diff --git a/src/toolchain/BuildFlags.ts b/src/toolchain/BuildFlags.ts
index dcb5d162c..dcb258518 100644
--- a/src/toolchain/BuildFlags.ts
+++ b/src/toolchain/BuildFlags.ts
@@ -128,6 +128,44 @@ export class BuildFlags {
         }
     }
 
+    /**
+     * Extract scratch-path or build-path value from an array of arguments
+     * @param args Array of command-line arguments to search
+     * @returns The path value if found, otherwise undefined
+     */
+    private static extractScratchPath(args: string[]): string | undefined {
+        for (let i = 0; i < args.length; i++) {
+            const arg = args[i];
+            if ((arg === "--scratch-path" || arg === "--build-path") && i + 1 < args.length) {
+                const path = args[i + 1];
+                if (path === "") {
+                    throw new Error(`Invalid ${arg}: path cannot be empty`);
+                }
+                if (path.startsWith("--")) {
+                    throw new Error(
+                        `Invalid ${arg}: expected a path but got another flag '${path}'`
+                    );
+                }
+                return path;
+            }
+            if (arg.startsWith("--scratch-path=")) {
+                const path = arg.substring("--scratch-path=".length);
+                if (path === "") {
+                    throw new Error("Invalid --scratch-path: path cannot be empty");
+                }
+                return path;
+            }
+            if (arg.startsWith("--build-path=")) {
+                const path = arg.substring("--build-path=".length);
+                if (path === "") {
+                    throw new Error("Invalid --build-path: path cannot be empty");
+                }
+                return path;
+            }
+        }
+        return undefined;
+    }
+
     /**
      * Get build path from configuration if exists or return a fallback .build directory in given workspace
      * @param filesystem path to workspace that will be used as a fallback loacation with .build directory
@@ -139,7 +177,12 @@ export class BuildFlags {
     ): string {
         const nodePath =
             platform === "posix" ? path.posix : platform === "win32" ? path.win32 : path;
-        const buildPath = configuration.buildPath.length > 0 ? configuration.buildPath : ".build";
+
+        const buildPath =
+            BuildFlags.extractScratchPath(configuration.buildArguments) ??
+            BuildFlags.extractScratchPath(configuration.packageArguments) ??
+            (configuration.buildPath.length > 0 ? configuration.buildPath : ".build");
+
         if (!nodePath.isAbsolute(buildPath) && absolute) {
             return nodePath.join(workspacePath, buildPath);
         } else {
diff --git a/test/unit-tests/toolchain/BuildFlags.test.ts b/test/unit-tests/toolchain/BuildFlags.test.ts
index d8c2d29c6..26626a373 100644
--- a/test/unit-tests/toolchain/BuildFlags.test.ts
+++ b/test/unit-tests/toolchain/BuildFlags.test.ts
@@ -203,6 +203,14 @@ suite("BuildFlags Test Suite", () => {
 
     suite("buildDirectoryFromWorkspacePath", () => {
         const buildPathConfig = mockGlobalValue(configuration, "buildPath");
+        const buildArgsConfig = mockGlobalValue(configuration, "buildArguments");
+        const packageArgsConfig = mockGlobalValue(configuration, "packageArguments");
+
+        beforeEach(() => {
+            buildPathConfig.setValue("");
+            buildArgsConfig.setValue([]);
+            packageArgsConfig.setValue([]);
+        });
 
         test("no configuration provided", () => {
             buildPathConfig.setValue("");
@@ -239,6 +247,107 @@ suite("BuildFlags Test Suite", () => {
                 BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", true)
             ).to.equalPath("/some/full/workspace/test/path/some/relative/test/path");
         });
+
+        test("--scratch-path in buildArguments with separate value", () => {
+            buildArgsConfig.setValue(["--scratch-path", "/custom/scratch/path"]);
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", false)
+            ).to.equalPath("/custom/scratch/path");
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", true)
+            ).to.equalPath("/custom/scratch/path");
+        });
+
+        test("--scratch-path in buildArguments with equals format", () => {
+            buildArgsConfig.setValue(["--scratch-path=/custom/scratch/path"]);
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", false)
+            ).to.equalPath("/custom/scratch/path");
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", true)
+            ).to.equalPath("/custom/scratch/path");
+        });
+
+        test("--scratch-path with relative path in buildArguments", () => {
+            buildArgsConfig.setValue(["--scratch-path", "custom/build"]);
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", false)
+            ).to.equalPath("custom/build");
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", true)
+            ).to.equalPath("/some/full/workspace/test/path/custom/build");
+        });
+
+        test("--build-path in buildArguments (legacy support)", () => {
+            buildArgsConfig.setValue(["--build-path", "/legacy/build/path"]);
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", false)
+            ).to.equalPath("/legacy/build/path");
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", true)
+            ).to.equalPath("/legacy/build/path");
+        });
+
+        test("--scratch-path in packageArguments", () => {
+            packageArgsConfig.setValue(["--scratch-path", "/package/scratch/path"]);
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", false)
+            ).to.equalPath("/package/scratch/path");
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", true)
+            ).to.equalPath("/package/scratch/path");
+        });
+
+        test("buildArguments takes precedence over packageArguments", () => {
+            buildArgsConfig.setValue(["--scratch-path", "/build/args/path"]);
+            packageArgsConfig.setValue(["--scratch-path", "/package/args/path"]);
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", false)
+            ).to.equalPath("/build/args/path");
+        });
+
+        test("buildArguments takes precedence over buildPath config", () => {
+            buildPathConfig.setValue("/config/path");
+            buildArgsConfig.setValue(["--scratch-path", "/build/args/path"]);
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", false)
+            ).to.equalPath("/build/args/path");
+        });
+
+        test("packageArguments takes precedence over buildPath config", () => {
+            buildPathConfig.setValue("/config/path");
+            packageArgsConfig.setValue(["--scratch-path", "/package/args/path"]);
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", false)
+            ).to.equalPath("/package/args/path");
+        });
+
+        test("--scratch-path among other arguments", () => {
+            buildArgsConfig.setValue([
+                "--verbose",
+                "--scratch-path",
+                "/custom/path",
+                "--configuration",
+                "release",
+            ]);
+
+            expect(
+                BuildFlags.buildDirectoryFromWorkspacePath("/some/full/workspace/test/path", false)
+            ).to.equalPath("/custom/path");
+        });
     });
 
     suite("withAdditionalFlags", () => {