diff --git a/api/internal/plugins/fnplugin/fnplugin.go b/api/internal/plugins/fnplugin/fnplugin.go
index 76be4b07606..5ee53a282a3 100644
--- a/api/internal/plugins/fnplugin/fnplugin.go
+++ b/api/internal/plugins/fnplugin/fnplugin.go
@@ -187,6 +187,7 @@ func (p *FnPlugin) invokePlugin(input []byte) ([]byte, error) {
 	p.runFns.Input = bytes.NewReader(input)
 	p.runFns.Functions = append(p.runFns.Functions, functionConfig)
 	p.runFns.Output = &ouputBuffer
+	p.runFns.WorkDir = p.h.WorkingDir()
 
 	err = p.runFns.Execute()
 	if err != nil {
diff --git a/api/internal/plugins/loader/loader.go b/api/internal/plugins/loader/loader.go
index 7bcce431522..465d942fd4f 100644
--- a/api/internal/plugins/loader/loader.go
+++ b/api/internal/plugins/loader/loader.go
@@ -48,10 +48,10 @@ func (l *Loader) Config() *types.PluginConfig {
 }
 
 func (l *Loader) LoadGenerators(
-	ldr ifc.Loader, v ifc.Validator, rm resmap.ResMap) ([]resmap.Generator, error) {
+	ldr ifc.Loader, v ifc.Validator, rm resmap.ResMap, workDir string) ([]resmap.Generator, error) {
 	var result []resmap.Generator
 	for _, res := range rm.Resources() {
-		g, err := l.LoadGenerator(ldr, v, res)
+		g, err := l.LoadGenerator(ldr, v, res, workDir)
 		if err != nil {
 			return nil, err
 		}
@@ -61,8 +61,8 @@ func (l *Loader) LoadGenerators(
 }
 
 func (l *Loader) LoadGenerator(
-	ldr ifc.Loader, v ifc.Validator, res *resource.Resource) (resmap.Generator, error) {
-	c, err := l.loadAndConfigurePlugin(ldr, v, res)
+	ldr ifc.Loader, v ifc.Validator, res *resource.Resource, workDir string) (resmap.Generator, error) {
+	c, err := l.loadAndConfigurePlugin(ldr, v, res, workDir)
 	if err != nil {
 		return nil, err
 	}
@@ -74,10 +74,10 @@ func (l *Loader) LoadGenerator(
 }
 
 func (l *Loader) LoadTransformers(
-	ldr ifc.Loader, v ifc.Validator, rm resmap.ResMap) ([]resmap.Transformer, error) {
+	ldr ifc.Loader, v ifc.Validator, rm resmap.ResMap, workDir string) ([]resmap.Transformer, error) {
 	var result []resmap.Transformer
 	for _, res := range rm.Resources() {
-		t, err := l.LoadTransformer(ldr, v, res)
+		t, err := l.LoadTransformer(ldr, v, res, workDir)
 		if err != nil {
 			return nil, err
 		}
@@ -87,8 +87,8 @@ func (l *Loader) LoadTransformers(
 }
 
 func (l *Loader) LoadTransformer(
-	ldr ifc.Loader, v ifc.Validator, res *resource.Resource) (resmap.Transformer, error) {
-	c, err := l.loadAndConfigurePlugin(ldr, v, res)
+	ldr ifc.Loader, v ifc.Validator, res *resource.Resource, workDir string) (resmap.Transformer, error) {
+	c, err := l.loadAndConfigurePlugin(ldr, v, res, workDir)
 	if err != nil {
 		return nil, err
 	}
@@ -158,11 +158,12 @@ func isBuiltinPlugin(res *resource.Resource) bool {
 func (l *Loader) loadAndConfigurePlugin(
 	ldr ifc.Loader,
 	v ifc.Validator,
-	res *resource.Resource) (c resmap.Configurable, err error) {
+	res *resource.Resource,
+	workDir string) (c resmap.Configurable, err error) {
 	if isBuiltinPlugin(res) {
 		switch l.pc.BpLoadingOptions {
 		case types.BploLoadFromFileSys:
-			c, err = l.loadPlugin(res)
+			c, err = l.loadPlugin(res, workDir)
 		case types.BploUseStaticallyLinked:
 			// Instead of looking for and loading a .so file,
 			// instantiate the plugin from a generated factory
@@ -177,7 +178,7 @@ func (l *Loader) loadAndConfigurePlugin(
 	} else {
 		switch l.pc.PluginRestrictions {
 		case types.PluginRestrictionsNone:
-			c, err = l.loadPlugin(res)
+			c, err = l.loadPlugin(res, workDir)
 		case types.PluginRestrictionsBuiltinsOnly:
 			err = types.NewErrOnlyBuiltinPluginsAllowed(res.OrgId().Kind)
 		default:
@@ -212,9 +213,10 @@ func (l *Loader) makeBuiltinPlugin(r resid.Gvk) (resmap.Configurable, error) {
 	return nil, errors.Errorf("unable to load builtin %s", r)
 }
 
