diff --git a/packages/vitest/src/node/core.ts b/packages/vitest/src/node/core.ts
index 597681811827..46f9e0f80d97 100644
--- a/packages/vitest/src/node/core.ts
+++ b/packages/vitest/src/node/core.ts
@@ -315,23 +315,22 @@ export class Vitest {
 
     const cwd = process.cwd()
 
-    const projects: (() => Promise<WorkspaceProject>)[] = []
+    const projects: WorkspaceProject[] = []
 
     try {
       // we have to resolve them one by one because CWD should depend on the project
       for (const filepath of filteredWorkspaces) {
         if (this.server.config.configFile === filepath) {
           const project = await this.createCoreProject()
-          projects.push(() => Promise.resolve(project))
+          projects.push(project)
           continue
         }
         const dir = filepath.endsWith('/') ? filepath.slice(0, -1) : dirname(filepath)
         if (isMainThread)
           process.chdir(dir)
-        // this just resolves the config, later we also wait when the server is resolved,
-        // but we can do that in parallel because it doesn't depend on process.cwd()
-        // this is strictly a performance optimization so we don't need to wait for server to start
-        projects.push(await initializeProject(filepath, this, { workspaceConfigPath, test: cliOverrides }))
+        projects.push(
+          await initializeProject(filepath, this, { workspaceConfigPath, test: cliOverrides }),
+        )
       }
     }
     finally {
@@ -339,7 +338,7 @@ export class Vitest {
         process.chdir(cwd)
     }
 
-    const projectPromises: Promise<() => Promise<WorkspaceProject>>[] = []
+    const projectPromises: Promise<WorkspaceProject>[] = []
 
     projectsOptions.forEach((options, index) => {
       // we can resolve these in parallel because process.cwd() is not changed
@@ -349,14 +348,10 @@ export class Vitest {
     if (!projects.length && !projectPromises.length)
       return [await this.createCoreProject()]
 
-    const resolvedProjectsReceivers = [
+    const resolvedProjects = await Promise.all([
       ...projects,
       ...await Promise.all(projectPromises),
-    ]
-    // we need to wait when the server is resolved, we can do that in parallel
-    const resolvedProjects = await Promise.all(
-      resolvedProjectsReceivers.map(receiver => receiver()),
-    )
+    ])
     const names = new Set<string>()
 
     for (const project of resolvedProjects) {
diff --git a/packages/vitest/src/node/workspace.ts b/packages/vitest/src/node/workspace.ts
index 8b8a52af1551..57f838b0b994 100644
--- a/packages/vitest/src/node/workspace.ts
+++ b/packages/vitest/src/node/workspace.ts
@@ -12,7 +12,6 @@ import { deepMerge } from '../utils'
 import type { Typechecker } from '../typecheck/typechecker'
 import type { BrowserProvider } from '../types/browser'
 import { getBrowserProvider } from '../integrations/browser'
-import { createDefer } from '../public/utils'
 import { isBrowserEnabled, resolveConfig } from './config'
 import { WorkspaceVitestPlugin } from './plugins/workspace'
 import { createViteServer } from './vite'
@@ -40,40 +39,22 @@ export async function initializeProject(workspacePath: string | number, ctx: Vit
       : workspacePath.endsWith('/') ? workspacePath : dirname(workspacePath)
   )
 
-  return new Promise<() => Promise<WorkspaceProject>>((resolve, reject) => {
-    const resolution = createDefer<WorkspaceProject>()
-    let configResolved = false
-    const config: ViteInlineConfig = {
-      ...options,
-      root,
-      logLevel: 'error',
-      configFile,
-      // this will make "mode": "test" | "benchmark" inside defineConfig
-      mode: options.test?.mode || options.mode || ctx.config.mode,
-      plugins: [
-        {
-          name: 'vitest:workspace:resolve',
-          configResolved() {
-            configResolved = true
-            resolve(() => resolution)
-          },
-        },
-        ...options.plugins || [],
-        WorkspaceVitestPlugin(project, { ...options, root, workspacePath }),
-      ],
-    }
+  const config: ViteInlineConfig = {
+    ...options,
+    root,
+    logLevel: 'error',
+    configFile,
+    // this will make "mode": "test" | "benchmark" inside defineConfig
+    mode: options.test?.mode || options.mode || ctx.config.mode,
+    plugins: [
+      ...options.plugins || [],
+      WorkspaceVitestPlugin(project, { ...options, root, workspacePath }),
+    ],
+  }
 
-    createViteServer(config)
-      .then(() => resolution.resolve(project))
-      .catch((err) => {
-        if (configResolved)
-          resolution.reject(err)
-        else
-          reject(err)
-      })
+  await createViteServer(config)
 
