diff --git a/.circleci/workflows.yml b/.circleci/workflows.yml
index 3a31bc6ddf4d..77e1bed3f50b 100644
--- a/.circleci/workflows.yml
+++ b/.circleci/workflows.yml
@@ -32,7 +32,7 @@ mainBuildFilters: &mainBuildFilters
         - 'update-v8-snapshot-cache-on-develop'
         - 'jquery-patch-remove-unload'
         - 'publish-binary'
-        - 'chore/use_build_docker_file_for_centos7'
+        - 'fix/8599'
 
 # usually we don't build Mac app - it takes a long time
 # but sometimes we want to really confirm we are doing the right thing
@@ -43,7 +43,7 @@ macWorkflowFilters: &darwin-workflow-filters
     - equal: [ develop, << pipeline.git.branch >> ]
     # use the following branch as well to ensure that v8 snapshot cache updates are fully tested
     - equal: [ 'update-v8-snapshot-cache-on-develop', << pipeline.git.branch >> ]
-    - equal: [ 'fix/webpack-batteries-included-for-yarn-pnp', << pipeline.git.branch >> ]
+    - equal: [ 'fix/8599', << pipeline.git.branch >> ]
     - matches:
         pattern: /^release\/\d+\.\d+\.\d+$/
         value: << pipeline.git.branch >>
@@ -54,7 +54,7 @@ linuxArm64WorkflowFilters: &linux-arm64-workflow-filters
     - equal: [ develop, << pipeline.git.branch >> ]
     # use the following branch as well to ensure that v8 snapshot cache updates are fully tested
     - equal: [ 'update-v8-snapshot-cache-on-develop', << pipeline.git.branch >> ]
-    - equal: [ 'chore/use_build_docker_file_for_centos7', << pipeline.git.branch >> ]
+    - equal: [ 'fix/8599', << pipeline.git.branch >> ]
     - equal: [ 'jquery-patch-remove-unload', << pipeline.git.branch >> ]
     - matches:
         pattern: /^release\/\d+\.\d+\.\d+$/
@@ -78,7 +78,7 @@ windowsWorkflowFilters: &windows-workflow-filters
     - equal: [ develop, << pipeline.git.branch >> ]
     # use the following branch as well to ensure that v8 snapshot cache updates are fully tested
     - equal: [ 'update-v8-snapshot-cache-on-develop', << pipeline.git.branch >> ]
-    - equal: [ 'fix/webpack-batteries-included-for-yarn-pnp', << pipeline.git.branch >> ]
+    - equal: [ 'fix/8599', << pipeline.git.branch >> ]
     - matches:
         pattern: /^release\/\d+\.\d+\.\d+$/
         value: << pipeline.git.branch >>
@@ -154,7 +154,7 @@ commands:
           name: Set environment variable to determine whether or not to persist artifacts
           command: |
             echo "Setting SHOULD_PERSIST_ARTIFACTS variable"
-            echo 'if ! [[ "$CIRCLE_BRANCH" != "develop" && "$CIRCLE_BRANCH" != "release/"* && "$CIRCLE_BRANCH" != "chore/use_build_docker_file_for_centos7" ]]; then
+            echo 'if ! [[ "$CIRCLE_BRANCH" != "develop" && "$CIRCLE_BRANCH" != "release/"* && "$CIRCLE_BRANCH" != "fix/8599" ]]; then
                 export SHOULD_PERSIST_ARTIFACTS=true
             fi' >> "$BASH_ENV"
   # You must run `setup_should_persist_artifacts` command and be using bash before running this command
diff --git a/cli/CHANGELOG.md b/cli/CHANGELOG.md
index bd2e581d08d0..b77c46ccfdda 100644
--- a/cli/CHANGELOG.md
+++ b/cli/CHANGELOG.md
@@ -11,9 +11,13 @@ _Released 8/27/2024 (PENDING)_
 
 - Added a `CYPRESS_SKIP_VERIFY` flag to enable suppressing Cypress verification checks. Addresses [#22243](https://github.com/cypress-io/cypress/issues/22243).
 
