diff --git a/README.md b/README.md
index e2adeb949..6349ea366 100644
--- a/README.md
+++ b/README.md
@@ -340,8 +340,12 @@ same major line. Should you need to upgrade to a new major, use an explicit
   will be taken into account.
 
 - `COREPACK_HOME` can be set in order to define where Corepack should install
-  the package managers. By default it is set to `%LOCALAPPDATA%\node\corepack`
-  on Windows, and to `$HOME/.cache/node/corepack` everywhere else.
+  the package managers. Otherwise, Corepack uses `$XDG_CACHE_HOME/node/corepack`
+  if `XDG_CACHE_HOME` is set. Without either override, it uses
+  `%LOCALAPPDATA%\node\corepack` on Windows (falling back to
+  `%USERPROFILE%\AppData\Local\node\corepack` if `LOCALAPPDATA` is unset), and
+  `$HOME/.cache/node/corepack` everywhere else. `LOCALAPPDATA` is ignored on
+  non-Windows platforms, including Linux running under WSL.
 
 - `COREPACK_ROOT` has no functional impact on Corepack itself; it's
   automatically being set in your environment by Corepack when it shells out to
diff --git a/sources/folderUtils.ts b/sources/folderUtils.ts
index 84cde502c..36685b52d 100644
--- a/sources/folderUtils.ts
+++ b/sources/folderUtils.ts
@@ -16,7 +16,7 @@ export function getCorepackHomeFolder() {
     process.env.COREPACK_HOME ??
     join(
       process.env.XDG_CACHE_HOME ??
-        process.env.LOCALAPPDATA ??
+        (process.platform === `win32` ? process.env.LOCALAPPDATA : undefined) ??
         join(homedir(), process.platform === `win32` ? `AppData/Local` : `.cache`),
       `node/corepack`,
     )
diff --git a/tests/folderUtils.test.ts b/tests/folderUtils.test.ts
new file mode 100644
index 000000000..4d42fb553
--- /dev/null
+++ b/tests/folderUtils.test.ts
@@ -0,0 +1,45 @@
+import {homedir}                                 from 'os';
+import {join}                                    from 'path';
+import process                                   from 'process';
+import {beforeEach, describe, expect, it}        from 'vitest';
+
+import {getCorepackHomeFolder, getInstallFolder} from '../sources/folderUtils.ts';
+
+beforeEach(() => {
+  delete process.env.COREPACK_HOME;
+  delete process.env.XDG_CACHE_HOME;
+  delete process.env.LOCALAPPDATA;
+});
+
+describe(`cache location`, () => {
+  const localAppData = join(homedir(), `windows-cache`);
+  const xdgCacheHome = join(homedir(), `xdg-cache`);
+  const corepackHome = join(homedir(), `custom-corepack`);
+
+  const cases: Array<{platform: NodeJS.Platform, env: NodeJS.ProcessEnv, expected: string}> = [
+    {platform: `linux`, env: {}, expected: join(homedir(), `.cache/node/corepack`)},
+    {platform: `linux`, env: {LOCALAPPDATA: localAppData}, expected: join(homedir(), `.cache/node/corepack`)},
+    {platform: `darwin`, env: {LOCALAPPDATA: localAppData}, expected: join(homedir(), `.cache/node/corepack`)},
+    {platform: `win32`, env: {LOCALAPPDATA: localAppData}, expected: join(localAppData, `node/corepack`)},
+    {platform: `win32`, env: {}, expected: join(homedir(), `AppData/Local/node/corepack`)},
+  ];
+
+  for (const platform of [`linux`, `darwin`, `win32`] as const) {
+    cases.push(
+      {platform, env: {XDG_CACHE_HOME: xdgCacheHome, LOCALAPPDATA: localAppData}, expected: join(xdgCacheHome, `node/corepack`)},
+      {platform, env: {COREPACK_HOME: corepackHome, XDG_CACHE_HOME: xdgCacheHome, LOCALAPPDATA: localAppData}, expected: corepackHome},
+    );
+  }
+
+  it.each(cases)(`uses $expected on $platform with $env`, ({platform, env, expected}) => {
+    const descriptor = Object.getOwnPropertyDescriptor(process, `platform`)!;
+    Object.assign(process.env, env);
+    Object.defineProperty(process, `platform`, {value: platform});
+    try {
+      expect(getCorepackHomeFolder()).toBe(expected);
+      expect(getInstallFolder()).toBe(join(expected, `v1`));
+    } finally {
+      Object.defineProperty(process, `platform`, descriptor);
+    }
+  });
+});