diff --git a/doc/api/test.md b/doc/api/test.md
index a7af114880ea87..c68274d810e831 100644
--- a/doc/api/test.md
+++ b/doc/api/test.md
@@ -1246,6 +1246,9 @@ added:
   - v18.9.0
   - v16.19.0
 changes:
+  - version: REPLACEME
+    pr-url: https://github.com/nodejs/node/pull/54225
+    description: Added the `cwd` option.
   - version: REPLACEME
     pr-url: https://github.com/nodejs/node/pull/53927
     description: Added the `isolation` option.
@@ -1273,6 +1276,9 @@ changes:
     parallel.
     If `false`, it would only run one test file at a time.
     **Default:** `false`.
+  * `cwd`: {string} Specifies the current working directory to be used by the test runner.
+    The cwd serves as the base path for resolving files according to the [test runner execution model][].
+    **Default:** `process.cwd()`.
   * `files`: {Array} An array containing the list of files to run.
     **Default** matching files from [test runner execution model][].
   * `forceExit`: {boolean} Configures the test runner to exit the process once
diff --git a/lib/internal/test_runner/runner.js b/lib/internal/test_runner/runner.js
index 9590ef8dcf75bf..246cfdf4ee1baf 100644
--- a/lib/internal/test_runner/runner.js
+++ b/lib/internal/test_runner/runner.js
@@ -54,6 +54,7 @@ const {
   validateObject,
   validateOneOf,
   validateInteger,
+  validateString,
 } = require('internal/validators');
 const { getInspectPort, isUsingInspector, isInspectorMessage } = require('internal/util/inspector');
 const { isRegExp } = require('internal/util/types');
@@ -536,6 +537,7 @@ function run(options = kEmptyObject) {
     setup,
     only,
     globPatterns,
+    cwd = process.cwd(),
   } = options;
 
   if (files != null) {
@@ -560,6 +562,8 @@ function run(options = kEmptyObject) {
     validateArray(globPatterns, 'options.globPatterns');
   }
 
+  validateString(cwd, 'options.cwd');
+
   if (globPatterns?.length > 0 && files?.length > 0) {
     throw new ERR_INVALID_ARG_VALUE(
       'options.globPatterns', globPatterns, 'is not supported when specifying \'options.files\'',
@@ -625,9 +629,6 @@ function run(options = kEmptyObject) {
   };
   const root = createTestTree(rootTestOptions, globalOptions);
 
-  // This const should be replaced by a run option in the future.
-  const cwd = process.cwd();
-
   let testFiles = files ?? createTestFileList(globPatterns, cwd);
 
   if (shard) {
@@ -698,7 +699,7 @@ function run(options = kEmptyObject) {
           root.harness.bootstrapPromise = promise;
 
