diff --git a/src/jsc/RuntimeTranspilerCache.rs b/src/jsc/RuntimeTranspilerCache.rs
index 98e9aa0a506b..495eecc88590 100644
--- a/src/jsc/RuntimeTranspilerCache.rs
+++ b/src/jsc/RuntimeTranspilerCache.rs
@@ -635,7 +635,10 @@ impl RuntimeTranspilerCache {
         // that `absBufZ` used.
         let top = FileSystem::instance().top_level_dir;
 
-        if let Some(dir) = env_var::XDG_CACHE_HOME.get() {
+        if let Some(dir) = env_var::XDG_CACHE_HOME
+            .get()
+            .filter(|d| paths::is_absolute(d))
+        {
             let parts: &[&[u8]] = &[dir, b"bun", b"@t@"];
             return path_handler::join_abs_string_buf_z::<platform::Loose>(
                 top,
@@ -649,7 +652,7 @@ impl RuntimeTranspilerCache {
         {
             // On a mac, default to ~/Library/Caches/bun/*
             // This is different than ~/.bun/install/cache, and not configurable by the user.
-            if let Some(home) = env_var::HOME.get() {
+            if let Some(home) = env_var::HOME.get().filter(|d| paths::is_absolute(d)) {
                 let parts: &[&[u8]] = &[home, b"Library/", b"Caches/", b"bun", b"@t@"];
                 return path_handler::join_abs_string_buf_z::<platform::Loose>(
                     top,
@@ -660,7 +663,7 @@ impl RuntimeTranspilerCache {
             }
         }
 
-        if let Some(dir) = env_var::HOME.get() {
+        if let Some(dir) = env_var::HOME.get().filter(|d| paths::is_absolute(d)) {
             let parts: &[&[u8]] = &[dir, b".bun", b"install", b"cache", b"@t@"];
             return path_handler::join_abs_string_buf_z::<platform::Loose>(
                 top,
diff --git a/test/cli/run/transpiler-cache.test.ts b/test/cli/run/transpiler-cache.test.ts
index 606582c1f2d3..415e697c115d 100644
--- a/test/cli/run/transpiler-cache.test.ts
+++ b/test/cli/run/transpiler-cache.test.ts
@@ -12,7 +12,7 @@ import {
   unlinkSync,
   writeFileSync,
 } from "fs";
-import { bunEnv, bunExe, bunRun, isWindows, tmpdirSync } from "harness";
+import { bunEnv, bunExe, bunRun, isMacOS, isWindows, tmpdirSync } from "harness";
 import { mkfifo } from "mkfifo";
 import { join } from "path";
 
@@ -210,6 +210,56 @@ describe("transpiler cache", () => {
     expect(await bunRun(join(temp_dir, "a.js"), env)).toSpawn("no-tmpdir-cache");
     expect(newCacheCount()).toBe(1);
   });
+  test.each([
+    ["an empty", ""],
+    ["a relative", "relxdg"],
+  ])("ignores %s XDG_CACHE_HOME instead of caching next to the project", async (_label, xdg_cache_home) => {
+    writeFileSync(join(temp_dir, "a.js"), dummyFile((50 * 1024 * 1.5) | 0, "1", "xdg-not-absolute"));
+
+    // The XDG base directory specification requires an absolute path, so the
+    // next candidate in the chain is HOME.
+    const home = join(temp_dir, "home");
+    mkdirSync(home, { recursive: true });
+    const home_cache = isMacOS
+      ? join(home, "Library", "Caches", "bun", "@t@")
+      : join(home, ".bun", "install", "cache", "@t@");
+
+    expect(
+      await bunRun(join(temp_dir, "a.js"), {
+        ...env,
+        BUN_RUNTIME_TRANSPILER_CACHE_PATH: undefined,
+        XDG_CACHE_HOME: xdg_cache_home,
+        HOME: home,
+        USERPROFILE: home,
+      }),
+    ).toSpawn("xdg-not-absolute");
+
+    expect(readdirSync(home_cache)).toHaveLength(1);
+    // The cwd is not a cache location: neither `bun/@t@` (empty value) nor
+    // `relxdg/bun/@t@` (relative value) may appear in the project.
+    expect(existsSync(join(temp_dir, "bun"))).toBeFalse();
+    expect(existsSync(join(temp_dir, "relxdg"))).toBeFalse();
+  });
+  test.each([
+    ["an empty", ""],
+    ["a relative", "relhome"],
+  ])("disables the cache for %s HOME instead of caching next to the project", async (_label, home) => {
+    writeFileSync(join(temp_dir, "a.js"), dummyFile((50 * 1024 * 1.5) | 0, "1", "home-not-absolute"));
+
+    // HOME is the last candidate, so a value that is not absolute leaves no
+    // cache location and the cache is disabled.
+    expect(
+      await bunRun(join(temp_dir, "a.js"), {
+        ...env,
+        BUN_RUNTIME_TRANSPILER_CACHE_PATH: undefined,
+        XDG_CACHE_HOME: undefined,
+        HOME: home,
+        USERPROFILE: home,
+      }),
+    ).toSpawn("home-not-absolute");
+
+    expect(readdirSync(temp_dir)).toEqual(["a.js"]);
+  });
   test("works if the cache is not user-readable", async () => {
     mkdirSync(cache_dir, { recursive: true });
     writeFileSync(join(temp_dir, "a.js"), dummyFile((50 * 1024 * 1.5) | 0, "1", "b"));