diff --git a/src/cmd/go/internal/generate/generate.go b/src/cmd/go/internal/generate/generate.go
index a48311d51b09b7..97df229b31568e 100644
--- a/src/cmd/go/internal/generate/generate.go
+++ b/src/cmd/go/internal/generate/generate.go
@@ -334,6 +334,7 @@ func (g *Generator) setEnv() {
 		"GOPACKAGE=" + g.pkg,
 		"DOLLAR=" + "$",
 	}
+	g.env = base.AppendPWD(g.env, g.dir)
 }
 
 // split breaks the line into words, evaluating quoted
diff --git a/src/cmd/go/testdata/script/generate.txt b/src/cmd/go/testdata/script/generate.txt
index c3c563e5f4a1d1..73f5bbd57a91d3 100644
--- a/src/cmd/go/testdata/script/generate.txt
+++ b/src/cmd/go/testdata/script/generate.txt
@@ -26,6 +26,10 @@ stdout 'yes' # flag.go should select yes
 go generate './generate/env_test.go'
 stdout 'main_test'
 
+# Test go generate provides the right "$PWD"
+go generate './generate/env_pwd.go'
+stdout $WORK'[/\\]gopath[/\\]src[/\\]generate'
+
 -- echo.go --
 package main
 
@@ -88,4 +92,8 @@ package p
 -- generate/env_test.go --
 package main_test
 
-//go:generate echo $GOPACKAGE
\ No newline at end of file
+//go:generate echo $GOPACKAGE
+-- generate/env_pwd.go --
+package p
+
+//go:generate echo $PWD