diff --git a/cmd/xc/interactive.go b/cmd/xc/interactive.go
index 2993f6e..2dabac6 100644
--- a/cmd/xc/interactive.go
+++ b/cmd/xc/interactive.go
@@ -4,6 +4,7 @@ import (
 	"context"
 	"fmt"
 	"io"
+	"os"
 	"strings"
 
 	"github.com/charmbracelet/bubbles/list"
@@ -129,7 +130,11 @@ func interactivePicker(ctx context.Context, tasks []models.Task, dir string) err
 	if task == nil {
 		return nil
 	}
-	runner, err := run.NewRunner(tasks, dir)
+	cwd, err := os.Getwd()
+	if err != nil {
+		return fmt.Errorf("error getting current directory: %w", err)
+	}
+	runner, err := run.NewRunner(tasks, dir, cwd)
 	if err != nil {
 		return fmt.Errorf("xc parse error: %w", err)
 	}
diff --git a/cmd/xc/main.go b/cmd/xc/main.go
index 2c4f6ba..0c228e2 100644
--- a/cmd/xc/main.go
+++ b/cmd/xc/main.go
@@ -254,7 +254,11 @@ func runMain() error {
 		return nil
 	}
 	// xc task1
-	runner, err := run.NewRunner(tasks, dir)
+	cwd, err := os.Getwd()
+	if err != nil {
+		return fmt.Errorf("error getting current directory: %w", err)
+	}
+	runner, err := run.NewRunner(tasks, dir, cwd)
 	if err != nil {
 		return fmt.Errorf("xc parse error: %w", err)
 	}
diff --git a/doc/content/task-syntax/directory.md b/doc/content/task-syntax/directory.md
index 1b19b9a..189b598 100644
--- a/doc/content/task-syntax/directory.md
+++ b/doc/content/task-syntax/directory.md
@@ -21,3 +21,16 @@ directory: ./src
 sh build.sh
 ```
 ````
+
+## Using the caller's working directory
+
+By default, tasks run in the directory where the README file is located, even if `xc` is invoked from a subdirectory. Setting `directory` to `$PWD` will instead run the task in the directory where `xc` was invoked.
+
+````markdown
+## Tasks
+### List
+directory: $PWD
+```
+ls
+```
+````
diff --git a/run/run.go b/run/run.go
index 81ea34b..17171a9 100644
--- a/run/run.go
+++ b/run/run.go
@@ -25,6 +25,7 @@ type Runner struct {
 	scriptRunner ScriptRunner
 	tasks        models.Tasks
 	dir          string
+	cwd          string
 	alreadyRan   map[string]bool
 	alreadyRanMu sync.Mutex
 	trace        bool
@@ -38,7 +39,7 @@ type Runner struct {
 //
 // NewRunner will return an error in the case that Dependent tasks are cyclical,
 // invalid or at a larger depth than 50.
-func NewRunner(ts models.Tasks, dir string) (runner Runner, err error) {
+func NewRunner(ts models.Tasks, dir, cwd string) (runner Runner, err error) {
 	trace := !slices.Contains(
 		[]string{"false", "no", "0"},
 		strings.ToLower(os.Getenv("XC_TRACE")))
@@ -46,6 +47,7 @@ func NewRunner(ts models.Tasks, dir string) (runner Runner, err error) {
 		scriptRunner: newInterpreter(),
 		tasks:        ts,
 		dir:          dir,
+		cwd:          cwd,
 		alreadyRan:   map[string]bool{},
 		trace:        trace,
 	}
@@ -218,6 +220,9 @@ func (r *Runner) getExecutionPath(task models.Task) string {
 	if task.Dir == "" {
 		return r.dir
 	}
+	if task.Dir == "$PWD" {
+		return r.cwd
+	}
 	if filepath.IsAbs(task.Dir) {
 		return task.Dir
 	}
diff --git a/run/run_test.go b/run/run_test.go
index 702e698..55f67bf 100644
--- a/run/run_test.go
+++ b/run/run_test.go
@@ -182,7 +182,7 @@ func TestRunAsync(t *testing.T) {
 			for i := range tt.tasks {
 				tt.tasks[i].DepsBehaviour = models.DependencyBehaviourAsync
 			}
-			runner, err := NewRunner(tt.tasks, "")
+			runner, err := NewRunner(tt.tasks, "", "")
 			if (err != nil) != tt.expectedParseError {
 				t.Fatalf("expected error %v, got %v", tt.expectedParseError, err)
 			}
@@ -206,7 +206,7 @@ func TestRun(t *testing.T) {
 	for _, tt := range testCases() {
 		tt := tt
 		t.Run(tt.name, func(t *testing.T) {
-			runner, err := NewRunner(tt.tasks, "")
+			runner, err := NewRunner(tt.tasks, "", "")
 			if (err != nil) != tt.expectedParseError {
 				t.Fatalf("expected error %v, got %v", tt.expectedParseError, err)
 			}
@@ -234,7 +234,7 @@ func TestRunWithInputs(t *testing.T) {
 				Script: "somecmd",
 				Inputs: []string{"FOO"},
 			},
-		}, "")
+		}, "", "")
 		if err != nil {
 			t.Fatal(err)
 		}
@@ -250,7 +250,7 @@ func TestRunWithInputs(t *testing.T) {
 				Script: "somecmd",
 				Inputs: []string{"FOO"},
 			},
-		}, "")
+		}, "", "")
 		if err != nil {
 			t.Fatal(err)
 		}
@@ -271,7 +271,7 @@ func TestRunWithInputs(t *testing.T) {
 				Script: "somecmd",
 				Inputs: []string{"FOO"},
 			},
-		}, "")
+		}, "", "")
 		if err != nil {
 			t.Fatal(err)
 		}
@@ -317,7 +317,7 @@ func TestOptionalInputPrecedence(t *testing.T) {
 		return val, found
 	}
 	t.Run("env default is used when no cli arg or os env is set", func(t *testing.T) {
-		runner, err := NewRunner(makeTask(), "")
+		runner, err := NewRunner(makeTask(), "", "")
 		if err != nil {
 			t.Fatal(err)
 		}
@@ -340,7 +340,7 @@ func TestOptionalInputPrecedence(t *testing.T) {
 	})
 
