diff --git a/ansible_runner/config/_base.py b/ansible_runner/config/_base.py
index 1c43da075..2208c36b4 100644
--- a/ansible_runner/config/_base.py
+++ b/ansible_runner/config/_base.py
@@ -120,16 +120,17 @@ def __init__(self,
 
         self.artifact_dir = os.path.join(artifact_dir, "{}".format(self.ident))
 
+        self.loader = ArtifactLoader(self.private_data_dir)
+
         if not project_dir:
             self.project_dir = os.path.join(self.private_data_dir, 'project')
         else:
-            self.project_dir = project_dir
+            self.project_dir = self.loader.abspath(project_dir)
 
         self.rotate_artifacts = rotate_artifacts
         self.fact_cache_type = fact_cache_type
         self.fact_cache = os.path.join(self.artifact_dir, fact_cache or 'fact_cache') if self.fact_cache_type == 'jsonfile' else None
 
-        self.loader = ArtifactLoader(self.private_data_dir)
 
         if self.host_cwd:
             self.host_cwd = os.path.abspath(self.host_cwd)
@@ -473,6 +474,9 @@ def wrap_args_for_containerization(self, args, execution_mode, cmdline_args):
             self._ensure_path_safe_to_mount(self.host_cwd)
             self._update_volume_mount_paths(new_args, self.host_cwd)
             workdir = self.host_cwd
+        elif self.project_dir:
+            workdir = "/runner/project"
+            self._update_volume_mount_paths(new_args, self.project_dir, workdir)
         else:
             workdir = "/runner/project"
 
diff --git a/test/fixtures/projects/project_dir_test/env/envvars b/test/fixtures/projects/project_dir_test/env/envvars
new file mode 100644
index 000000000..c85123e2e
--- /dev/null
+++ b/test/fixtures/projects/project_dir_test/env/envvars
@@ -0,0 +1 @@
+ANSIBLE_DEVEL_WARNING: no
diff --git a/test/fixtures/projects/project_dir_test/inventory/inv_1 b/test/fixtures/projects/project_dir_test/inventory/inv_1
new file mode 100644
index 000000000..093f403c6
--- /dev/null
+++ b/test/fixtures/projects/project_dir_test/inventory/inv_1
@@ -0,0 +1 @@
+host_1 ansible_connection=local ansible_python_interpreter="{{ ansible_playbook_python }}"
diff --git a/test/fixtures/projects/project_dir_test/my_project/debug.yml b/test/fixtures/projects/project_dir_test/my_project/debug.yml
new file mode 100644
index 000000000..9f75f2217
--- /dev/null
+++ b/test/fixtures/projects/project_dir_test/my_project/debug.yml
@@ -0,0 +1,6 @@
+- hosts: all
+  gather_facts: no
+
+  tasks:
+    - debug:
+        msg: "In my_project"
diff --git a/test/fixtures/projects/project_dir_test/project/debug.yml b/test/fixtures/projects/project_dir_test/project/debug.yml
new file mode 100644
index 000000000..e19899a9f
--- /dev/null
+++ b/test/fixtures/projects/project_dir_test/project/debug.yml
@@ -0,0 +1,6 @@
+- hosts: all
+  gather_facts: no
+
+  tasks:
+    - debug:
+        msg: "In project"
diff --git a/test/integration/test_interface.py b/test/integration/test_interface.py
index 42a0b53ef..9da23faf1 100644
--- a/test/integration/test_interface.py
+++ b/test/integration/test_interface.py
@@ -190,6 +190,68 @@ def test_multiple_inventories(project_fixtures):
     assert 'host_2' in stdout
 
 
+def test_default_project_dir(project_fixtures):
+    private_data_dir = project_fixtures / 'project_dir_test'
+
+    res = run(
+        private_data_dir=private_data_dir,
+        playbook='debug.yml',
+    )
+    stdout = res.stdout.read()
+
+    assert res.rc == 0, stdout
+    assert 'In project' in stdout
+
+
+def test_project_dir(project_fixtures):
+    private_data_dir = project_fixtures / 'project_dir_test'
+
+    res = run(
+        private_data_dir=private_data_dir,
+        project_dir='my_project',
+        playbook='debug.yml',
+    )
+    stdout = res.stdout.read()
+
+    assert res.rc == 0, stdout
+    assert 'In my_project' in stdout
+
+
+@pytest.mark.test_all_runtimes
+def test_default_project_dir_inside_container(project_fixtures, runtime):
+    private_data_dir = project_fixtures / 'project_dir_test'
+
+    res = run(
+        private_data_dir=private_data_dir,
+        playbook='debug.yml',
+        process_isolation_executable=runtime,
+        process_isolation=True,
+        container_image=defaults.default_container_image,
+    )
+    stdout = res.stdout.read()
+
+    assert res.rc == 0, stdout
+    assert 'In project' in stdout
+
+
+@pytest.mark.test_all_runtimes
+def test_project_dir_inside_container(project_fixtures, runtime):
+    private_data_dir = project_fixtures / 'project_dir_test'
+
+    res = run(
+        private_data_dir=private_data_dir,
+        project_dir='my_project',
+        playbook='debug.yml',
+        process_isolation_executable=runtime,
+        process_isolation=True,
+        container_image=defaults.default_container_image,
+    )
+    stdout = res.stdout.read()
+
+    assert res.rc == 0, stdout
+    assert 'In my_project' in stdout
+
+
 def test_inventory_absolute_path(project_fixtures):
     private_data_dir = project_fixtures / 'debug'