+**Bugfixes:**
+
+- Fixed an issue where files outside the Cypress project directory were not calculating the bundle output path correctly for the `file:preprocessor`. Addresses [#8599](https://github.com/cypress-io/cypress/issues/8599).
+
 **Dependency Updates:**
 
-- Updated `detect-port` from `1.3.0` to `1.6.1`. Addressed in [#30038](https://github.com/cypress-io/cypress/pull/30038).
+- Updated `detect-port` from `1.3.0` to `1.6.1`. Addressed in [#30038](https://github.com/cypress-io/cypress/pull/30038). 
 
 ## 13.13.3
 
diff --git a/packages/server/lib/util/app_data.js b/packages/server/lib/util/app_data.js
index efe9cb21f1de..a2f3c7b11021 100644
--- a/packages/server/lib/util/app_data.js
+++ b/packages/server/lib/util/app_data.js
@@ -10,11 +10,38 @@ const { fs } = require('../util/fs')
 const cwd = require('../cwd')
 const md5 = require('md5')
 const sanitize = require('sanitize-filename')
+const replace = require('lodash/replace')
 
 const PRODUCT_NAME = pkg.productName || pkg.name
-const OS_DATA_PATH = ospath.data()
 
-const ELECTRON_APP_DATA_PATH = path.join(OS_DATA_PATH, PRODUCT_NAME)
+// original source code: https://github.com/isaacs/common-ancestor-path
+// but modified to be more testable
+const findCommonAncestor = (a, b) => {
+  const sep = os.platform() === 'win32' ? '\\' : '/'
+
+  function* commonArrayMembers (a, b) {
+    const [l, s] = a.length > b.length ? [a, b] : [b, a]
+
+    for (const x of s) {
+      if (x === l.shift()) {
+        yield x
+      } else {
+        break
+      }
+    }
+  }
+
+  return a === b ? a
+    : path.parse(a).root !== path.parse(b).root ? null
+      : [...commonArrayMembers(path.normalize(a).split(sep), path.normalize(b).split(sep))].join(sep)
+}
+
+const getElectronAppDataPath = () => {
+  const OS_DATA_PATH = ospath.data()
+  const ELECTRON_APP_DATA_PATH = path.join(OS_DATA_PATH, PRODUCT_NAME)
+
+  return ELECTRON_APP_DATA_PATH
+}
 
 if (!PRODUCT_NAME) {
   throw new Error('Root package is missing name')
@@ -47,11 +74,45 @@ const toHashName = (projectRoot) => {
   return `${name}-${hash}`
 }
 
+const modifyFileIfOutsideProjectDirectory = (projectRoot, filePath) => {
+  /**
+   * files that live outside of the project directory
+   * do not resolve correctly on Windows as we are trying to resolve the file to the project directory.
+   * This issue is only noticeable on windows since the absolute path gets appended to the project bundle
+   * path. In Unix based systems, this goes unnoticed because:
+   *     /Users/foo/project/nested/hash-bundle/Users/foo/project/file.js
+   * is a valid path in Unix, but
+   *     C:\\Users\\foo\\project\\nested\\hash-bundleC:\\Users\\foo\\project\\file.js
+   * is not a valid path in Windows
+   *
+   * To resolve this issue, we find the common ancestor directory between the project and file,
+   * take the path AFTER the common ancestor directory of the file, and append it to the project bundle directory.
+   * Effectively:
+   *     C:\\Users\\foo\\project\\nested\\hash-bundleC:\\Users\\foo\\project\\file.js
+   * will become
+   *     C:\\Users\\foo\\project\\nested\\hash-bundle\\file.js
+   * @see https://github.com/cypress-io/cypress/issues/8599
+   */
+
+  const relative = path.relative(projectRoot, filePath)
+  const isSubDirectory = relative && !relative.startsWith('..') && !path.isAbsolute(relative)
+
+  // if the file does NOT live inside the project directory,
+  // find the common ancestor of the project and file to get the file subpath to append to the project bundle directory
+  if (!isSubDirectory) {
+    const commonDirectoryPath = findCommonAncestor(projectRoot, filePath)
+
+    filePath = replace(filePath, commonDirectoryPath, '')
+  }
+
+  return filePath
+}
+
 module.exports = {
   toHashName,
-
+  findCommonAncestor,
   getBundledFilePath (projectRoot, filePath) {
-    return this.projectsPath(toHashName(projectRoot), 'bundles', filePath)
+    return this.projectsPath(toHashName(projectRoot), 'bundles', modifyFileIfOutsideProjectDirectory(projectRoot, filePath))
   },
 
   ensure () {
@@ -98,7 +159,7 @@ module.exports = {
       folder = `${folder}-e2e-test`
     }
 
