diff --git a/src/client/testing/testController/pytest/pytestHelpers.ts b/src/client/testing/testController/pytest/pytestHelpers.ts
index c6e748fb85a7..1eca4c0ff16a 100644
--- a/src/client/testing/testController/pytest/pytestHelpers.ts
+++ b/src/client/testing/testController/pytest/pytestHelpers.ts
@@ -4,6 +4,7 @@ import * as path from 'path';
 import * as fs from 'fs';
 import { traceInfo, traceWarn } from '../../../logging';
 import { addValueIfKeyNotExist, hasSymlinkParent } from '../common/utils';
+import { arePathsSame } from '../../../common/platform/fs-paths';
 
 /**
  * Checks if the current working directory contains a symlink and ensures --rootdir is set in pytest args.
@@ -16,7 +17,7 @@ export async function handleSymlinkAndRootDir(cwd: string, pytestArgs: string[])
     if (stats.isSymbolicLink()) {
         isSymbolicLink = true;
         traceWarn(`Working directory is a symbolic link: ${cwd} -> ${resolvedPath}`);
-    } else if (resolvedPath !== cwd) {
+    } else if (!arePathsSame(resolvedPath, cwd)) {
         traceWarn(
             `Working directory resolves to different path: ${cwd} -> ${resolvedPath}. Checking for symlinks in parent directories.`,
         );
diff --git a/src/test/testing/testController/pytest/pytestHelpers.unit.test.ts b/src/test/testing/testController/pytest/pytestHelpers.unit.test.ts
new file mode 100644
index 000000000000..daf8a49a1a77
--- /dev/null
+++ b/src/test/testing/testController/pytest/pytestHelpers.unit.test.ts
@@ -0,0 +1,58 @@
+// Copyright (c) Microsoft Corporation. All rights reserved.
+// Licensed under the MIT License.
+import * as assert from 'assert';
+import * as fs from 'fs';
+import * as sinon from 'sinon';
+import { handleSymlinkAndRootDir } from '../../../../client/testing/testController/pytest/pytestHelpers';
+import * as utils from '../../../../client/testing/testController/common/utils';
+import * as fsPaths from '../../../../client/common/platform/fs-paths';
+
+suite('pytestHelpers handleSymlinkAndRootDir', () => {
+    teardown(() => {
+        sinon.restore();
+    });
+
+    test('does not check symlink parent when cwd and resolvedPath are considered the same path', async () => {
+        sinon.stub(fs.promises, 'lstat').resolves({
+            isSymbolicLink: () => false,
+        } as fs.Stats);
+        sinon.stub(fs.promises, 'realpath').resolves('C:\\clones\\python-soundfile');
+        sinon.stub(fsPaths, 'arePathsSame').callsFake((p1, p2) => p1.toLowerCase() === p2.toLowerCase());
+
+        const hasSymlinkParentStub = sinon.stub(utils, 'hasSymlinkParent');
+
+        const result = await handleSymlinkAndRootDir('c:\\clones\\python-soundfile', ['arg1']);
+
+        assert.strictEqual(hasSymlinkParentStub.called, false);
+        assert.deepStrictEqual(result, ['arg1', '--rootdir=c:\\clones\\python-soundfile']);
+    });
+
+    test('checks symlink parent when resolvedPath differs from cwd', async () => {
+        sinon.stub(fs.promises, 'lstat').resolves({
+            isSymbolicLink: () => false,
+        } as fs.Stats);
+        sinon.stub(fs.promises, 'realpath').resolves('/real/path/to/project');
+        sinon.stub(fsPaths, 'arePathsSame').returns(false);
+
+        const hasSymlinkParentStub = sinon.stub(utils, 'hasSymlinkParent').resolves(true);
+
+        const result = await handleSymlinkAndRootDir('/symlink/to/project', ['arg1']);
+
+        assert.strictEqual(hasSymlinkParentStub.calledOnceWith('/symlink/to/project'), true);
+        assert.deepStrictEqual(result, ['arg1', '--rootdir=/symlink/to/project']);
+    });
+
+    test('detects direct symlink without checking parent directories', async () => {
+        sinon.stub(fs.promises, 'lstat').resolves({
+            isSymbolicLink: () => true,
+        } as fs.Stats);
+        sinon.stub(fs.promises, 'realpath').resolves('/real/path');
+
+        const hasSymlinkParentStub = sinon.stub(utils, 'hasSymlinkParent');
+
+        const result = await handleSymlinkAndRootDir('/symlink/path', ['arg1']);
+
+        assert.strictEqual(hasSymlinkParentStub.called, false);
+        assert.deepStrictEqual(result, ['arg1', '--rootdir=/symlink/path']);
+    });
+});