 	t.Run("cli arg overrides env default", func(t *testing.T) {
-		runner, err := NewRunner(makeTask(), "")
+		runner, err := NewRunner(makeTask(), "", "")
 		if err != nil {
 			t.Fatal(err)
 		}
@@ -364,7 +364,7 @@ func TestOptionalInputPrecedence(t *testing.T) {
 
 	t.Run("os env overrides env default when input is declared", func(t *testing.T) {
 		t.Setenv("MY_VAR", "from_shell")
-		runner, err := NewRunner(makeTask(), "")
+		runner, err := NewRunner(makeTask(), "", "")
 		if err != nil {
 			t.Fatal(err)
 		}
@@ -388,7 +388,7 @@ func TestOptionalInputPrecedence(t *testing.T) {
 
 	t.Run("cli arg overrides os env", func(t *testing.T) {
 		t.Setenv("MY_VAR", "from_shell")
-		runner, err := NewRunner(makeTask(), "")
+		runner, err := NewRunner(makeTask(), "", "")
 		if err != nil {
 			t.Fatal(err)
 		}
@@ -420,7 +420,7 @@ func TestOptionalInputPrecedence(t *testing.T) {
 				Script: "somecmd",
 				Env:    []string{"MY_VAR=forced_value"},
 			},
-		}, "")
+		}, "", "")
 		if err != nil {
 			t.Fatal(err)
 		}
@@ -442,3 +442,54 @@ func TestOptionalInputPrecedence(t *testing.T) {
 		}
 	})
 }
+
+func TestGetExecutionPath(t *testing.T) {
+	tests := []struct {
+		name     string
+		dir      string
+		cwd      string
+		taskDir  string
+		expected string
+	}{
+		{
+			name:     "empty dir uses runner dir",
+			dir:      "/repo",
+			cwd:      "/repo/subdir",
+			taskDir:  "",
+			expected: "/repo",
+		},
+		{
+			name:     "relative dir is joined with runner dir",
+			dir:      "/repo",
+			cwd:      "/repo/subdir",
+			taskDir:  "./src",
+			expected: "/repo/src",
+		},
+		{
+			name:     "absolute dir is used as-is",
+			dir:      "/repo",
+			cwd:      "/repo/subdir",
+			taskDir:  "/tmp/build",
+			expected: "/tmp/build",
+		},
+		{
+			name:     "$PWD uses caller working directory",
+			dir:      "/repo",
+			cwd:      "/repo/subdir",
+			taskDir:  "$PWD",
+			expected: "/repo/subdir",
+		},
+	}
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			r := Runner{
+				dir: tt.dir,
+				cwd: tt.cwd,
+			}
+			got := r.getExecutionPath(models.Task{Dir: tt.taskDir})
+			if got != tt.expected {
+				t.Fatalf("expected %q, got %q", tt.expected, got)
+			}
+		})
+	}
+}