-func (l *Loader) loadPlugin(res *resource.Resource) (resmap.Configurable, error) {
+func (l *Loader) loadPlugin(res *resource.Resource, workDir string) (resmap.Configurable, error) {
 	spec := fnplugin.GetFunctionSpec(res)
 	if spec != nil {
+		l.pc.FnpLoadingOptions.WorkingDir = workDir
 		return fnplugin.NewFnPlugin(&l.pc.FnpLoadingOptions), nil
 	}
 	return l.loadExecOrGoPlugin(res.OrgId())
diff --git a/api/internal/plugins/loader/loader_test.go b/api/internal/plugins/loader/loader_test.go
index c5e30b808bb..363d79699c0 100644
--- a/api/internal/plugins/loader/loader_test.go
+++ b/api/internal/plugins/loader/loader_test.go
@@ -72,7 +72,7 @@ func TestLoader(t *testing.T) {
 			t.Fatal("expect non-nil loader")
 		}
 		_, err = pLdr.LoadGenerators(
-			fLdr, valtest_test.MakeFakeValidator(), generatorConfigs)
+			fLdr, valtest_test.MakeFakeValidator(), generatorConfigs, "")
 		if err != nil {
 			t.Fatal(err)
 		}
diff --git a/api/internal/target/kusttarget.go b/api/internal/target/kusttarget.go
index f601b42530b..6aa8e4def06 100644
--- a/api/internal/target/kusttarget.go
+++ b/api/internal/target/kusttarget.go
@@ -21,7 +21,6 @@ import (
 	"sigs.k8s.io/kustomize/api/resmap"
 	"sigs.k8s.io/kustomize/api/resource"
 	"sigs.k8s.io/kustomize/api/types"
-	"sigs.k8s.io/kustomize/kyaml/kio/kioutil"
 	"sigs.k8s.io/kustomize/kyaml/openapi"
 	"sigs.k8s.io/yaml"
 )
@@ -263,12 +262,7 @@ func (kt *KustTarget) configureExternalGenerators() ([]resmap.Generator, error)
 	if err != nil {
 		return nil, err
 	}
-	m := ra.ResMap()
-	err = m.AnnotateAll(kioutil.WorkingDirAnnotation, kt.ldr.Root())
-	if err != nil {
-		return nil, err
-	}
-	return kt.pLdr.LoadGenerators(kt.ldr, kt.validator, m)
+	return kt.pLdr.LoadGenerators(kt.ldr, kt.validator, ra.ResMap(), kt.ldr.Root())
 }
 
 func (kt *KustTarget) runTransformers(ra *accumulator.ResAccumulator) error {
@@ -305,12 +299,7 @@ func (kt *KustTarget) configureExternalTransformers(transformers []string) ([]re
 	if err != nil {
 		return nil, err
 	}
-	m := ra.ResMap()
-	err = m.AnnotateAll(kioutil.WorkingDirAnnotation, kt.ldr.Root())
-	if err != nil {
-		return nil, err
-	}
-	return kt.pLdr.LoadTransformers(kt.ldr, kt.validator, m)
+	return kt.pLdr.LoadTransformers(kt.ldr, kt.validator, ra.ResMap(), kt.ldr.Root())
 }
 
 func (kt *KustTarget) runValidators(ra *accumulator.ResAccumulator) error {
diff --git a/api/resmap/resmap.go b/api/resmap/resmap.go
index 7c0c2ea8021..8327543ae2b 100644
--- a/api/resmap/resmap.go
+++ b/api/resmap/resmap.go
@@ -66,6 +66,10 @@ func (c *PluginHelpers) Validator() ifc.Validator {
 	return c.v
 }
 