           for (let i = 0; i < testFiles.length; ++i) {
-            const testFile = testFiles[i];
+            const testFile = resolve(cwd, testFiles[i]);
             const fileURL = pathToFileURL(testFile);
             const parent = i === 0 ? undefined : parentURL;
             let threw = false;
diff --git a/test/parallel/test-runner-no-isolation-different-cwd-watch.mjs b/test/parallel/test-runner-no-isolation-different-cwd-watch.mjs
new file mode 100644
index 00000000000000..232b9af8286184
--- /dev/null
+++ b/test/parallel/test-runner-no-isolation-different-cwd-watch.mjs
@@ -0,0 +1,57 @@
+import { allowGlobals, mustCall, mustNotCall } from '../common/index.mjs';
+import * as fixtures from '../common/fixtures.mjs';
+import { deepStrictEqual } from 'node:assert';
+import { run } from 'node:test';
+
+try {
+  const controller = new AbortController();
+  const stream = run({
+    cwd: fixtures.path('test-runner', 'no-isolation'),
+    isolation: 'none',
+    watch: true,
+    signal: controller.signal,
+  });
+
+  stream.on('test:fail', () => mustNotCall());
+  stream.on('test:pass', mustCall(5));
+  stream.on('data', function({ type }) {
+    if (type === 'test:watch:drained') {
+      controller.abort();
+    }
+  });
+  // eslint-disable-next-line no-unused-vars
+  for await (const _ of stream);
+  allowGlobals(globalThis.GLOBAL_ORDER);
+  deepStrictEqual(globalThis.GLOBAL_ORDER, [
+    'before one: <root>',
+    'suite one',
+    'before two: <root>',
+    'suite two',
+
+    'beforeEach one: suite one - test',
+    'beforeEach two: suite one - test',
+    'suite one - test',
+    'afterEach one: suite one - test',
+    'afterEach two: suite one - test',
+
+    'beforeEach one: test one',
+    'beforeEach two: test one',
+    'test one',
+    'afterEach one: test one',
+    'afterEach two: test one',
+
+    'before suite two: suite two',
+
+    'beforeEach one: suite two - test',
+    'beforeEach two: suite two - test',
+    'suite two - test',
+    'afterEach one: suite two - test',
+    'afterEach two: suite two - test',
+
+    'after one: <root>',
+    'after two: <root>',
+  ]);
+} catch (err) {
+  console.error(err);
+  process.exit(1);
+}
diff --git a/test/parallel/test-runner-no-isolation-different-cwd.mjs b/test/parallel/test-runner-no-isolation-different-cwd.mjs
new file mode 100644
index 00000000000000..6a15cc4f2b6b32
--- /dev/null
+++ b/test/parallel/test-runner-no-isolation-different-cwd.mjs
@@ -0,0 +1,48 @@
+import { allowGlobals, mustCall } from '../common/index.mjs';
+import * as fixtures from '../common/fixtures.mjs';
+import { strictEqual } from 'node:assert';
+import { run } from 'node:test';
+
+const stream = run({
+  cwd: fixtures.path('test-runner', 'no-isolation'),
+  isolation: 'none',
+});
+
+let errors = 0;
+stream.on('test:fail', () => {
+  errors++;
+});
+stream.on('test:pass', mustCall(5));
+// eslint-disable-next-line no-unused-vars
+for await (const _ of stream);
+strictEqual(errors, 0);
+allowGlobals(globalThis.GLOBAL_ORDER);
+strictEqual(globalThis.GLOBAL_ORDER, [
+  'before one: <root>',
+  'suite one',
+  'before two: <root>',
+  'suite two',
+
+  'beforeEach one: suite one - test',
+  'beforeEach two: suite one - test',
+  'suite one - test',
+  'afterEach one: suite one - test',
+  'afterEach two: suite one - test',
+
+  'beforeEach one: test one',
+  'beforeEach two: test one',
+  'test one',
+  'afterEach one: test one',
+  'afterEach two: test one',
+
+  'before suite two: suite two',
+
+  'beforeEach one: suite two - test',
+  'beforeEach two: suite two - test',
+  'suite two - test',
+  'afterEach one: suite two - test',
+  'afterEach two: suite two - test',
+
+  'after one: <root>',
+  'after two: <root>',
+]);
diff --git a/test/parallel/test-runner-run.mjs b/test/parallel/test-runner-run.mjs
index 7a575da9c95275..355bbaee13fcd5 100644
--- a/test/parallel/test-runner-run.mjs
+++ b/test/parallel/test-runner-run.mjs
@@ -481,6 +481,13 @@ describe('require(\'node:test\').run', { concurrency: true }, () => {
       });
     });
 
+    it('should only allow a string in options.cwd', async () => {
+      [Symbol(), {}, [], () => {}, 0, 1, 0n, 1n, true, false]
+        .forEach((cwd) => assert.throws(() => run({ cwd }), {
+          code: 'ERR_INVALID_ARG_TYPE'
+        }));
+    });
+
     it('should only allow object as options', () => {
       [Symbol(), [], () => {}, 0, 1, 0n, 1n, '', '1', true, false]
         .forEach((options) => assert.throws(() => run(options), {
@@ -513,6 +520,33 @@ describe('require(\'node:test\').run', { concurrency: true }, () => {
     for await (const _ of stream);
     assert.match(stderr, /Warning: node:test run\(\) is being called recursively/);
   });
+
+  it('should run with different cwd', async () => {
+    const stream = run({
+      cwd: fixtures.path('test-runner', 'cwd')
+    });
+    stream.on('test:fail', common.mustNotCall());
+    stream.on('test:pass', common.mustCall(1));
+
+    // eslint-disable-next-line no-unused-vars
+    for await (const _ of stream);
+  });
+
+  it('should run with different cwd while in watch mode', async () => {
+    const controller = new AbortController();
+    const stream = run({
+      cwd: fixtures.path('test-runner', 'cwd'),
+      watch: true,
+      signal: controller.signal,
+    }).on('data', function({ type }) {
+      if (type === 'test:watch:drained') {
+        controller.abort();
+      }
+    });
+
+    stream.on('test:fail', common.mustNotCall());
+    stream.on('test:pass', common.mustCall(1));
+  });
 });
 
 describe('forceExit', () => {