diff --git a/cmd/workspace/up/up.go b/cmd/workspace/up/up.go
index c4574e845..5192bba09 100644
--- a/cmd/workspace/up/up.go
+++ b/cmd/workspace/up/up.go
@@ -515,16 +515,20 @@ func reportErr(err error, _ bool, _ io.Writer) error {
 // emitUpResult writes the JSON result envelope for a completed `up` invocation.
 func emitUpResult(wctx *workspaceContext, ideURL string, out io.Writer) {
 	containerID := config2.GetContainerID(wctx.result)
+	workdir := wctx.workdir
 	var warnings []string
 	recovery := false
 	if wctx.result != nil {
 		warnings = wctx.result.HostWarnings
 		recovery = wctx.result.RecoveryContainer
+		if workdir == "" && wctx.result.SubstitutionContext != nil {
+			workdir = wctx.result.SubstitutionContext.ContainerWorkspaceFolder
+		}
 	}
 	_ = config2.WriteResultJSON(out, config2.ResultEnvelope{
 		ContainerID:           containerID,
 		RemoteUser:            wctx.user,
-		RemoteWorkspaceFolder: wctx.workdir,
+		RemoteWorkspaceFolder: workdir,
 		URL:                   ideURL,
 		Warnings:              warnings,
 		Recovery:              recovery,
diff --git a/cmd/workspace/up/up_workdir_test.go b/cmd/workspace/up/up_workdir_test.go
new file mode 100644
index 000000000..302b80c9d
--- /dev/null
+++ b/cmd/workspace/up/up_workdir_test.go
@@ -0,0 +1,130 @@
+package up
+
+import (
+	"bytes"
+	"encoding/json"
+	"testing"
+
+	"github.com/devsy-org/devsy/cmd/flags"
+	devcconfig "github.com/devsy-org/devsy/pkg/devcontainer/config"
+	"github.com/devsy-org/devsy/pkg/provider"
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+)
+
+type workspaceFolderCase struct {
+	name           string
+	resolvedFolder string
+	configFolder   string
+	subpath        string
+	override       string
+	noMergedConfig bool
+	wantWorkdir    string
+	want           string
+}
+
+func TestUpResultWorkspaceFolder(t *testing.T) {
+	const (
+		defaultFolder  = "/workspaces/project"
+		customFolder   = "/src/project"
+		overrideFolder = "/override/project"
+		gitSubpath     = "app"
+		literalFolder  = "/src/$(printf marker)"
+	)
+	tests := []workspaceFolderCase{
+		{name: "default folder", resolvedFolder: defaultFolder, want: defaultFolder},
+		{name: "custom mount folder", resolvedFolder: customFolder, want: customFolder},
+		{name: "literal mount folder", resolvedFolder: literalFolder, want: literalFolder},
+		{
+			name:           "no merged config",
+			resolvedFolder: defaultFolder,
+			noMergedConfig: true,
+			want:           defaultFolder,
+		},
+		{
+			name:           "explicit folder",
+			resolvedFolder: defaultFolder,
+			configFolder:   customFolder,
+			wantWorkdir:    customFolder, want: customFolder,
+		},
+		{
+			name:           "git subpath",
+			resolvedFolder: defaultFolder,
+			subpath:        gitSubpath,
+			wantWorkdir:    defaultFolder + "/app", want: defaultFolder + "/app",
+		},
+		{
+			name:           "git subpath with explicit folder",
+			resolvedFolder: customFolder,
+			configFolder:   customFolder,
+			subpath:        gitSubpath,
+			wantWorkdir:    customFolder + "/app",
+			want:           customFolder + "/app",
+		},
+		{
+			name:           "CLI override",
+			resolvedFolder: defaultFolder,
+			override:       overrideFolder,
+			wantWorkdir:    overrideFolder, want: overrideFolder,
+		},
+		{
