diff --git a/cmpserver/plugin/plugin.go b/cmpserver/plugin/plugin.go
index f8b63b4f5b2db..5c9190c3ceb39 100644
--- a/cmpserver/plugin/plugin.go
+++ b/cmpserver/plugin/plugin.go
@@ -225,7 +225,16 @@ func (s *Service) generateManifestGeneric(stream GenerateManifestStream) error {
 	if !strings.HasPrefix(appPath, workDir) {
 		return errors.New("illegal appPath: out of workDir bound")
 	}
-	response, err := s.generateManifest(ctx, appPath, metadata.GetEnv())
+
+	log.Debugf("Plugin using workdir: %s", workDir)
+
+	envEntries := metadata.GetEnv()
+	envEntries = append(envEntries, &apiclient.EnvEntry{
+		Name:  "ARGOCD_REPO_SERVER_CMP_WORKDIR",
+		Value: workDir,
+	})
+
+	response, err := s.generateManifest(ctx, appPath, envEntries)
 	if err != nil {
 		return fmt.Errorf("error generating manifests: %w", err)
 	}
diff --git a/cmpserver/plugin/plugin_test.go b/cmpserver/plugin/plugin_test.go
index 3c6e4363248f9..01b04c8a507ba 100644
--- a/cmpserver/plugin/plugin_test.go
+++ b/cmpserver/plugin/plugin_test.go
@@ -675,6 +675,28 @@ func TestService_GenerateManifest(t *testing.T) {
 	})
 }
 
+func TestService_EnvironmentVariables(t *testing.T) {
+	configFilePath := "./testdata/kustomize/config"
+	service, err := newService(configFilePath)
+	require.NoError(t, err)
+
+	t.Run("ARGOCD_REPO_SERVER_CMP_WORKDIR is set", func(t *testing.T) {
+		service.WithGenerateCommand(Command{
+			Command: []string{"sh", "-c"},
+			Args:    []string{"echo -n $ARGOCD_REPO_SERVER_CMP_WORKDIR"},
+		})
+
+		s, err := NewMockGenerateManifestStream("./testdata/kustomize", "./testdata/kustomize", nil)
+		require.NoError(t, err)
+		err = service.generateManifestGeneric(s)
+		require.NoError(t, err)
+		require.NotNil(t, s.response)
+		require.NotEmpty(t, s.response.Manifests)
+		envWorkDir := s.response.Manifests[0]
+		assert.NotEmpty(t, envWorkDir, "Environment variable ARGOCD_REPO_SERVER_CMP_WORKDIR should not be empty")
+	})
+}
+
 type MockMatchRepositoryStream struct {
 	metadataSent    bool
 	fileSent        bool