diff --git a/cmd/toolsrv/internal/fs/proc.go b/cmd/toolsrv/internal/fs/proc.go
index 5be6dfc..afe8aea 100644
--- a/cmd/toolsrv/internal/fs/proc.go
+++ b/cmd/toolsrv/internal/fs/proc.go
@@ -18,6 +18,7 @@ import (
 
 	"ollie/cmd/toolsrv/internal/exec"
 	"ollie/cmd/toolsrv/internal/registry"
+	"ollie/paths"
 	"ollie/toolsrv"
 )
 
@@ -95,7 +96,7 @@ func (st *State) CWD() string {
 // SetCWD sets the current working directory.
 func (st *State) SetCWD(dir string) {
 	st.mu.Lock()
-	st.cwd = dir
+	st.cwd = paths.ExpandHome(dir)
 	st.mu.Unlock()
 }
 
diff --git a/cmd/toolsrv/main.go b/cmd/toolsrv/main.go
index 46ba3f2..a53d2fd 100644
--- a/cmd/toolsrv/main.go
+++ b/cmd/toolsrv/main.go
@@ -29,6 +29,7 @@ import (
 	"ollie/env"
 	"ollie/fsedsl"
 	olog "ollie/log"
+	"ollie/paths"
 )
 
 var (
@@ -61,6 +62,9 @@ func main() {
 		os.Exit(1)
 	}
 
+	// Expand ~ in CWD (shell doesn't expand ~ in arguments).
+	*cwd = paths.ExpandHome(*cwd)
+
 	// Set up logger
 	sink := olog.NewSink(os.Stdout, os.Stderr, olog.LevelInfo)
 	defer sink.Flush()