diff --git a/extensions/open-remote-ssh/package.json b/extensions/open-remote-ssh/package.json
index 315c432b121..1c3007c1957 100644
--- a/extensions/open-remote-ssh/package.json
+++ b/extensions/open-remote-ssh/package.json
@@ -103,6 +103,12 @@
 					"description": "**Experimental:** The name of the server binary, use this **only if** you are using a client without a corresponding server release",
 					"scope": "application",
 					"default": ""
+				},
+				"remoteSSH.serverInstallPath": {
+					"type": "string",
+					"markdownDescription": "A custom directory to install the Positron server data on the remote machine. By default, the server data is installed in `~/.positron-server`.",
+					"scope": "application",
+					"default": ""
 				}
 			}
 		},
diff --git a/extensions/open-remote-ssh/src/serverConfig.ts b/extensions/open-remote-ssh/src/serverConfig.ts
index f4b81450e47..acc8e094f25 100644
--- a/extensions/open-remote-ssh/src/serverConfig.ts
+++ b/extensions/open-remote-ssh/src/serverConfig.ts
@@ -35,6 +35,7 @@ export async function getVSCodeServerConfig(): Promise<IServerConfig> {
 	const productJson = await getVSCodeProductJson();
 
 	const customServerBinaryName = vscode.workspace.getConfiguration('remoteSSH.experimental').get<string>('serverBinaryName', '');
+	const customDataFolderName = vscode.workspace.getConfiguration('remoteSSH').get<string>('serverInstallPath', '');
 
 	const version = `${positron.version}-${positron.buildNumber}`;
 
@@ -44,7 +45,7 @@ export async function getVSCodeServerConfig(): Promise<IServerConfig> {
 		quality: productJson.quality,
 		release: productJson.release,
 		serverApplicationName: customServerBinaryName || productJson.serverApplicationName,
-		serverDataFolderName: productJson.serverDataFolderName,
+		serverDataFolderName: customDataFolderName || productJson.serverDataFolderName,
 		serverDownloadUrlTemplate: productJson.serverDownloadUrlTemplate
 	};
 }
diff --git a/extensions/open-remote-ssh/src/serverSetup.ts b/extensions/open-remote-ssh/src/serverSetup.ts
index 6a3a9596e4c..e78bd31c5b5 100644
--- a/extensions/open-remote-ssh/src/serverSetup.ts
+++ b/extensions/open-remote-ssh/src/serverSetup.ts
@@ -94,11 +94,15 @@ export async function installCodeServer(conn: SSHConnection, serverDownloadUrlTe
 
 	let commandOutput: { stdout: string; stderr: string };
 	if (platform === 'windows') {
+		// If the default was not changed, adjust the path for PowerShell on Windows
+		if (installOptions.serverDataFolderName === '$HOME/.positron-server') {
+			installOptions.serverDataFolderName = '$HOME\\.positron-server';
+		}
 		const installServerScript = generatePowerShellInstallScript(installOptions);
 
 		logger.trace('Server install command:', installServerScript);
 
-		const installDir = `$HOME\\${vscodeServerConfig.serverDataFolderName}\\install`;
+		const installDir = `${vscodeServerConfig.serverDataFolderName}\\install`;
 		const installScript = `${installDir}\\${vscodeServerConfig.commit}.ps1`;
 		const endRegex = new RegExp(`${scriptId}: end`);
 		// investigate if it's possible to use `-EncodedCommand` flag
@@ -226,7 +230,7 @@ DISTRO_VSCODIUM_RELEASE="${release ?? ''}"
 SERVER_APP_NAME="${serverApplicationName}"
 SERVER_INITIAL_EXTENSIONS="${extensions}"
 SERVER_LISTEN_FLAG="${useSocketPath ? `--socket-path="$TMP_DIR/vscode-server-sock-${crypto.randomUUID()}"` : '--port=0'}"
-SERVER_DATA_DIR="$HOME/${serverDataFolderName}"
+SERVER_DATA_DIR="${serverDataFolderName}"
 SERVER_DIR="$SERVER_DATA_DIR/bin/$DISTRO_COMMIT"
 SERVER_SCRIPT="$SERVER_DIR/bin/$SERVER_APP_NAME"
 SERVER_LOGFILE="$SERVER_DATA_DIR/.$DISTRO_COMMIT.log"
@@ -467,7 +471,7 @@ $DISTRO_VSCODIUM_RELEASE="${release ?? ''}"
 $SERVER_APP_NAME="${serverApplicationName}"
 $SERVER_INITIAL_EXTENSIONS="${extensions}"
 $SERVER_LISTEN_FLAG="${useSocketPath ? `--socket-path="$TMP_DIR/vscode-server-sock-${crypto.randomUUID()}"` : '--port=0'}"
-$SERVER_DATA_DIR="$(Resolve-Path ~)\\${serverDataFolderName}"
+$SERVER_DATA_DIR="${serverDataFolderName}"
 $SERVER_DIR="$SERVER_DATA_DIR\\bin\\$DISTRO_COMMIT"
 $SERVER_SCRIPT="$SERVER_DIR\\bin\\$SERVER_APP_NAME.cmd"
 $SERVER_LOGFILE="$SERVER_DATA_DIR\\.$DISTRO_COMMIT.log"
diff --git a/product.json b/product.json
index 3c5727d4ab8..0ea6bca49c3 100644
--- a/product.json
+++ b/product.json
@@ -14,7 +14,7 @@
 	"serverLicense": [],
 	"serverLicensePrompt": "",
 	"serverApplicationName": "positron-server",
-	"serverDataFolderName": ".positron-server",
+	"serverDataFolderName": "$HOME/.positron-server",
 	"serverDownloadUrlTemplate": "https://cdn.posit.co/positron/dailies/reh/${arch-long}/positron-reh-${os}-${arch}-${version}.tar.gz",
 	"tunnelApplicationName": "positron-tunnel",
 	"win32DirName": "Positron",