diff --git a/src/API.jl b/src/API.jl
index 103e7c99f3..d11ce3d453 100644
--- a/src/API.jl
+++ b/src/API.jl
@@ -187,46 +187,57 @@ for f in (:develop, :add, :rm, :up, :pin, :free, :test, :build, :status, :why, :
     end
 end
 
-function update_source_if_set(project, pkg)
+function update_source_if_set(env, pkg)
+    project = env.project
     source = get(project.sources, pkg.name, nothing)
-    source === nothing && return
-    if pkg.repo == GitRepo()
-        delete!(project.sources, pkg.name)
-    else
-        # This should probably not modify the dicts directly...
-        if pkg.repo.source !== nothing
-            source["url"] = pkg.repo.source
-            delete!(source, "path")
+    if source !== nothing
+        if pkg.repo == GitRepo()
+            delete!(project.sources, pkg.name)
+        else
+            # This should probably not modify the dicts directly...
+            if pkg.repo.source !== nothing
+                source["url"] = pkg.repo.source
+                delete!(source, "path")
+            end
+            if pkg.repo.rev !== nothing
+                source["rev"] = pkg.repo.rev
+                delete!(source, "path")
+            end
+            if pkg.repo.subdir !== nothing
+                source["subdir"] = pkg.repo.subdir
+            end
+            if pkg.path !== nothing
+                source["path"] = pkg.path
+                delete!(source, "url")
+                delete!(source, "rev")
+            end
         end
-        if pkg.repo.rev !== nothing
-            source["rev"] = pkg.repo.rev
-            delete!(source, "path")
+        if pkg.subdir !== nothing
+            source["subdir"] = pkg.subdir
         end
-        if pkg.repo.subdir !== nothing
-            source["subdir"] = pkg.repo.subdir
+        path, repo = get_path_repo(project, pkg.name)
+        if path !== nothing
+            pkg.path = path
         end
-        if pkg.path !== nothing
-            source["path"] = pkg.path
-            delete!(source, "url")
-            delete!(source, "rev")
+        if repo.source !== nothing
+            pkg.repo.source = repo.source
+        end
+        if repo.rev !== nothing
+            pkg.repo.rev = repo.rev
+        end
+        if repo.subdir !== nothing
+            pkg.repo.subdir = repo.subdir
         end
     end
-    if pkg.subdir !== nothing
-        source["subdir"] = pkg.subdir
-    end
-    path, repo = get_path_repo(project, pkg.name)
-    if path !== nothing
-        pkg.path = path
-    end
-    if repo.source !== nothing
-        pkg.repo.source = repo.source
-    end
-    if repo.rev !== nothing
-        pkg.repo.rev = repo.rev
-    end
-    if repo.subdir !== nothing
-        pkg.repo.subdir = repo.subdir
+
+    # Packages in manifest should have their paths set to the path in the manifest
+    for (path, wproj) in env.workspace
+        if wproj.uuid == pkg.uuid
+            pkg.path = Types.relative_project_path(env.manifest_file, dirname(path))
+            break
+        end
     end
+    return
 end
 
 function develop(ctx::Context, pkgs::Vector{PackageSpec}; shared::Bool=true,
@@ -268,7 +279,7 @@ function develop(ctx::Context, pkgs::Vector{PackageSpec}; shared::Bool=true,
         if length(findall(x -> x.uuid == pkg.uuid, pkgs)) > 1
             pkgerror("it is invalid to specify multiple packages with the same UUID: $(err_rep(pkg))")
         end
-        update_source_if_set(ctx.env.project, pkg)
+        update_source_if_set(ctx.env, pkg)
     end
 
     Operations.develop(ctx, pkgs, new_git; preserve=preserve, platform=platform)
@@ -322,7 +333,7 @@ function add(ctx::Context, pkgs::Vector{PackageSpec}; preserve::PreserveLevel=Op
         if length(findall(x -> x.uuid == pkg.uuid, pkgs)) > 1
             pkgerror("it is invalid to specify multiple packages with the same UUID: $(err_rep(pkg))")
         end
-        update_source_if_set(ctx.env.project, pkg)
+        update_source_if_set(ctx.env, pkg)
     end
 
