diff --git a/crates/goose-mcp/src/developer/rmcp_developer.rs b/crates/goose-mcp/src/developer/rmcp_developer.rs
index e77b5b6883ae..006c5a9c175a 100644
--- a/crates/goose-mcp/src/developer/rmcp_developer.rs
+++ b/crates/goose-mcp/src/developer/rmcp_developer.rs
@@ -21,6 +21,8 @@ use rmcp::{
 const WORKING_DIR_HEADER: &str = "agent-working-dir";
 const SESSION_ID_HEADER: &str = "agent-session-id";
 
+pub const WORKING_DIR_PLACEHOLDER: &str = "{{WORKING_DIR}}";
+
 fn extract_working_dir_from_meta(meta: &Meta) -> Option<PathBuf> {
     meta.0
         .get(WORKING_DIR_HEADER)
@@ -242,8 +244,6 @@ pub struct DeveloperServer {
 impl ServerHandler for DeveloperServer {
     #[allow(clippy::too_many_lines)]
     fn get_info(&self) -> ServerInfo {
-        // Get base instructions and working directory
-        let cwd = std::env::current_dir().expect("should have a current working dir");
         let os = std::env::consts::OS;
         let in_container = Self::is_definitely_container();
 
@@ -268,7 +268,7 @@ impl ServerHandler for DeveloperServer {
                 {container_info}
                 "#,
                 os=os,
-                cwd=cwd.to_string_lossy(),
+                cwd=WORKING_DIR_PLACEHOLDER,
                 container_info=if in_container { "container: true" } else { "" },
             },
             _ => {
@@ -295,7 +295,7 @@ impl ServerHandler for DeveloperServer {
             {container_info}
                 "#,
                 os=os,
-                cwd=cwd.to_string_lossy(),
+                cwd=WORKING_DIR_PLACEHOLDER,
                 shell=shell_info,
                 container_info=if in_container { "container: true" } else { "" },
                 }
diff --git a/crates/goose-mcp/src/lib.rs b/crates/goose-mcp/src/lib.rs
index f9c47a5b8203..e1077683c982 100644
--- a/crates/goose-mcp/src/lib.rs
+++ b/crates/goose-mcp/src/lib.rs
@@ -20,6 +20,7 @@ pub mod tutorial;
 pub use autovisualiser::AutoVisualiserRouter;
 pub use computercontroller::ComputerControllerServer;
 pub use developer::rmcp_developer::DeveloperServer;
+pub use developer::rmcp_developer::WORKING_DIR_PLACEHOLDER;
 pub use memory::MemoryServer;
 pub use tutorial::TutorialServer;
 
diff --git a/crates/goose/src/agents/agent.rs b/crates/goose/src/agents/agent.rs
index 9ed9f8838731..0663c7d6dc0e 100644
--- a/crates/goose/src/agents/agent.rs
+++ b/crates/goose/src/agents/agent.rs
@@ -1728,7 +1728,15 @@ impl Agent {
     ) -> Result<Recipe> {
         tracing::info!("Starting recipe creation with {} messages", messages.len());
 
-        let extensions_info = self.extension_manager.get_extensions_info().await;
+        let session = self
+            .config
+            .session_manager
+            .get_session(session_id, false)
+            .await?;
+        let extensions_info = self
+            .extension_manager
+            .get_extensions_info(&session.working_dir)
+            .await;
         tracing::debug!("Retrieved {} extensions info", extensions_info.len());
         let (extension_count, tool_count) = self
             .extension_manager
diff --git a/crates/goose/src/agents/extension_manager.rs b/crates/goose/src/agents/extension_manager.rs
index 0c9d645248a1..d77668cf4d34 100644
--- a/crates/goose/src/agents/extension_manager.rs
+++ b/crates/goose/src/agents/extension_manager.rs
@@ -791,17 +791,17 @@ impl ExtensionManager {
     }
 
     /// Get extensions info for building the system prompt
-    pub async fn get_extensions_info(&self) -> Vec<ExtensionInfo> {
+    pub async fn get_extensions_info(&self, working_dir: &std::path::Path) -> Vec<ExtensionInfo> {
+        let working_dir_str = working_dir.to_string_lossy();
         self.extensions
             .lock()
             .await
             .iter()
             .map(|(name, ext)| {
-                ExtensionInfo::new(
-                    name,
-                    ext.get_instructions().unwrap_or_default().as_str(),
-                    ext.supports_resources(),
-                )
+                let instructions = ext.get_instructions().unwrap_or_default();
+                let instructions =
+                    instructions.replace(goose_mcp::WORKING_DIR_PLACEHOLDER, &working_dir_str);
+                ExtensionInfo::new(name, &instructions, ext.supports_resources())
             })
             .collect()
     }
diff --git a/crates/goose/src/agents/reply_parts.rs b/crates/goose/src/agents/reply_parts.rs
index 54e6d81ae8ed..a220a843a657 100644
--- a/crates/goose/src/agents/reply_parts.rs
+++ b/crates/goose/src/agents/reply_parts.rs
@@ -162,7 +162,10 @@ impl Agent {
         tools.sort_by(|a, b| a.name.cmp(&b.name));
 
         // Prepare system prompt
-        let extensions_info = self.extension_manager.get_extensions_info().await;
+        let extensions_info = self
+            .extension_manager
+            .get_extensions_info(working_dir)
+            .await;
         let (extension_count, tool_count) = self
             .extension_manager
             .get_extension_and_tool_counts(session_id)
diff --git a/crates/goose/tests/providers.rs b/crates/goose/tests/providers.rs
index 0d3ff3a46eeb..b934cc857efa 100644
--- a/crates/goose/tests/providers.rs
+++ b/crates/goose/tests/providers.rs
@@ -120,7 +120,10 @@ impl ProviderTester {
             .await
             .expect("get_prefixed_tools failed");
 
-        let info = self.extension_manager.get_extensions_info().await;
+        let info = self
+            .extension_manager
+            .get_extensions_info(std::path::Path::new("."))
+            .await;
         let system = PromptManager::new()
             .builder()
             .with_extensions(info.into_iter())