diff --git a/src/features/interpreterSelection.ts b/src/features/interpreterSelection.ts
index d761d4065..0116cc869 100644
--- a/src/features/interpreterSelection.ts
+++ b/src/features/interpreterSelection.ts
@@ -587,7 +587,8 @@ async function toAbsoluteInterpreterPath(interpreterPath: string, scope: Uri | u
     if (path.isAbsolute(interpreterPath)) {
         return interpreterPath;
     }
-    if (!/[\\/]/.test(interpreterPath)) {
+    const isBareCommand = !/[\\/]/.test(interpreterPath);
+    if (isBareCommand) {
         const onPath = await findCommandOnPath(interpreterPath);
         if (onPath) {
             return onPath;
@@ -596,6 +597,24 @@ async function toAbsoluteInterpreterPath(interpreterPath: string, scope: Uri | u
     if (!scope) {
         return interpreterPath;
     }
+    if (isBareCommand) {
+        // Keep bare commands intact when they are absent from the extension host's PATH.
+        // The native finder can resolve them using its own environment (for example, the
+        // integrated terminal's shell environment).
+        const workspaceCandidate = path.resolve(
+            getWorkspaceFolder(scope)?.uri.fsPath ?? scope.fsPath,
+            interpreterPath,
+        );
+        try {
+            if ((await fs.stat(workspaceCandidate)).isDirectory()) {
+                return workspaceCandidate;
+            }
+        } catch {
+            // A missing bare name may still be resolvable by the native finder (for example, by
+            // an integrated-terminal environment manager), so pass it through unchanged.
+        }
+        return interpreterPath;
+    }
     const workspaceFolder = getWorkspaceFolder(scope);
     return path.resolve(workspaceFolder?.uri.fsPath ?? scope.fsPath, interpreterPath);
 }
@@ -666,6 +685,7 @@ async function tryResolveInterpreterPath(
             }
 
             if (manager && resolvedEnv) {
+                const isBareCommand = !/[\\/]/.test(interpreterPath);
                 // Create a wrapper environment that uses the user's specified path, named like the
                 // resolved environment so the status bar and views show a normal interpreter label.
                 const newEnv: PythonEnvironment = {
@@ -677,11 +697,11 @@ async function tryResolveInterpreterPath(
                     displayName: resolvedEnv.displayName,
                     version: resolved.version ?? '',
                     displayPath: interpreterPath,
-                    environmentPath: Uri.file(interpreterPath),
+                    environmentPath: isBareCommand ? resolvedEnv.environmentPath : Uri.file(interpreterPath),
                     sysPrefix: resolved.prefix ?? '',
                     execInfo: {
                         run: {
-                            executable: interpreterPath,
+                            executable: isBareCommand ? resolved.executable : interpreterPath,
                         },
                     },
                 };
diff --git a/src/test/features/interpreterSelection.unit.test.ts b/src/test/features/interpreterSelection.unit.test.ts
index d0b9ee0ae..7411ecfd6 100644
--- a/src/test/features/interpreterSelection.unit.test.ts
+++ b/src/test/features/interpreterSelection.unit.test.ts
@@ -488,14 +488,16 @@ suite('Interpreter Selection - Priority Chain', () => {
                 });
             }
 
-            test('should resolve a command name that is not on PATH against the workspace folder', async () => {
+            test('should pass a command name that is not on PATH to the native finder unchanged', async () => {
                 const workspaceUri = Uri.file(path.resolve('test', 'workspace'));
                 const workspaceFolder = { name: 'workspace', uri: workspaceUri } as WorkspaceFolder;
-                const expected = path.resolve(workspaceUri.fsPath, 'pyenvs-test-missing-python');
+                const command = 'pyenvs-test-missing-python';
+                originalPath = process.env.PATH;
+                process.env.PATH = '';
                 sandbox.stub(workspaceApis, 'getConfiguration').returns(createMockConfig([]) as WorkspaceConfiguration);
                 sandbox.stub(workspaceApis, 'getWorkspaceFolder').returns(workspaceFolder);
                 sandbox.stub(workspaceApis, 'getWorkspaceFolders').returns([workspaceFolder]);
-                useDefaultInterpreterPath('pyenvs-test-missing-python');
+                useDefaultInterpreterPath(command);
                 mockNativeFinder.resolve.rejects(new Error('not found'));
                 mockVenvManager.get.resolves(undefined);
 
@@ -507,7 +509,34 @@ suite('Interpreter Selection - Priority Chain', () => {
                     mockApi as unknown as PythonEnvironmentApi,
                 );
 
-                assert.ok(mockNativeFinder.resolve.calledOnceWithExactly(expected));
+                assert.ok(mockNativeFinder.resolve.calledOnceWithExactly(command));
+            });
+
+            test('should resolve a bare workspace directory to its absolute path', async () => {
+                const workspaceUri = Uri.file(await fs.mkdtemp(path.join(os.tmpdir(), 'dip-workspace-')));
+                const workspaceFolder = { name: 'workspace', uri: workspaceUri } as WorkspaceFolder;
+                const envDirectory = path.join(workspaceUri.fsPath, '.venv');
+                await fs.mkdir(envDirectory);
+                sandbox.stub(workspaceApis, 'getConfiguration').returns(createMockConfig([]) as WorkspaceConfiguration);
+                sandbox.stub(workspaceApis, 'getWorkspaceFolder').returns(workspaceFolder);
+                sandbox.stub(workspaceApis, 'getWorkspaceFolders').returns([workspaceFolder]);
+                useDefaultInterpreterPath('.venv');
+                mockNativeFinder.resolve.rejects(new Error('not found'));
+                mockVenvManager.get.resolves(undefined);
+
+                try {
+                    await resolveEnvironmentByPriority(
+                        workspaceUri,
+                        mockEnvManagers as unknown as EnvironmentManagers,
+                        mockProjectManager as unknown as PythonProjectManager,
+                        mockNativeFinder as unknown as NativePythonFinder,
+                        mockApi as unknown as PythonEnvironmentApi,
+                    );
+
+                    assert.ok(mockNativeFinder.resolve.calledOnceWithExactly(envDirectory));
+                } finally {
+                    await fs.remove(workspaceUri.fsPath);
+                }
             });
 
             test('should treat the default value "python" as not configured', async () => {