diff --git a/doc/manual/rl-next/shebang-relative.md b/doc/manual/rl-next/shebang-relative.md
index e6ab9346f..ab39a359c 100644
--- a/doc/manual/rl-next/shebang-relative.md
+++ b/doc/manual/rl-next/shebang-relative.md
@@ -5,4 +5,6 @@ description: {
 `nix-shell` shebangs use the script file's relative location to resolve relative paths to files passed as command line arguments, but expression arguments were still evaluated using the current working directory as a base path.
 The new behavior is that evaluations are performed relative to the script.
 
+The old behavior can be opted into by setting the option [`nix-shell-shebang-arguments-relative-to-script`](@docroot@/command-ref/conf-file.md#conf-nix-shell-shebang-arguments-relative-to-script) to `false`.
+
 }
diff --git a/src/libcmd/common-eval-args.cc b/src/libcmd/common-eval-args.cc
index ffc1ebd59..a243b8c49 100644
--- a/src/libcmd/common-eval-args.cc
+++ b/src/libcmd/common-eval-args.cc
@@ -202,7 +202,7 @@ Bindings * MixEvalArgs::getAutoArgs(EvalState & state)
         auto v = state.allocValue();
         std::visit(overloaded {
             [&](const AutoArgExpr & arg) {
-                state.mkThunk_(*v, state.parseExprFromString(arg.expr, true ? state.rootPath(absPath(getCommandBaseDir())) : state.rootPath(".")));
+                state.mkThunk_(*v, state.parseExprFromString(arg.expr, compatibilitySettings.nixShellShebangArgumentsRelativeToScript ? state.rootPath(absPath(getCommandBaseDir())) : state.rootPath(".")));
             },
             [&](const AutoArgString & arg) {
                 v->mkString(arg.s);
diff --git a/src/libcmd/compatibility-settings.hh b/src/libcmd/compatibility-settings.hh
index 5dc0eaf2b..961001080 100644
--- a/src/libcmd/compatibility-settings.hh
+++ b/src/libcmd/compatibility-settings.hh
@@ -14,6 +14,15 @@ struct CompatibilitySettings : public Config
 
         You may set this to `false` to revert to the Nix 2.3 behavior.
     )"};
+
+    Setting<bool> nixShellShebangArgumentsRelativeToScript{
+        this, true, "nix-shell-shebang-arguments-relative-to-script", R"(
+        Before Nix 2.24, the arguments in a `nix-shell` shebang - as well as `--arg` - were relative to working directory.
+
+        Since Nix 2.24, the arguments are relative to the [base directory](@docroot@/glossary.md#gloss-base-directory) defined as the script's directory.
+
+        You may set this to `false` to revert to the Nix 2.3 behavior.
+    )"};
 };
 
 };
diff --git a/src/nix-build/nix-build.cc b/src/nix-build/nix-build.cc
index cfe183888..f4af3fd04 100644
--- a/src/nix-build/nix-build.cc
+++ b/src/nix-build/nix-build.cc
@@ -293,7 +293,7 @@ static void main_nix_build(int argc, char * * argv)
     state->repair = myArgs.repair;
     if (myArgs.repair) buildMode = bmRepair;
 
-    if (inShebang) {
+    if (inShebang && compatibilitySettings.nixShellShebangArgumentsRelativeToScript) {
         myArgs.setBaseDir(absPath(dirOf(script)));
     }
     auto autoArgs = myArgs.getAutoArgs(*state);
@@ -345,7 +345,7 @@ static void main_nix_build(int argc, char * * argv)
             if (fromArgs)
                 exprs.push_back(state->parseExprFromString(
                     std::move(i),
-                    inShebang ? lookupFileArg(*state, baseDir) : state->rootPath(".")
+                    (inShebang && compatibilitySettings.nixShellShebangArgumentsRelativeToScript) ? lookupFileArg(*state, baseDir) : state->rootPath(".")
                 ));
             else {
                 auto absolute = i;
diff --git a/tests/functional/nix-shell.sh b/tests/functional/nix-shell.sh
index 596ac5951..fd3edf81a 100755
--- a/tests/functional/nix-shell.sh
+++ b/tests/functional/nix-shell.sh
@@ -76,6 +76,14 @@ echo "cwd: $PWD"
 output=$($TEST_ROOT/shell.shebang.expr bar)
 [ "$output" = foo ]
 
+# Test nix-shell shebang mode with an alternate working directory
+sed -e "s|@ENV_PROG@|$(type -P env)|" shell.shebang.legacy.expr > $TEST_ROOT/shell.shebang.legacy.expr
+chmod a+rx $TEST_ROOT/shell.shebang.legacy.expr
+# Should fail due to expressions using relative path
+mkdir -p "$TEST_ROOT/somewhere-unrelated"
+output="$(cd "$TEST_ROOT/somewhere-unrelated"; $TEST_ROOT/shell.shebang.legacy.expr bar;)"
+[[ $(realpath "$output") = $(realpath "$TEST_ROOT/somewhere-unrelated") ]]
+
 # Test nix-shell shebang mode again with metacharacters in the filename.
 # First word of filename is chosen to not match any file in the test root.
 sed -e "s|@ENV_PROG@|$(type -P env)|" shell.shebang.sh > $TEST_ROOT/spaced\ \\\'\"shell.shebang.sh