+func (c *PluginHelpers) WorkingDir() string {
+	return c.pc.FnpLoadingOptions.WorkingDir
+}
+
 type GeneratorPlugin interface {
 	Generator
 	Configurable
diff --git a/api/testutils/kusttest/harnessenhanced.go b/api/testutils/kusttest/harnessenhanced.go
index fa33f5db84c..4f1eec487af 100644
--- a/api/testutils/kusttest/harnessenhanced.go
+++ b/api/testutils/kusttest/harnessenhanced.go
@@ -161,7 +161,7 @@ func (th *HarnessEnhanced) LoadAndRunGeneratorWithBuildAnnotations(
 		th.t.Fatalf("Err: %v", err)
 	}
 	g, err := th.pl.LoadGenerator(
-		th.ldr, valtest_test.MakeFakeValidator(), res)
+		th.ldr, valtest_test.MakeFakeValidator(), res, "")
 	if err != nil {
 		th.t.Fatalf("Err: %v", err)
 	}
@@ -218,7 +218,7 @@ func (th *HarnessEnhanced) RunTransformerFromResMap(
 		th.t.Fatalf("Err: %v", err)
 	}
 	g, err := th.pl.LoadTransformer(
-		th.ldr, valtest_test.MakeFakeValidator(), transConfig)
+		th.ldr, valtest_test.MakeFakeValidator(), transConfig, "")
 	if err != nil {
 		return nil, err
 	}
diff --git a/api/types/pluginrestrictions.go b/api/types/pluginrestrictions.go
index b1ab2221f69..88b03b3f5bd 100644
--- a/api/types/pluginrestrictions.go
+++ b/api/types/pluginrestrictions.go
@@ -57,4 +57,6 @@ type FnPluginLoadingOptions struct {
 	Env []string
 	// Run as uid and gid of the command executor
 	AsCurrentUser bool
+	// Run in this working directory
+	WorkingDir string
 }
diff --git a/kyaml/kio/kioutil/kioutil.go b/kyaml/kio/kioutil/kioutil.go
index 16155e4b266..993cdfd848a 100644
--- a/kyaml/kio/kioutil/kioutil.go
+++ b/kyaml/kio/kioutil/kioutil.go
@@ -25,10 +25,6 @@ const (
 
 	// SeqIndentAnnotation records the sequence nodes indentation of the input resource
 	SeqIndentAnnotation AnnotationKey = "internal.config.kubernetes.io/seqindent"
-
-	// WorkingDirAnnotation records the directory of the kustomization that
-	// refers to the resource
-	WorkingDirAnnotation AnnotationKey = "internal.config.kubernetes.io/working-dir"
 )
 
 func GetFileAnnotations(rn *yaml.RNode) (string, string, error) {
diff --git a/kyaml/runfn/runfn.go b/kyaml/runfn/runfn.go
index 7904bf434f1..f85788dfb9e 100644
--- a/kyaml/runfn/runfn.go
+++ b/kyaml/runfn/runfn.go
@@ -101,6 +101,10 @@ type RunFns struct {
 	// If it is true, the empty result will be provided as input to the next
 	// function in the list.
 	ContinueOnEmptyResult bool
+
+	// WorkDir specifies which working directory an exec function should run in.
+	// If this is empty, fall back to the current working directory.
+	WorkDir string
 }
 
 // Execute runs the command
@@ -507,13 +511,13 @@ func (r *RunFns) ffp(spec runtimeutil.FunctionSpec, api *yaml.RNode, currentUser
 	}
 
 	if r.EnableExec && spec.Exec.Path != "" {
-		wd, err := getWorkingDirectory(api)
+		wd, err := getWorkingDirectory(r.WorkDir)
 		if err != nil {
 			return nil, err
 		}
 
 		ef := &exec.Filter{
-			Path: spec.Exec.Path,
+			Path:       spec.Exec.Path,
 			WorkingDir: wd,
 		}
 
@@ -527,10 +531,8 @@ func (r *RunFns) ffp(spec runtimeutil.FunctionSpec, api *yaml.RNode, currentUser
 	return nil, nil
 }
 
-func getWorkingDirectory(api *yaml.RNode) (string, error) {
-	annotations := api.GetAnnotations()
-	wd, ok := annotations[kioutil.WorkingDirAnnotation]
-	if !ok {
+func getWorkingDirectory(wd string) (string, error) {
+	if wd == "" {
 		return os.Getwd()
 	}