-    const p = path.join(ELECTRON_APP_DATA_PATH, 'cy', folder, ...paths)
+    const p = path.join(getElectronAppDataPath(), 'cy', folder, ...paths)
 
     log('path: %s', p)
 
@@ -106,7 +167,7 @@ module.exports = {
   },
 
   electronPartitionsPath () {
-    return path.join(ELECTRON_APP_DATA_PATH, 'Partitions')
+    return path.join(getElectronAppDataPath(), 'Partitions')
   },
 
   projectsPath (...paths) {
diff --git a/packages/server/test/unit/util/app_data_spec.js b/packages/server/test/unit/util/app_data_spec.js
index f05405245fe4..35c93fb8d3d5 100644
--- a/packages/server/test/unit/util/app_data_spec.js
+++ b/packages/server/test/unit/util/app_data_spec.js
@@ -1,4 +1,7 @@
 require('../../spec_helper')
+const os = require('os')
+const osPath = require('ospath')
+const path = require('path')
 
 const AppData = require(`../../../lib/util/app_data`)
 
@@ -28,6 +31,28 @@ describe('lib/util/app_data', () => {
     })
   })
 
+  context('#findCommonAncestor', () => {
+    it('posix', () => {
+      expect(AppData.findCommonAncestor('/a/b/c/d', '/a/b/c/d/')).to.equal('/a/b/c/d')
+      expect(AppData.findCommonAncestor('/a/b/c', '/a/x/y')).to.equal('/a')
+      expect(AppData.findCommonAncestor('/a/b/', '/a/b/')).to.equal('/a/b/')
+      expect(AppData.findCommonAncestor('/a', '/a/b/c')).to.equal('/a')
+      expect(AppData.findCommonAncestor('/a/b/c', '/a')).to.equal('/a')
+    })
+
+    it('win32', () => {
+      sinon.stub(os, 'platform')
+      os.platform.returns('win32')
+
+      expect(AppData.findCommonAncestor('c:\\a\\b\\c\\d', 'c:\\a\\b\\c\\d\\')).to.equal('c:\\a\\b\\c\\d')
+      expect(AppData.findCommonAncestor('c:\\a\\b\\c', 'c:\\a\\x\\y')).to.equal('c:\\a')
+      expect(AppData.findCommonAncestor('c:\\a\\b\\', 'c:\\a\\b\\')).to.equal('c:\\a\\b\\')
+      expect(AppData.findCommonAncestor('c:\\a\\b\\', 'd:\\a\\b\\')).to.equal('')
+      expect(AppData.findCommonAncestor('c:\\a', 'c:\\a\\b\\c')).to.equal('c:\\a')
+      expect(AppData.findCommonAncestor('c:\\a\\b\\c', 'c:\\a')).to.equal('c:\\a')
+    })
+  })
+
   context('#getBundledFilePath', () => {
     it('provides an absolute path to the bundled file', () => {
       const projectRoot = '/foo/bar'
@@ -38,5 +63,69 @@ describe('lib/util/app_data', () => {
       expect(result).to.contain(expectedPrefix)
       expect(result).to.contain(imagePath)
     })
+
+    // @see https://github.com/cypress-io/cypress/issues/8599
+    describe('issue #8599: can find a path to bundle preprocessor files that live outside the project directory', () => {
+      it('on windows', () => {
+        // mock / stub out path and os variables as if we were on Windows
+        sinon.stub(os, 'platform')
+        sinon.stub(osPath, 'data')
+        sinon.stub(path, 'basename')
+        sinon.stub(path, 'dirname')
+        sinon.stub(path, 'isAbsolute')
+        sinon.stub(path, 'join')
+        sinon.stub(path, 'parse')
+        sinon.stub(path, 'normalize')
+
+        os.platform.returns('win32')
+        osPath.data.returns(`C:\\Users\\foo\\AppData\\Roaming`)
+
+        path.basename.callsFake((...args) => path.win32.basename(...args))
