diff --git a/src/cargo/core/workspace.rs b/src/cargo/core/workspace.rs
index 7f7114131fe..c13163af8b9 100644
--- a/src/cargo/core/workspace.rs
+++ b/src/cargo/core/workspace.rs
@@ -381,7 +381,21 @@ impl<'cfg> Workspace<'cfg> {
     pub fn target_dir(&self) -> Filesystem {
         self.target_dir
             .clone()
-            .unwrap_or_else(|| Filesystem::new(self.root().join("target")))
+            .unwrap_or_else(|| self.default_target_dir())
+    }
+
+    fn default_target_dir(&self) -> Filesystem {
+        if self.root_maybe().is_embedded() {
+            let hash = crate::util::hex::short_hash(&self.root_manifest().to_string_lossy());
+            let mut rel_path = PathBuf::new();
+            rel_path.push("target");
+            rel_path.push(&hash[0..2]);
+            rel_path.push(&hash[2..]);
+
+            self.config().home().join(rel_path)
+        } else {
+            Filesystem::new(self.root().join("target"))
+        }
     }
 
     /// Returns the root `[replace]` section of this workspace.
diff --git a/tests/testsuite/script.rs b/tests/testsuite/script.rs
index d4f343be644..0b3ace7c503 100644
--- a/tests/testsuite/script.rs
+++ b/tests/testsuite/script.rs
@@ -35,7 +35,7 @@ args: []
 [WARNING] `package.edition` is unspecifiead, defaulting to `2021`
 [COMPILING] echo v0.0.0 ([ROOT]/foo)
 [FINISHED] dev [unoptimized + debuginfo] target(s) in [..]s
-[RUNNING] `[..]debug/echo[EXE]`
+[RUNNING] `[..]/debug/echo[EXE]`
 ",
         )
         .run();
@@ -537,3 +537,28 @@ fn main() {
         )
         .run();
 }
+
+#[cargo_test]
+fn implicit_target_dir() {
+    let script = ECHO_SCRIPT;
+    let p = cargo_test_support::project()
+        .file("script.rs", script)
+        .build();
+
+    p.cargo("-Zscript script.rs")
+        .masquerade_as_nightly_cargo(&["script"])
+        .with_stdout(
+            r#"bin: [ROOT]/home/.cargo/target/[..]/debug/script[EXE]
+args: []
+"#,
+        )
+        .with_stderr(
+            "\
+[WARNING] `package.edition` is unspecifiead, defaulting to `2021`
+[COMPILING] script v0.0.0 ([ROOT]/foo)
+[FINISHED] dev [unoptimized + debuginfo] target(s) in [..]s
+[RUNNING] `[ROOT]/home/.cargo/target/[..]/debug/script[EXE]`
+",
+        )
+        .run();
+}