diff --git a/src/poetry/utils/env.py b/src/poetry/utils/env.py
index 024713e9272..6c7e60deb34 100644
--- a/src/poetry/utils/env.py
+++ b/src/poetry/utils/env.py
@@ -1145,7 +1145,7 @@ def get_base_prefix(cls) -> Path:
     def generate_env_name(cls, name: str, cwd: str) -> str:
         name = name.lower()
         sanitized_name = re.sub(r'[ $`!*@"\\\r\n\t]', "_", name)[:42]
-        normalized_cwd = os.path.normcase(cwd)
+        normalized_cwd = os.path.normcase(os.path.realpath(cwd))
         h_bytes = hashlib.sha256(encode(normalized_cwd)).digest()
         h_str = base64.urlsafe_b64encode(h_bytes).decode()[:8]
 
diff --git a/tests/utils/test_env.py b/tests/utils/test_env.py
index a3a4474b399..03c1e4c29ff 100644
--- a/tests/utils/test_env.py
+++ b/tests/utils/test_env.py
@@ -1362,6 +1362,13 @@ def test_generate_env_name_ignores_case_for_case_insensitive_fs(tmp_dir: str):
         assert venv_name1 != venv_name2
 
 
+def test_generate_env_name_uses_real_path(tmp_dir: str, mocker: MockerFixture):
+    mocker.patch("os.path.realpath", return_value="the_real_dir")
+    venv_name1 = EnvManager.generate_env_name("simple-project", "the_real_dir")
+    venv_name2 = EnvManager.generate_env_name("simple-project", "linked_dir")
+    assert venv_name1 == venv_name2
+
+
 @pytest.fixture()
 def extended_without_setup_poetry() -> Poetry:
     poetry = Factory().create_poetry(