diff --git a/Cargo.lock b/Cargo.lock
index cd8cdea4d6..157d53311e 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -2173,6 +2173,7 @@ dependencies = [
  "dashmap",
  "derive_more",
  "derive_setters",
+ "dunce",
  "fake",
  "forge_app",
  "forge_domain",
diff --git a/Cargo.toml b/Cargo.toml
index 12e3fbc1d1..c14ccced03 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -40,6 +40,7 @@ derive_setters = "0.1.9"
 dirs = "6.0.0"
 dissimilar = "1.0.9"
 dotenvy = "0.15.7"
+dunce = "1.0.5"
 fzf-wrapped = "0.1.4"
 futures = "0.3.32"
 gh-workflow = "0.8.1"
diff --git a/crates/forge_services/Cargo.toml b/crates/forge_services/Cargo.toml
index ccee3506bd..d7b93c0118 100644
--- a/crates/forge_services/Cargo.toml
+++ b/crates/forge_services/Cargo.toml
@@ -21,6 +21,7 @@ handlebars.workspace = true
 forge_fs.workspace = true
 dashmap.workspace = true
 anyhow.workspace = true
+dunce.workspace = true
 futures.workspace = true
 reqwest.workspace = true
 derive_more.workspace = true
diff --git a/crates/forge_services/src/context_engine.rs b/crates/forge_services/src/context_engine.rs
index 51299ca6bf..a966bb6fa6 100644
--- a/crates/forge_services/src/context_engine.rs
+++ b/crates/forge_services/src/context_engine.rs
@@ -219,8 +219,7 @@ impl<F: 'static + ProviderRepository + WorkspaceIndexRepository> ForgeWorkspaceS
         emit(SyncProgress::Starting).await;
 
         let (token, user_id) = self.get_workspace_credentials().await?;
-        let path = path
-            .canonicalize()
+        let path = dunce::canonicalize(&path)
             .with_context(|| format!("Failed to resolve path: {}", path.display()))?;
 
         // Initialize workspace (finds existing or creates new)
@@ -412,8 +411,7 @@ impl<F: 'static + ProviderRepository + WorkspaceIndexRepository> ForgeWorkspaceS
     where
         F: WorkspaceIndexRepository,
     {
-        let canonical_path = path
-            .canonicalize()
+        let canonical_path = dunce::canonicalize(&path)
             .with_context(|| format!("Failed to resolve path: {}", path.display()))?;
 
         // Get all workspaces from remote server
@@ -604,7 +602,9 @@ impl<F: 'static + ProviderRepository + WorkspaceIndexRepository> ForgeWorkspaceS
                 match result {
                     Ok(content) => {
                         let hash = compute_hash(&content);
-                        let absolute_path_str = absolute_path.to_string_lossy().to_string();
+                        let absolute_path_str = dunce::simplified(&absolute_path)
+                            .to_string_lossy()
+                            .to_string();
                         yield Ok(FileNode { file_path: absolute_path_str, content, hash });
                     }
                     Err(e) => {
@@ -618,8 +618,7 @@ impl<F: 'static + ProviderRepository + WorkspaceIndexRepository> ForgeWorkspaceS
 
     async fn _init_workspace(&self, path: PathBuf) -> Result<(bool, WorkspaceId)> {
         let (token, _user_id) = self.get_workspace_credentials().await?;
-        let path = path
-            .canonicalize()
+        let path = dunce::canonicalize(&path)
             .with_context(|| format!("Failed to resolve path: {}", path.display()))?;
 
         // Find workspace by exact match or ancestor from remote server