diff --git a/src/bin/cargo/commands/install.rs b/src/bin/cargo/commands/install.rs
index 621558d97c4..f0bbb4d7971 100644
--- a/src/bin/cargo/commands/install.rs
+++ b/src/bin/cargo/commands/install.rs
@@ -1,9 +1,11 @@
 use crate::command_prelude::*;
 
-use cargo::core::{GitReference, SourceId};
+use cargo::core::{GitReference, SourceId, Workspace};
 use cargo::ops;
 use cargo::util::IntoUrl;
 
+use cargo_util::paths;
+
 pub fn cli() -> App {
     subcommand("install")
         .about("Install a Rust binary. Default location is $HOME/.cargo/bin")
@@ -80,13 +82,20 @@ pub fn cli() -> App {
 }
 
 pub fn exec(config: &mut Config, args: &ArgMatches) -> CliResult {
-    if let Some(path) = args.value_of_path("path", config) {
+    let path = args.value_of_path("path", config);
+    if let Some(path) = &path {
         config.reload_rooted_at(path)?;
     } else {
         // TODO: Consider calling set_search_stop_path(home).
         config.reload_rooted_at(config.home().clone().into_path_unlocked())?;
     }
 
+    // In general, we try to avoid normalizing paths in Cargo,
+    // but in these particular cases we need it to fix rust-lang/cargo#10283.
+    // (Handle `SourceId::for_path` and `Workspace::new`,
+    // but not `Config::reload_rooted_at` which is always cwd)
+    let path = path.map(|p| paths::normalize_path(&p));
+
     let krates = args
         .values_of("crate")
         .unwrap_or_default()
@@ -106,7 +115,7 @@ pub fn exec(config: &mut Config, args: &ArgMatches) -> CliResult {
             GitReference::DefaultBranch
         };
         SourceId::for_git(&url, gitref)?
-    } else if let Some(path) = args.value_of_path("path", config) {
+    } else if let Some(path) = &path {
         SourceId::for_path(&path)?
     } else if krates.is_empty() {
         from_cwd = true;
@@ -125,9 +134,14 @@ pub fn exec(config: &mut Config, args: &ArgMatches) -> CliResult {
     // We only provide workspace information for local crate installation from
     // one of the following sources:
     // - From current working directory (only work for edition 2015).
-    // - From a specific local file path.
-    let workspace = if from_cwd || args.is_present("path") {
+    // - From a specific local file path (from `--path` arg).
+    //
+    // This workspace information is for emitting helpful messages from
+    // `ArgMatchesExt::compile_options` and won't affect the actual compilation.
+    let workspace = if from_cwd {
         args.workspace(config).ok()
+    } else if let Some(path) = &path {
+        Workspace::new(&path.join("Cargo.toml"), config).ok()
     } else {
         None
     };
diff --git a/tests/testsuite/install.rs b/tests/testsuite/install.rs
index c4a63edb39f..5442c1884c9 100644
--- a/tests/testsuite/install.rs
+++ b/tests/testsuite/install.rs
@@ -7,7 +7,7 @@ use cargo_test_support::cross_compile;
 use cargo_test_support::git;
 use cargo_test_support::registry::{self, registry_path, registry_url, Package};
 use cargo_test_support::{
-    basic_manifest, cargo_process, no_such_file_err_msg, project, symlink_supported, t,
+    basic_manifest, cargo_process, no_such_file_err_msg, project, project_in, symlink_supported, t,
 };
 
 use cargo_test_support::install::{
@@ -493,6 +493,70 @@ but found cargo.toml please try to rename it to Cargo.toml. --path must point to
         .run();
 }
 
+#[cargo_test]
+fn install_relative_path_outside_current_ws() {
+    let p = project()
+        .file(
+            "Cargo.toml",
+            r#"
+                [package]
+                name = "bar"
+                version = "0.1.0"
+                authors = []
+
+                [workspace]
+                members = ["baz"]
+            "#,
+        )
+        .file("src/main.rs", "fn main() {}")
+        .file(
+            "baz/Cargo.toml",
+            r#"
+                [package]
+                name = "baz"
+                version = "0.1.0"
+                authors = []
+                edition = "2021"
+
+                [dependencies]
+                foo = "1"
+            "#,
+        )
+        .file("baz/src/lib.rs", "")
+        .build();
+
+    let _bin_project = project_in("bar")
+        .file("src/main.rs", "fn main() {}")
+        .build();
+
+    p.cargo("install --path ../bar/foo")
+        .with_stderr(&format!(
+            "\
+[INSTALLING] foo v0.0.1 ([..]/bar/foo)
+[COMPILING] foo v0.0.1 ([..]/bar/foo)
+[FINISHED] release [..]
+[INSTALLING] {home}/bin/foo[EXE]
+[INSTALLED] package `foo v0.0.1 ([..]/bar/foo)` (executable `foo[EXE]`)
+[WARNING] be sure to add [..]
+",
+            home = cargo_home().display(),
+        ))
+        .run();
+
+    // Validate the workspace error message to display available targets.
+    p.cargo("install --path ../bar/foo --bin")
+        .with_status(101)
+        .with_stderr(
+            "\
+[ERROR] \"--bin\" takes one argument.
+Available binaries:
+    foo
+
+",
+        )
+        .run();
+}
+
 #[cargo_test]
 fn multiple_crates_error() {
     let p = git::repo(&paths::root().join("foo"))