diff --git a/crates/paths/src/lib.rs b/crates/paths/src/lib.rs
index 6ae23ac841ad..b7985d10db9c 100644
--- a/crates/paths/src/lib.rs
+++ b/crates/paths/src/lib.rs
@@ -179,6 +179,11 @@ impl AbsPath {
         self.0.ends_with(&suffix.0)
     }
 
+    /// Equivalent of [`Path::canonicalize`] for `AbsPath`.
+    pub fn canonicalize(&self) -> Result<AbsPathBuf, std::io::Error> {
+        Ok(self.as_ref().canonicalize()?.try_into().unwrap())
+    }
+
     // region:delegate-methods
 
     // Note that we deliberately don't implement `Deref<Target = Path>` here.
diff --git a/crates/project-model/src/workspace.rs b/crates/project-model/src/workspace.rs
index 2a11f1e8eb82..dc13655c934e 100644
--- a/crates/project-model/src/workspace.rs
+++ b/crates/project-model/src/workspace.rs
@@ -150,13 +150,14 @@ impl ProjectWorkspace {
     ) -> Result<ProjectWorkspace> {
         let res = match manifest {
             ProjectManifest::ProjectJson(project_json) => {
+                let project_json = project_json.canonicalize()?;
                 let file = fs::read_to_string(&project_json).with_context(|| {
                     format!("Failed to read json file {}", project_json.display())
                 })?;
                 let data = serde_json::from_str(&file).with_context(|| {
                     format!("Failed to deserialize json file {}", project_json.display())
                 })?;
-                let project_location = project_json.parent().to_path_buf();
+                let project_location = project_json.parent().unwrap().to_path_buf();
                 let project_json = ProjectJson::new(&project_location, data);
                 ProjectWorkspace::load_inline(
                     project_json,