-    return project
-  })
+  return project
 }
 
 export class WorkspaceProject {
diff --git a/test/workspaces/cwdPlugin.d.ts b/test/workspaces/cwdPlugin.d.ts
new file mode 100644
index 000000000000..9ebe0c31f11a
--- /dev/null
+++ b/test/workspaces/cwdPlugin.d.ts
@@ -0,0 +1,3 @@
+import type { Plugin } from 'vite'
+
+export function cwdPlugin(name: string): Plugin
diff --git a/test/workspaces/cwdPlugin.js b/test/workspaces/cwdPlugin.js
new file mode 100644
index 000000000000..acedf5d214ae
--- /dev/null
+++ b/test/workspaces/cwdPlugin.js
@@ -0,0 +1,13 @@
+// @ts-check
+
+export function cwdPlugin(name) {
+  return {
+    name: `vitest:test:workspace-${name}`,
+    configResolved() {
+      process.env[`${name}_CWD_CONFIG`] = process.cwd()
+    },
+    configureServer() {
+      process.env[`${name}_CWD_SERVER`] = process.cwd()
+    },
+  }
+}
diff --git a/test/workspaces/globalTest.ts b/test/workspaces/globalTest.ts
index 5267232fb7e2..3ad6b6a5421e 100644
--- a/test/workspaces/globalTest.ts
+++ b/test/workspaces/globalTest.ts
@@ -33,8 +33,8 @@ export async function teardown() {
   try {
     assert.ok(results.success)
     assert.equal(results.numTotalTestSuites, 28)
-    assert.equal(results.numTotalTests, 30)
-    assert.equal(results.numPassedTests, 30)
+    assert.equal(results.numTotalTests, 31)
+    assert.equal(results.numPassedTests, 31)
 
     const shared = results.testResults.filter((r: any) => r.name.includes('space_shared/test.spec.ts'))
 
diff --git a/test/workspaces/space_1/test/env-injected.spec.ts b/test/workspaces/space_1/test/env-injected.spec.ts
index 9ac381fa72de..6fb705198d2d 100644
--- a/test/workspaces/space_1/test/env-injected.spec.ts
+++ b/test/workspaces/space_1/test/env-injected.spec.ts
@@ -1,3 +1,4 @@
+import { resolve } from 'node:path'
 import { expect, test } from 'vitest'
 
 declare global {
@@ -23,3 +24,13 @@ test('env variable is assigned', () => {
   expect(process.env.CONFIG_LOCAL).toBe('local')
   expect(process.env.CONFIG_OVERRIDE).toBe('local')
 })
+
+test('cwd is resolved correctly', () => {
+  const spaceRoot = resolve(import.meta.dirname, '..')
+  const rootPath = resolve(spaceRoot, '..')
+
+  expect(process.env.ROOT_CWD_CONFIG).toBe(rootPath)
+  expect(process.env.ROOT_CWD_SERVER).toBe(rootPath)
+  expect(process.env.SPACE_2_CWD_CONFIG).toBe(spaceRoot)
+  expect(process.env.SPACE_2_CWD_SERVER).toBe(spaceRoot)
+})
diff --git a/test/workspaces/space_1/vite.config.ts b/test/workspaces/space_1/vite.config.ts
index 2423c17577bd..2280fe0ef5c3 100644
--- a/test/workspaces/space_1/vite.config.ts
+++ b/test/workspaces/space_1/vite.config.ts
@@ -1,7 +1,9 @@
 import { defineProject } from 'vitest/config'
+import { cwdPlugin } from '../cwdPlugin'
 
 export default defineProject({
   envPrefix: ['VITE_', 'CUSTOM_'],
+  plugins: [cwdPlugin('SPACE_2')],
   define: {
     __DEV__: 'true',
   },
diff --git a/test/workspaces/vitest.config.ts b/test/workspaces/vitest.config.ts
index 5377d72a8ebf..52540c401d50 100644
--- a/test/workspaces/vitest.config.ts
+++ b/test/workspaces/vitest.config.ts
@@ -1,4 +1,5 @@
 import { defineConfig } from 'vitest/config'
+import { cwdPlugin } from './cwdPlugin.js'
 
 if (process.env.TEST_WATCH) {
   // Patch stdin on the process so that we can fake it to seem like a real interactive terminal and pass the TTY checks
@@ -8,6 +9,7 @@ if (process.env.TEST_WATCH) {
 
 export default defineConfig({
   envPrefix: ['VITE_', 'CUSTOM_', 'ROOT_'],
+  plugins: [cwdPlugin('ROOT')],
   test: {
     coverage: {
       enabled: true,