diff --git a/CHANGELOG.md b/CHANGELOG.md
index fcfb20ccd..cf21dc65e 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -26,6 +26,10 @@ Given a version number `MAJOR.MINOR.PATCH`, we increment the:
 
 - Add `terramate create --wants ... --wanted-by ...` flags for configuring the `stack.wants` and `stack.wanted_by` attributes, respectively.
 
+### Fixed
+
+- Fix the cleaning up of orphaned files in the `terramate generate` to respect the `-C <dir>` flag.
+
 ## v0.10.6
 
 ### Fixed
diff --git a/generate/generate.go b/generate/generate.go
index 1e4c36aac..59ee56f1f 100644
--- a/generate/generate.go
+++ b/generate/generate.go
@@ -194,7 +194,7 @@ func Do(
 	stackReport := doStackGeneration(root, tree, vendorDir, vendorRequests)
 	rootReport := doRootGeneration(root, tree)
 	report := mergeReports(stackReport, rootReport)
-	return cleanupOrphaned(root, report)
+	return cleanupOrphaned(root, tree, report)
 }
 
 func doStackGeneration(
@@ -1339,21 +1339,23 @@ func loadStackCodeCfgs(
 	return genfilesConfigs, nil
 }
 
-func cleanupOrphaned(root *config.Root, report Report) Report {
+func cleanupOrphaned(root *config.Root, target *config.Tree, report Report) Report {
 	logger := log.With().
 		Str("action", "generate.cleanupOrphaned()").
+		Stringer("dir", target.Dir()).
 		Logger()
-	// If the root of the tree is a stack then there is nothing to do
-	// since there can't be any orphans (the root parent stack owns
-	// the entire project).
-	if root.Tree().IsStack() {
-		logger.Debug().Msg("project root is a stack, nothing to do")
+
+	defer report.sort()
+
+	// If the target tree is a stack then there is nothing to do
+	// as it was already generated at this point.
+	if target.IsStack() {
 		return report
 	}
 
 	logger.Debug().Msg("listing orphaned generated files")
 
-	orphanedGenFiles, err := ListStackGenFiles(root, root.HostDir())
+	orphanedGenFiles, err := ListStackGenFiles(root, target.HostDir())
 	if err != nil {
 		report.CleanupErr = err
 		return report
@@ -1363,8 +1365,8 @@ func cleanupOrphaned(root *config.Root, report Report) Report {
 	deleteFailures := map[project.Path]*errors.List{}
 
 	for _, genfile := range orphanedGenFiles {
-		genfileAbspath := filepath.Join(root.HostDir(), genfile)
-		dir := project.NewPath("/" + filepath.ToSlash(filepath.Dir(genfile)))
+		genfileAbspath := filepath.Join(target.HostDir(), genfile)
+		dir := project.PrjAbsPath(root.HostDir(), filepath.Dir(genfileAbspath))
 		if err := os.Remove(genfileAbspath); err != nil {
 			if deleteFailures[dir] == nil {
 				deleteFailures[dir] = errors.L()
@@ -1402,7 +1404,5 @@ func cleanupOrphaned(root *config.Root, report Report) Report {
 			Deleted: deletedFiles,
 		})
 	}
-
-	report.sort()
 	return report
 }
diff --git a/generate/generate_test.go b/generate/generate_test.go
index 6fd43b3e9..65870d207 100644
--- a/generate/generate_test.go
+++ b/generate/generate_test.go
@@ -799,6 +799,97 @@ func TestGenerateCleanup(t *testing.T) {
 				},
 			},
 		},
+		{
+			name: "workdir is respected in cleanup",
+			layout: []string{
+				"s:stacks/stack-1",
+				"s:stacks/stack-2",
+				"s:stacks/stack-1/stack-1-a",
+				"s:stacks/stack-1/stack-1-b",
+				"s:stacks/stack-3", // only files here will be cleaned up.
+				genfile("dir/orphan.hcl"),
+				genfile("stacks/stack-1/a.hcl"),
+				genfile("stacks/stack-1/subdir/b.hcl"),
+				genfile("stacks/stack-1/subdir/dir/c.hcl"),
+				genfile("stacks/stack-1/stack-1-a/e.hcl"),
+				genfile("stacks/stack-1/stack-1-a/subdir/f.hcl"),
+				genfile("stacks/stack-1/stack-1-a/subdir/dir/g.hcl"),
+				genfile("stacks/stack-1/stack-1-b/h.hcl"),
+				genfile("stacks/stack-2/d.hcl"),
+				genfile("stacks/stack-3/x.hcl"),
+				genfile("stacks/stack-3/subdir/y.hcl"),
+				genfile("stacks/stack-3/subdir/dir/z.hcl"),
+			},
+			fromdir: "/stacks/stack-3",
+			wantReport: generate.Report{
+				Successes: []generate.Result{
+					{
+						Dir: project.NewPath("/stacks/stack-3"),
+						Deleted: []string{
+							"subdir/dir/z.hcl",
+							"subdir/y.hcl",
+							"x.hcl",
+						},
+					},
+				},
+			},
+			want: []generatedFile{
+				{
+					dir: "/stacks/stack-1",
+					files: map[string]fmt.Stringer{
+						"a.hcl": Doc(),
+					},
+				},
+				{
+					dir: "/stacks/stack-1/stack-1-a",
+					files: map[string]fmt.Stringer{
+						"e.hcl": Doc(),
+					},
+				},
+				{
+					dir: "/stacks/stack-1/stack-1-a/subdir/dir",
+					files: map[string]fmt.Stringer{
+						"g.hcl": Doc(),
+					},
+				},
+				{
+					dir: "/stacks/stack-1/stack-1-a/subdir",
+					files: map[string]fmt.Stringer{
+						"f.hcl": Doc(),
+					},
+				},
+				{
+					dir: "/stacks/stack-1/stack-1-b",
+					files: map[string]fmt.Stringer{
+						"h.hcl": Doc(),
+					},
+				},
+				{
+					dir: "/stacks/stack-1/subdir",
+					files: map[string]fmt.Stringer{
+						"b.hcl": Doc(),
+					},
+				},
+				{
+					dir: "/stacks/stack-1/subdir/dir",
+					files: map[string]fmt.Stringer{
+						"c.hcl": Doc(),
+					},
+				},
+				{
+					dir: "/stacks/stack-2",
+					files: map[string]fmt.Stringer{
+						"d.hcl": Doc(),
+					},
+				},
+				{
+					dir: "/dir",
+					files: map[string]fmt.Stringer{
+						"orphan.hcl": Doc(),
+					},
+				},
+			},
+		},
 		{
 			name: "cleanup ignores dotdirs outside stacks",
 			layout: []string{