     Operations.add(ctx, pkgs, new_git; allow_autoprecomp, preserve, platform, target)
@@ -401,7 +412,7 @@ function up(ctx::Context, pkgs::Vector{PackageSpec};
         ensure_resolved(ctx, ctx.env.manifest, pkgs)
     end
     for pkg in pkgs
-        update_source_if_set(ctx.env.project, pkg)
+        update_source_if_set(ctx.env, pkg)
     end
     Operations.up(ctx, pkgs, level; skip_writing_project, preserve)
     return
@@ -440,7 +451,7 @@ function pin(ctx::Context, pkgs::Vector{PackageSpec}; all_pkgs::Bool=false, kwar
                 pkgerror("pinning a package requires a single version, not a versionrange")
             end
         end
-        update_source_if_set(ctx.env.project, pkg)
+        update_source_if_set(ctx.env, pkg)
     end
 
     project_deps_resolve!(ctx.env, pkgs)
diff --git a/test/test_packages/WorkspacePathResolution/Project.toml b/test/test_packages/WorkspacePathResolution/Project.toml
new file mode 100644
index 0000000000..793ff0e389
--- /dev/null
+++ b/test/test_packages/WorkspacePathResolution/Project.toml
@@ -0,0 +1,5 @@
+[workspace]
+projects = [
+    "SubProjectA",
+    "SubProjectB",
+]
\ No newline at end of file
diff --git a/test/test_packages/WorkspacePathResolution/SubProjectA/Project.toml b/test/test_packages/WorkspacePathResolution/SubProjectA/Project.toml
new file mode 100644
index 0000000000..e5aa2bbe50
--- /dev/null
+++ b/test/test_packages/WorkspacePathResolution/SubProjectA/Project.toml
@@ -0,0 +1,9 @@
+name = "SubProjectA"
+uuid = "87654321-4321-4321-4321-210987654321"
+version = "0.1.0"
+
+[deps]
+SubProjectB = "12345678-1234-1234-1234-123456789012"
+
+[sources]
+SubProjectB = {path = "SubProjectB"}
diff --git a/test/test_packages/WorkspacePathResolution/SubProjectA/src/SubProjectA.jl b/test/test_packages/WorkspacePathResolution/SubProjectA/src/SubProjectA.jl
new file mode 100644
index 0000000000..06b4efa7b4
--- /dev/null
+++ b/test/test_packages/WorkspacePathResolution/SubProjectA/src/SubProjectA.jl
@@ -0,0 +1,7 @@
+module SubProjectA
+
+using SubProjectB
+
+greet() = "Hello from SubProjectA! " * SubProjectB.greet()
+
+end
\ No newline at end of file
diff --git a/test/test_packages/WorkspacePathResolution/SubProjectB/Project.toml b/test/test_packages/WorkspacePathResolution/SubProjectB/Project.toml
new file mode 100644
index 0000000000..f989c45989
--- /dev/null
+++ b/test/test_packages/WorkspacePathResolution/SubProjectB/Project.toml
@@ -0,0 +1,3 @@
+name = "SubProjectB"
+uuid = "12345678-1234-1234-1234-123456789012"
+version = "0.1.0"
\ No newline at end of file
diff --git a/test/test_packages/WorkspacePathResolution/SubProjectB/src/SubProjectB.jl b/test/test_packages/WorkspacePathResolution/SubProjectB/src/SubProjectB.jl
new file mode 100644
index 0000000000..342bdf6c94
--- /dev/null
+++ b/test/test_packages/WorkspacePathResolution/SubProjectB/src/SubProjectB.jl
@@ -0,0 +1,5 @@
+module SubProjectB
+
+greet() = "Hello from SubProjectB!"
+
+end
\ No newline at end of file
diff --git a/test/workspaces.jl b/test/workspaces.jl
index 33b75d2baa..ba848246f0 100644
--- a/test/workspaces.jl
+++ b/test/workspaces.jl
@@ -163,4 +163,19 @@ end
     end
 end
 
+@testset "workspace path resolution issue #4222" begin
+    mktempdir() do dir
+        path = copy_test_package(dir, "WorkspacePathResolution")
+        cd(path) do
+            with_current_env() do
+                # First resolve SubProjectB (non-root project) without existing Manifest
+                Pkg.activate("SubProjectB")
+                @test !isfile("Manifest.toml")
+                # Should be able to find SubProjectA and succeed
+                Pkg.update()
+            end
+        end
+    end
+end
+
 end # module