diff --git a/spec/std/dir_spec.cr b/spec/std/dir_spec.cr
index 3772ff073b17..c521c2faa4a0 100644
--- a/spec/std/dir_spec.cr
+++ b/spec/std/dir_spec.cr
@@ -1,4 +1,5 @@
 require "./spec_helper"
+require "../support/env"
 
 private def unset_tempdir
   {% if flag?(:windows) %}
@@ -507,8 +508,41 @@ describe "Dir" do
     end
   end
 
-  it ".current" do
-    Dir.current.should eq(`#{{{ flag?(:win32) ? "cmd /c cd" : "pwd" }}}`.chomp)
+  describe ".current" do
+    it "matches shell" do
+      Dir.current.should eq(`#{{{ flag?(:win32) ? "cmd /c cd" : "pwd" }}}`.chomp)
+    end
+
+    # Skip spec on Windows due to weak support for symlinks and $PWD.
+    {% unless flag?(:win32) %}
+      it "follows $PWD" do
+        with_tempfile "current-pwd" do |path|
+          Dir.mkdir_p path
+          # Resolve any symbolic links in path caused by tmpdir being a link.
+          # For example on macOS, /tmp is a symlink to /private/tmp.
+          path = File.real_path(path)
+
+          target_path = File.join(path, "target")
+          link_path = File.join(path, "link")
+          Dir.mkdir_p target_path
+          File.symlink(target_path, link_path)
+
+          Dir.cd(link_path) do
+            with_env({"PWD" => nil}) do
+              Dir.current.should eq target_path
+            end
+
+            with_env({"PWD" => link_path}) do
+              Dir.current.should eq link_path
+            end
+
+            with_env({"PWD" => "/some/other/path"}) do
+              Dir.current.should eq target_path
+            end
+          end
+        end
+      end
+    {% end %}
   end
 
   describe ".tempdir" do
diff --git a/src/crystal/system/unix/dir.cr b/src/crystal/system/unix/dir.cr
index 79d5202dc9a5..e2faa53b4482 100644
--- a/src/crystal/system/unix/dir.cr
+++ b/src/crystal/system/unix/dir.cr
@@ -42,6 +42,15 @@ module Crystal::System::Dir
   end
 
   def self.current : String
+    # If $PWD is set and it matches the current path, use that.
+    # This helps telling apart symlinked paths.
+    if (pwd = ENV["PWD"]?) && pwd.starts_with?("/") &&
+       (pwd_info = ::Crystal::System::File.info?(pwd, follow_symlinks: true)) &&
+       (dot_info = ::Crystal::System::File.info?(".", follow_symlinks: true)) &&
+       pwd_info.same_file?(dot_info)
+      return pwd
+    end
+
     unless dir = LibC.getcwd(nil, 0)
       raise ::File::Error.from_errno("Error getting current directory", file: "./")
     end
diff --git a/src/dir.cr b/src/dir.cr
index 62c9e3c83b85..e69b147baf9d 100644
--- a/src/dir.cr
+++ b/src/dir.cr
@@ -176,7 +176,12 @@ class Dir
     @closed = true
   end
 
-  # Returns the current working directory.
+  # Returns an absolute path to the current working directory.
+  #
+  # The result is similar to the shell commands `pwd` (POSIX) and `cd` (Windows).
+  #
+  # On POSIX systems, it respects the environment value `$PWD` if available and
+  # if it points to the current working directory.
   def self.current : String
     Crystal::System::Dir.current
   end