diff --git a/crates/remote/src/transport/docker.rs b/crates/remote/src/transport/docker.rs
index 6322cd9193d383cfcd3e9ff5cb93670bcd136023..872d1d460ec82cb3eab2233a0af3161bbf2ec1b2 100644
--- a/crates/remote/src/transport/docker.rs
+++ b/crates/remote/src/transport/docker.rs
@@ -761,7 +761,8 @@ impl RemoteConnection for DockerExecConnection {
             const TILDE_PREFIX: &'static str = "~/";
             if working_dir.starts_with(TILDE_PREFIX) {
                 let working_dir = working_dir.trim_start_matches("~").trim_start_matches("/");
-                parsed_working_dir = Some(format!("$HOME/{working_dir}"));
+                parsed_working_dir =
+                    Some(format!("{}/{}", self.remote_dir_for_server, working_dir));
             } else {
                 parsed_working_dir = Some(working_dir);
             }