diff --git a/src/services/code-index/processors/file-watcher.ts b/src/services/code-index/processors/file-watcher.ts
index 1e5ebcbcebc..a6a3122c36c 100644
--- a/src/services/code-index/processors/file-watcher.ts
+++ b/src/services/code-index/processors/file-watcher.ts
@@ -508,8 +508,12 @@ export class FileWatcher implements IFileWatcher {
 	 */
 	async processFile(filePath: string): Promise<FileProcessingResult> {
 		try {
+			// Get relative path for ignore checks
+			const relativeFilePath = generateRelativeFilePath(filePath, this.workspacePath)
+
 			// Check if file is in an ignored directory
-			if (isPathInIgnoredDirectory(filePath)) {
+			// Use relative path to avoid matching parent directories outside the workspace
+			if (isPathInIgnoredDirectory(relativeFilePath)) {
 				return {
 					path: filePath,
 					status: "skipped" as const,
@@ -518,7 +522,6 @@ export class FileWatcher implements IFileWatcher {
 			}
 
 			// Check if file should be ignored
-			const relativeFilePath = generateRelativeFilePath(filePath, this.workspacePath)
 			if (
 				!this.ignoreController.validateAccess(filePath) ||
 				(this.ignoreInstance && this.ignoreInstance.ignores(relativeFilePath))
diff --git a/src/services/code-index/processors/scanner.ts b/src/services/code-index/processors/scanner.ts
index 92a7d77c272..91689a56d7c 100644
--- a/src/services/code-index/processors/scanner.ts
+++ b/src/services/code-index/processors/scanner.ts
@@ -96,7 +96,8 @@ export class DirectoryScanner implements IDirectoryScanner {
 			const relativeFilePath = generateRelativeFilePath(filePath, scanWorkspace)
 
 			// Check if file is in an ignored directory using the shared helper
-			if (isPathInIgnoredDirectory(filePath)) {
+			// Use relative path to avoid matching parent directories outside the workspace
+			if (isPathInIgnoredDirectory(relativeFilePath)) {
 				return false
 			}