diff --git a/src/PowerShellEditorServices.Protocol/Server/DebugAdapter.cs b/src/PowerShellEditorServices.Protocol/Server/DebugAdapter.cs
index 0b50dca3b..115d3ca44 100644
--- a/src/PowerShellEditorServices.Protocol/Server/DebugAdapter.cs
+++ b/src/PowerShellEditorServices.Protocol/Server/DebugAdapter.cs
@@ -294,7 +294,7 @@ protected async Task HandleLaunchRequest(
             if (this.editorSession.PowerShellContext.CurrentRunspace.Location == RunspaceLocation.Local &&
                 !this.editorSession.DebugService.IsDebuggerStopped)
             {
-                await editorSession.PowerShellContext.SetWorkingDirectory(workingDir);
+                await editorSession.PowerShellContext.SetWorkingDirectory(workingDir, isPathAlreadyEscaped: false);
                 Logger.Write(LogLevel.Verbose, "Working dir set to: " + workingDir);
             }
 
diff --git a/src/PowerShellEditorServices.Protocol/Server/LanguageServer.cs b/src/PowerShellEditorServices.Protocol/Server/LanguageServer.cs
index 8e157be92..6b2413ea8 100644
--- a/src/PowerShellEditorServices.Protocol/Server/LanguageServer.cs
+++ b/src/PowerShellEditorServices.Protocol/Server/LanguageServer.cs
@@ -178,7 +178,8 @@ protected async Task HandleInitializeRequest(
             if (editorSession.Workspace.WorkspacePath != null)
             {
                 await editorSession.PowerShellContext.SetWorkingDirectory(
-                    editorSession.Workspace.WorkspacePath);
+                    editorSession.Workspace.WorkspacePath,
+                    isPathAlreadyEscaped: false);
             }
 
             await requestContext.SendResult(
diff --git a/src/PowerShellEditorServices/Session/PowerShellContext.cs b/src/PowerShellEditorServices/Session/PowerShellContext.cs
index 0c6e1ee98..51cd79d64 100644
--- a/src/PowerShellEditorServices/Session/PowerShellContext.cs
+++ b/src/PowerShellEditorServices/Session/PowerShellContext.cs
@@ -1078,11 +1078,26 @@ internal void ReleaseRunspaceHandle(RunspaceHandle runspaceHandle)
         /// </summary>
         /// <param name="path"></param>
         public async Task SetWorkingDirectory(string path)
+        {
+            await this.SetWorkingDirectory(path, true);
+        }
+
+        /// <summary>
+        /// Sets the current working directory of the powershell context.
+        /// </summary>
+        /// <param name="path"></param>
+        /// <param name="isPathAlreadyEscaped">Specify false to have the path escaped, otherwise specify true if the path has already been escaped.</param>
+        public async Task SetWorkingDirectory(string path, bool isPathAlreadyEscaped)
         {
             this.InitialWorkingDirectory = path;
 
             using (RunspaceHandle runspaceHandle = await this.GetRunspaceHandle())
             {
+                if (!isPathAlreadyEscaped)
+                {
+                    path = EscapePath(path, false);
+                }
+
                 runspaceHandle.Runspace.SessionStateProxy.Path.SetLocation(path);
             }
         }