diff --git a/CHANGELOG.md b/CHANGELOG.md
index a90222b..f6d626d 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -24,6 +24,10 @@ The format is based on [Keep a Changelog](http://keepachangelog.com/) and this p
 - Adds stats (additions & deletions) to files nodes in comparisons — closes [#2078](https://github.com/gitkraken/vscode-gitlens/issues/2078) thanks to help via [PR #2079](https://github.com/gitkraken/vscode-gitlens/pull/2079) by Nafiur Rahman Khadem ([@ShafinKhadem](https://github.com/ShafinKhadem))
 - Adds the ability to uniquely format uncommitted changes for the current line blame annotations — closes [#1987](https://github.com/gitkraken/vscode-gitlens/issues/1987)
   - Adds a `gitlens.currentLine.uncommittedChangesFormat` setting to specify the uncommitted changes format of the current line blame annotation. **NOTE**: Setting this to an empty string will disable current line blame annotations for uncommitted changes
+- Adds variable expansion support to the `gitlens.worktrees.defaultLocation` setting
+  - `${userHome}` — the path of the user's home folder
+  - `${workspaceFolder}` — the path of the folder opened in VS Code containing the specified repository
+  - `${workspaceFolderBasename}` — the name of the folder opened in VS Code containing the specified repository without any slashes (/)
 
 ### Changed
 
diff --git a/src/commands/git/worktree.ts b/src/commands/git/worktree.ts
index b7c265c..c23dbca 100644
--- a/src/commands/git/worktree.ts
+++ b/src/commands/git/worktree.ts
@@ -478,14 +478,18 @@ export class WorktreeGitCommand extends QuickCommand<State> {
 		let recommendedRootUri;
 
 		const repoUri = state.repo.uri;
+		const trailer = `${basename(repoUri.path)}.worktrees`;
+
 		if (repoUri.toString() !== pickedUri.toString()) {
 			if (isDescendent(pickedUri, repoUri)) {
-				recommendedRootUri = Uri.joinPath(repoUri, '..', `${basename(repoUri.path)}.worktrees`);
+				recommendedRootUri = Uri.joinPath(repoUri, '..', trailer);
+			} else if (basename(pickedUri.path) === trailer) {
+				recommendedRootUri = pickedUri;
 			} else {
-				recommendedRootUri = Uri.joinPath(pickedUri, `${basename(repoUri.path)}.worktrees`);
+				recommendedRootUri = Uri.joinPath(pickedUri, trailer);
 			}
 		} else {
-			recommendedRootUri = Uri.joinPath(repoUri, '..', `${basename(repoUri.path)}.worktrees`);
+			recommendedRootUri = Uri.joinPath(repoUri, '..', trailer);
 			// Don't allow creating directly into the main worktree folder
 			canCreateDirectlyInPicked = false;
 		}
diff --git a/src/env/node/git/localGitProvider.ts b/src/env/node/git/localGitProvider.ts
index e9dd556..df42c35 100644
--- a/src/env/node/git/localGitProvider.ts
+++ b/src/env/node/git/localGitProvider.ts
@@ -110,7 +110,7 @@ import {
 } from '../../../system/path';
 import type { PromiseOrValue } from '../../../system/promise';
 import { any, fastestSettled, getSettledValue } from '../../../system/promise';
-import { equalsIgnoreCase, getDurationMilliseconds, md5, splitSingle } from '../../../system/string';
+import { equalsIgnoreCase, getDurationMilliseconds, interpolate, md5, splitSingle } from '../../../system/string';
 import { PathTrie } from '../../../system/trie';
 import { compare, fromString } from '../../../system/version';
 import type { CachedBlame, CachedDiff, CachedLog, TrackedDocument } from '../../../trackers/gitDocumentTracker';
@@ -3930,7 +3930,14 @@ export class LocalGitProvider implements GitProvider, Disposable {
 			location = joinPaths(homedir(), location.slice(1));
 		}
 
-		return this.getAbsoluteUri(location, repoPath); //isAbsolute(location) ? GitUri.file(location) : ;
+		const folder = this.container.git.getRepository(repoPath)?.folder;
+		location = interpolate(location, {
+			userHome: homedir(),
+			workspaceFolder: folder?.uri.fsPath,
+			workspaceFolderBasename: folder?.name,
+		});
+
+		return this.getAbsoluteUri(location, repoPath);
 	}
 
 	@log()