diff --git a/packages/angular/cli/src/command-builder/schematics-command-module.ts b/packages/angular/cli/src/command-builder/schematics-command-module.ts
index fa67597777ae..2e02dd4fecfe 100644
--- a/packages/angular/cli/src/command-builder/schematics-command-module.ts
+++ b/packages/angular/cli/src/command-builder/schematics-command-module.ts
@@ -17,7 +17,11 @@ import { relative } from 'node:path';
 import { Argv } from 'yargs';
 import { isPackageNameSafeForAnalytics } from '../analytics/analytics';
 import { EventCustomDimension } from '../analytics/analytics-parameters';
-import { getProjectByCwd, getSchematicDefaults } from '../utilities/config';
+import {
+  getProjectByCwd,
+  getSchematicDefaults,
+  getSchematicWorkingDirectory,
+} from '../utilities/config';
 import { assertIsError } from '../utilities/error';
 import { formatFiles } from '../utilities/formatting';
 import { memoize } from '../utilities/memoize';
@@ -138,10 +142,14 @@ export abstract class SchematicsCommandModule
     workflow.registry.useXDeprecatedProvider((msg) => logger.warn(msg));
     workflow.registry.addSmartDefaultProvider('projectName', () => this.getProjectName());
 
-    const workingDir = devkitNormalize(relative(this.context.root, process.cwd()));
-    workflow.registry.addSmartDefaultProvider('workingDirectory', () =>
-      workingDir === '' ? undefined : workingDir,
-    );
+    const workingDirectory = this.context.workspace
+      ? getSchematicWorkingDirectory(this.context.workspace)
+      : (() => {
+          const dir = devkitNormalize(relative(root, process.cwd()));
+
+          return dir === '' ? undefined : dir;
+        })();
+    workflow.registry.addSmartDefaultProvider('workingDirectory', () => workingDirectory);
 
     workflow.engineHost.registerOptionsTransform(async (schematic, options) => {
       const {
diff --git a/packages/angular/cli/src/utilities/config.ts b/packages/angular/cli/src/utilities/config.ts
index 6aa762aa264f..1d9e2249b5a1 100644
--- a/packages/angular/cli/src/utilities/config.ts
+++ b/packages/angular/cli/src/utilities/config.ts
@@ -6,7 +6,7 @@
  * found in the LICENSE file at https://angular.dev/license
  */
 
-import { json, workspaces } from '@angular-devkit/core';
+import { json, normalize as devkitNormalize, workspaces } from '@angular-devkit/core';
 import { existsSync, promises as fs } from 'node:fs';
 import * as os from 'node:os';
 import * as path from 'node:path';
@@ -323,6 +323,35 @@ export function getProjectByCwd(workspace: AngularWorkspace): string | null {
   return null;
 }
 
+/**
+ * Resolves the schematic `workingDirectory` smart default relative to the active project root.
+ * When the cwd is the project root, `undefined` is returned so schematics can apply their own
+ * default path (e.g. `src/app`).
+ */
+export function getSchematicWorkingDirectory(
+  workspace: AngularWorkspace,
+  cwd: string = process.cwd(),
+): string | undefined {
+  const projectName =
+    workspace.projects.size === 1
+      ? Array.from(workspace.projects.keys())[0]
+      : findProjectByPath(workspace, cwd);
+
+  if (projectName) {
+    const project = workspace.projects.get(projectName);
+    if (project) {
+      const projectRoot = path.join(workspace.basePath, project.root);
+      const projectRelative = devkitNormalize(path.relative(projectRoot, cwd));
+
+      return projectRelative === '' ? undefined : projectRelative;
+    }
+  }
+
+  const workspaceRelative = devkitNormalize(path.relative(workspace.basePath, cwd));
+
+  return workspaceRelative === '' ? undefined : workspaceRelative;
+}
+
 export async function getConfiguredPackageManager(): Promise<PackageManager | null> {
   const getPackageManager = (source: json.JsonValue | undefined): PackageManager | null => {
     if (isJsonObject(source)) {
diff --git a/packages/angular/cli/src/utilities/schematic-working-directory_spec.ts b/packages/angular/cli/src/utilities/schematic-working-directory_spec.ts
new file mode 100644
index 000000000000..3820e2bdbb23
--- /dev/null
+++ b/packages/angular/cli/src/utilities/schematic-working-directory_spec.ts
@@ -0,0 +1,57 @@
+/**
+ * @license
+ * Copyright Google LLC All Rights Reserved.
+ *
+ * Use of this source code is governed by an MIT-style license that can be
+ * found in the LICENSE file at https://angular.dev/license
+ */
+
+import { workspaces } from '@angular-devkit/core';
+import { join, resolve } from 'node:path';
+import { AngularWorkspace, getSchematicWorkingDirectory } from './config';
+
+describe('getSchematicWorkingDirectory', () => {
+  const workspaceRoot = resolve('/tmp/workspace');
+
+  function mockWorkspace(
+    projects: Record<string, { root: string }>,
+  ): AngularWorkspace {
+    const collection = new workspaces.ProjectDefinitionCollection();
+    for (const [name, { root }] of Object.entries(projects)) {
+      collection.set(name, { root } as workspaces.ProjectDefinition);
+    }
+
+    return {
+      basePath: workspaceRoot,
+      projects: collection,
+    } as unknown as AngularWorkspace;
+  }
+
+  it('returns undefined when cwd is a multi-project application root', () => {
+    const workspace = mockWorkspace({
+      app1: { root: 'projects/app1' },
+      app2: { root: 'projects/app2' },
+    });
+    const cwd = join(workspaceRoot, 'projects/app1');
+
+    expect(getSchematicWorkingDirectory(workspace, cwd)).toBeUndefined();
+  });
+
+  it('returns a path relative to the project when cwd is inside the project tree', () => {
+    const workspace = mockWorkspace({
+      app1: { root: 'projects/app1' },
+      app2: { root: 'projects/app2' },
+    });
+    const cwd = join(workspaceRoot, 'projects/app1/src/app/features');
+
+    expect(getSchematicWorkingDirectory(workspace, cwd)).toBe('src/app/features');
+  });
+
+  it('returns undefined for a single-project workspace when cwd is the workspace root', () => {
+    const workspace = mockWorkspace({
+      app: { root: '' },
+    });
+
+    expect(getSchematicWorkingDirectory(workspace, workspaceRoot)).toBeUndefined();
+  });
+});