+			name:           "CLI override takes precedence",
+			resolvedFolder: customFolder,
+			configFolder:   customFolder,
+			subpath:        gitSubpath,
+			override:       overrideFolder,
+			wantWorkdir:    overrideFolder, want: overrideFolder,
+		},
+	}
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			assertUpResultFolder(t, tt)
+		})
+	}
+}
+
+func assertUpResultFolder(t *testing.T, test workspaceFolderCase) {
+	t.Helper()
+	result := &devcconfig.Result{
+		SubstitutionContext: &devcconfig.SubstitutionContext{
+			ContainerWorkspaceFolder: test.resolvedFolder,
+		},
+	}
+	if !test.noMergedConfig {
+		result.MergedConfig = &devcconfig.MergedDevContainerConfig{
+			DevContainerConfigBase: devcconfig.DevContainerConfigBase{
+				WorkspaceFolder: test.configFolder,
+			},
+		}
+	}
+	workspace := &provider.Workspace{
+		Source: provider.WorkspaceSource{GitSubPath: test.subpath},
+	}
+	client := prepareWorkspaceClient{workspaceConfig: workspace}
+	cmd := &UpCmd{GlobalFlags: &flags.GlobalFlags{}}
+	cmd.WorkspaceFolder = test.override
+	workdir := cmd.resolveWorkdir(result, client)
+	assert.Equal(t, test.wantWorkdir, workdir, "folder used by SSH")
+
+	var output bytes.Buffer
+	wctx := &workspaceContext{result: result, workdir: workdir}
+	emitUpResult(wctx, "", &output)
+	assert.Equal(t, test.wantWorkdir, wctx.workdir, "JSON emission must preserve SSH folder")
+	var envelope devcconfig.ResultEnvelope
+	require.NoError(t, json.Unmarshal(output.Bytes(), &envelope))
+	assert.Equal(t, "success", envelope.Outcome)
+	assert.Equal(t, test.want, envelope.RemoteWorkspaceFolder)
+}
+
+func TestEmitUpResultWithoutSubstitutionContext(t *testing.T) {
+	for _, result := range []*devcconfig.Result{nil, {}} {
+		for _, workdir := range []string{"", "/explicit"} {
+			var output bytes.Buffer
+			wctx := &workspaceContext{result: result, workdir: workdir}
+			emitUpResult(wctx, "", &output)
+			var envelope devcconfig.ResultEnvelope
+			require.NoError(t, json.Unmarshal(output.Bytes(), &envelope))
+			assert.Equal(t, workdir, envelope.RemoteWorkspaceFolder)
+		}
+	}
+}
diff --git a/e2e/tests/up/up_behaviors.go b/e2e/tests/up/up_behaviors.go
index 774955bfb..16cd4ae4f 100644
--- a/e2e/tests/up/up_behaviors.go
+++ b/e2e/tests/up/up_behaviors.go
@@ -160,6 +160,7 @@ var _ = ginkgo.Describe("up command behaviors", ginkgo.Label("up-behaviors"), fu
 		framework.ExpectNoError(err)
 
 		gomega.Expect(envelope.Outcome).To(gomega.Equal("success"))
+		gomega.Expect(envelope.RemoteWorkspaceFolder).NotTo(gomega.BeEmpty())
 		statusCount := 0
 		for _, line := range lines[:len(lines)-1] {
 			var status struct {
@@ -229,8 +230,7 @@ var _ = ginkgo.Describe("up command behaviors", ginkgo.Label("up-behaviors"), fu
 				"expected exactly one success envelope in stdout, got %d", len(matched))
 			gomega.Expect(matched[0].ContainerID).NotTo(gomega.BeEmpty())
 			gomega.Expect(matched[0].RemoteUser).NotTo(gomega.BeEmpty())
-			// RemoteWorkspaceFolder may legitimately be empty when the
-			// devcontainer.json doesn't set a workspaceFolder.
+			gomega.Expect(matched[0].RemoteWorkspaceFolder).NotTo(gomega.BeEmpty())
 		}, ginkgo.SpecTimeout(framework.TimeoutLong()))
 
 	ginkgo.It("suppresses JSON envelope with --result-format plain", func(ctx context.Context) {