diff --git a/.changeset/fix-directory-fetcher-absolute-path.md b/.changeset/fix-directory-fetcher-absolute-path.md
new file mode 100644
index 0000000000..692362ba09
--- /dev/null
+++ b/.changeset/fix-directory-fetcher-absolute-path.md
@@ -0,0 +1,6 @@
+---
+"@pnpm/fetching.directory-fetcher": patch
+"pnpm": patch
+---
+
+Fix installing a directory dependency (`file:<dir>`) from an absolute path on a different drive on Windows. The directory fetcher was joining the stored directory onto `lockfileDir`, which on Windows concatenates an absolute cross-drive path literally (`path.join('D:\\...', 'C:\\Users\\...')` → `'D:\\...\\C:\\Users\\...'`). Use `path.resolve` so absolute paths are respected. This surfaced as an ENOENT during `pnpm setup` in CI when `PNPM_HOME` and the OS temp directory were on different drives.
diff --git a/fetching/directory-fetcher/src/index.ts b/fetching/directory-fetcher/src/index.ts
index bf4b0f161d..29fe4521a8 100644
--- a/fetching/directory-fetcher/src/index.ts
+++ b/fetching/directory-fetcher/src/index.ts
@@ -24,7 +24,10 @@ export function createDirectoryFetcher (
   const fetchFromDir = opts?.includeOnlyPackageFiles ? fetchPackageFilesFromDir : fetchAllFilesFromDir.bind(null, readFileStat)
 
   const directoryFetcher: DirectoryFetcher = (cafs, resolution, opts) => {
-    const dir = path.join(opts.lockfileDir, resolution.directory)
+    // Use path.resolve so absolute directories (e.g. cross-drive Windows paths
+    // stored by `file:` deps) are respected instead of being concatenated
+    // onto lockfileDir.
+    const dir = path.resolve(opts.lockfileDir, resolution.directory)
     return fetchFromDir(dir)
   }
 
diff --git a/fetching/directory-fetcher/test/index.ts b/fetching/directory-fetcher/test/index.ts
index 087006de72..9c213babd6 100644
--- a/fetching/directory-fetcher/test/index.ts
+++ b/fetching/directory-fetcher/test/index.ts
@@ -111,6 +111,26 @@ test('fetch does not fail on package with broken symlink', async () => {
   expect(debug).toHaveBeenCalledWith({ brokenSymlink: path.resolve('not-exists') })
 })
 
+test('fetch respects absolute directory regardless of lockfileDir', async () => {
+  const absDir = f.find('simple-pkg')
+  const fetcher = createDirectoryFetcher({ includeOnlyPackageFiles: true })
+
+  // lockfileDir is unrelated to the directory being fetched. When the
+  // stored directory is absolute (e.g. cross-drive `file:` deps on Windows)
+  // the fetcher must use the absolute path as-is rather than joining it
+  // onto lockfileDir.
+  // eslint-disable-next-line
+  const fetchResult = await fetcher.directory({} as any, {
+    directory: absDir,
+    type: 'directory',
+  }, {
+    lockfileDir: f.find('no-manifest'),
+  })
+
+  expect(fetchResult.local).toBe(true)
+  expect(fetchResult.filesMap.get('package.json')).toBe(path.join(absDir, 'package.json'))
+})
+
 describe('fetch resolves symlinked files to their real locations', () => {
   const indexJsPath = path.join(f.find('no-manifest'), 'index.js')
   const srcPath = f.find('simple-pkg')