"                |
+      ^ready $ echo "Xsomedir/Xuniquefile"               |
                                                         |
       [Process exited 0]                                |
-      :terminal echo "scripts/shadacat.py"              |
+      :terminal echo "Xsomedir/Xuniquefile"             |
     ]])
     feed([[<C-\><C-N>]])
     eq('term://', string.match(eval('bufname("%")'), '^term://'))
     feed([[ggf"lgf]])
-    eq('scripts/shadacat.py', eval('bufname("%")'))
+    eq('Xsomedir/Xuniquefile', eval('bufname("%")'))
   end)
 
   it('with bufhidden=delete #3958', function()
diff --git a/test/functional/treesitter/highlight_spec.lua b/test/functional/treesitter/highlight_spec.lua
index bf085aa42d..40731420fc 100644
--- a/test/functional/treesitter/highlight_spec.lua
+++ b/test/functional/treesitter/highlight_spec.lua
@@ -1443,7 +1443,7 @@ end)
 
 it('no nil index for missing highlight query', function()
   clear()
-  local cqueries = vim.uv.cwd() .. '/runtime/queries/c/'
+  local cqueries = t.paths.test_source_path .. '/runtime/queries/c/'
   os.rename(cqueries .. 'highlights.scm', cqueries .. '_highlights.scm')
   finally(function()
     os.rename(cqueries .. '_highlights.scm', cqueries .. 'highlights.scm')
diff --git a/test/functional/treesitter/inspect_tree_spec.lua b/test/functional/treesitter/inspect_tree_spec.lua
index 01d8260fce..fb87618fa9 100644
--- a/test/functional/treesitter/inspect_tree_spec.lua
+++ b/test/functional/treesitter/inspect_tree_spec.lua
@@ -38,7 +38,7 @@ describe('vim.treesitter.inspect_tree', function()
   it('sets correct buffer name', function()
     t.skip(t.is_zig_build(), 'vim.treesitter not found after chdir with build.zig')
 
-    n.api.nvim_set_current_dir('test/functional/fixtures')
+    n.api.nvim_set_current_dir(t.paths.test_source_path .. '/test/functional/fixtures')
     n.command('edit lua/syntax_error.lua')
     eq('lua/syntax_error.lua', n.fn.bufname('%'))
     local full_path = n.api.nvim_buf_get_name(0)
diff --git a/test/functional/ui/embed_spec.lua b/test/functional/ui/embed_spec.lua
index 67a5d6643f..56fb59feac 100644
--- a/test/functional/ui/embed_spec.lua
+++ b/test/functional/ui/embed_spec.lua
@@ -236,6 +236,7 @@ describe('--embed UI', function()
 
   it('updates cwd of attached UI #21771', function()
     clear { args_rm = { '--headless' } }
+    api.nvim_set_current_dir(t.paths.test_source_path)
 
     local screen = Screen.new(40, 8)
 
diff --git a/test/functional/vimscript/executable_spec.lua b/test/functional/vimscript/executable_spec.lua
index 05d249ca32..3840f55e84 100644
--- a/test/functional/vimscript/executable_spec.lua
+++ b/test/functional/vimscript/executable_spec.lua
@@ -20,6 +20,9 @@ describe('executable()', function()
 
   if is_os('win') then
     it('exepath respects shellslash', function()
+      -- test/ cannot be a symlink in this test.
+      n.api.nvim_set_current_dir(t.paths.test_source_path)
+
       command('let $PATH = fnamemodify("./test/functional/fixtures/bin", ":p")')
       eq(
         [[test\functional\fixtures\bin\null.CMD]],
@@ -33,6 +36,9 @@ describe('executable()', function()
     end)
 
     it('stdpath respects shellslash', function()
+      -- Needs to check paths relative to repo root dir.
+      n.api.nvim_set_current_dir(t.paths.test_source_path)
+
       t.matches(
         [[build\Xtest_xdg[%w_]*\share\nvim%-data]],
         call('fnamemodify', call('stdpath', 'data'), ':.')
diff --git a/test/functional/vimscript/fnamemodify_spec.lua b/test/functional/vimscript/fnamemodify_spec.lua
index f2cee9b83e..8b0b242c62 100644
--- a/test/functional/vimscript/fnamemodify_spec.lua
+++ b/test/functional/vimscript/fnamemodify_spec.lua
@@ -45,6 +45,9 @@ describe('fnamemodify()', function()
   end)
 
   it('handles examples from ":help filename-modifiers"', function()
+    -- src/ cannot be a symlink in this test.
+    n.api.nvim_set_current_dir(t.paths.test_source_path)
+
     local filename = 'src/version.c'
     local cwd = getcwd()
 
diff --git a/test/functional/vimscript/system_spec.lua b/test/functional/vimscript/system_spec.lua
index 54650caa71..67a613d848 100644
--- a/test/functional/vimscript/system_spec.lua
+++ b/test/functional/vimscript/system_spec.lua
@@ -131,11 +131,16 @@ describe('system()', function()
 
     before_each(function()
       screen = Screen.new()
+      t.write_file('Xmorefile', ('line1\nline2\nline3\n'):rep(10))
+    end)
+
+    after_each(function()
+      os.remove('Xmorefile')
     end)
 
     if is_os('win') then
       local function test_more()
-        eq('root = true', eval([[get(split(system('"more" ".editorconfig"'), "\n"), 0, '')]]))
+        eq('line1', eval([[get(split(system('"more" "Xmorefile"'), "\n"), 0, '')]]))
       end
       local function test_shell_unquoting()
         eval([[system('"ping" "-n" "1" "127.0.0.1"')]])