+        path.dirname.callsFake((...args) => path.win32.dirname(...args))
+        path.isAbsolute.callsFake((...args) => path.win32.isAbsolute(...args))
+        path.join.callsFake((...args) => path.win32.join(...args))
+        path.parse.callsFake((...args) => path.win32.parse(...args))
+        path.normalize.callsFake((...args) => path.win32.normalize(...args))
+        const filePathNotInProjectDirectory = `C:\\Users\\foo\\project\\support\\index.js`
+
+        const projectRoot = `C:\\Users\\foo\\project\\nested-project`
+
+        const result = AppData.getBundledFilePath(projectRoot, filePathNotInProjectDirectory)
+
+        // currently is: 'C:\\Users\\foo\\AppData\\Roaming\\Cypress\\cy\\test\\projects\\nested-project-5ddfc54488859fd4a685e789cc5259c9\\bundles\\C:\\Users\\foo\\project\\support\\index.js'
+        // likely should be something like this: 'C:\\Users\\foo\\AppData\\Roaming\\Cypress\\cy\\test\\projects\\nested-project-5ddfc54488859fd4a685e789cc5259c9\\bundles\\support\\index.js'
+        expect(result).to.equal(`C:\\Users\\foo\\AppData\\Roaming\\Cypress\\cy\\test\\projects\\nested-project-5ddfc54488859fd4a685e789cc5259c9\\bundles\\support\\index.js`)
+      })
+
+      it('on linux', () => {
+        sinon.stub(os, 'platform')
+        sinon.stub(osPath, 'data')
+
+        os.platform.returns('linux')
+        osPath.data.returns(`/Users/foo/.cache`)
+
+        const filePathNotInProjectDirectory = `/Users/foo/project/support/index.js`
+        const projectRoot = `/Users/foo/project/nested-project`
+
+        const result = AppData.getBundledFilePath(projectRoot, filePathNotInProjectDirectory)
+
+        expect(result).to.equal(`/Users/foo/.cache/Cypress/cy/test/projects/nested-project-48bc0cf1ee4dff159065e8a5813d3c7f/bundles/support/index.js`)
+      })
+
+      it('on darwin/mac', () => {
+        sinon.stub(os, 'platform')
+        sinon.stub(osPath, 'data')
+
+        os.platform.returns('linux')
+        osPath.data.returns(`/Users/foo/Library/Caches`)
+
+        const filePathNotInProjectDirectory = `/Users/foo/project/support/index.js`
+        const projectRoot = `/Users/foo/project/nested-project`
+
+        const result = AppData.getBundledFilePath(projectRoot, filePathNotInProjectDirectory)
+
+        expect(result).to.equal(`/Users/foo/Library/Caches/Cypress/cy/test/projects/nested-project-48bc0cf1ee4dff159065e8a5813d3c7f/bundles/support/index.js`)
+      })
+    })
   })
 })
diff --git a/yarn.lock b/yarn.lock
index f304d58603b7..a66ea3d335ed 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -12443,7 +12443,7 @@ commander@~2.19.0:
   resolved "https://registry.yarnpkg.com/commander/-/commander-2.19.0.tgz#f6198aa84e5b83c46054b94ddedbfed5ee9ff12a"
   integrity sha512-6tvAOO+D6OENvRAh524Dh9jcfKTYDQAqvqezbCW82xj5X0pSrcpxtvRKHLG0yBY6SD7PSDrJaj+0AiOcKVd1Xg==
 
-common-ancestor-path@^1.0.1:
+common-ancestor-path@1.0.1, common-ancestor-path@^1.0.1:
   version "1.0.1"
   resolved "https://registry.yarnpkg.com/common-ancestor-path/-/common-ancestor-path-1.0.1.tgz#4f7d2d1394d91b7abdf51871c62f71eadb0182a7"
   integrity sha512-L3sHRo1pXXEqX8VU28kfgUY+YGsk09hPqZiZmLacNib6XNTCM8ubYeT7ryXQw8asB1sKgcU5lkB7ONug08aB8w==