diff --git a/src/managers/pyenv/pyenvUtils.ts b/src/managers/pyenv/pyenvUtils.ts
index 8ab51fb0..8dde2213 100644
--- a/src/managers/pyenv/pyenvUtils.ts
+++ b/src/managers/pyenv/pyenvUtils.ts
@@ -23,6 +23,21 @@ import {
 } from '../common/nativePythonFinder';
 import { shortVersion, sortEnvironments } from '../common/utils';
 
+/**
+ * Returns the pyenv root directory from the pyenv executable path.
+ * Prefers `PYENV_ROOT` env var when set, otherwise goes up 2 levels from the binary.
+ * On POSIX, pyenv binary is at `<root>/bin/pyenv` (e.g. `~/.pyenv/bin/pyenv`).
+ * On Windows, pyenv-win binary is at `<root>/bin/pyenv.bat` (e.g. `~/.pyenv/pyenv-win/bin/pyenv.bat`,
+ * where `<root>` is `~/.pyenv/pyenv-win`).
+ */
+export function getPyenvDir(pyenv: string): string {
+    const pyenvRoot = process.env.PYENV_ROOT;
+    if (pyenvRoot) {
+        return pyenvRoot;
+    }
+    return path.dirname(path.dirname(pyenv));
+}
+
 async function findPyenv(): Promise<string | undefined> {
     try {
         return await which('pyenv');
@@ -174,8 +189,9 @@ function nativeToPythonEnv(
         return undefined;
     }
 
-    const versionsPath = normalizePath(path.join(path.dirname(path.dirname(pyenv)), 'versions'));
-    const envsPaths = normalizePath(path.join(path.dirname(versionsPath), 'envs'));
+    const pyenvDir = getPyenvDir(pyenv);
+    const versionsPath = normalizePath(path.join(pyenvDir, 'versions'));
+    const envsPaths = normalizePath(path.join(pyenvDir, 'envs'));
     let group = undefined;
     const normPrefix = normalizePath(info.prefix);
     if (normPrefix.startsWith(versionsPath)) {
diff --git a/src/test/managers/pyenv/pyenvUtils.unit.test.ts b/src/test/managers/pyenv/pyenvUtils.unit.test.ts
new file mode 100644
index 00000000..0f7024d7
--- /dev/null
+++ b/src/test/managers/pyenv/pyenvUtils.unit.test.ts
@@ -0,0 +1,44 @@
+import assert from 'node:assert';
+import * as path from 'path';
+import * as sinon from 'sinon';
+import { getPyenvDir } from '../../../managers/pyenv/pyenvUtils';
+
+suite('pyenvUtils - getPyenvDir', () => {
+    let originalPyenvRoot: string | undefined;
+
+    setup(() => {
+        originalPyenvRoot = process.env.PYENV_ROOT;
+        delete process.env.PYENV_ROOT;
+    });
+
+    teardown(() => {
+        sinon.restore();
+        if (originalPyenvRoot !== undefined) {
+            process.env.PYENV_ROOT = originalPyenvRoot;
+        } else {
+            delete process.env.PYENV_ROOT;
+        }
+    });
+
+    test('should use PYENV_ROOT when set', () => {
+        const pyenvRoot = path.join(path.sep, 'custom', 'pyenv', 'root');
+        process.env.PYENV_ROOT = pyenvRoot;
+        const pyenvBin = path.join(path.sep, 'other', 'bin', 'pyenv');
+        const result = getPyenvDir(pyenvBin);
+        assert.strictEqual(result, pyenvRoot);
+    });
+
+    test('should go up 2 levels on POSIX when PYENV_ROOT is not set (bin/pyenv -> pyenv root)', () => {
+        // e.g. /home/user/.pyenv/bin/pyenv
+        const pyenvBin = path.join(path.sep, 'home', 'user', '.pyenv', 'bin', 'pyenv');
+        const result = getPyenvDir(pyenvBin);
+        assert.strictEqual(result, path.join(path.sep, 'home', 'user', '.pyenv'));
+    });
+
+    test('should go up 2 levels on Windows when PYENV_ROOT is not set (pyenv-win/bin/pyenv.bat -> pyenv-win)', () => {
+        // e.g. C:\Users\user\.pyenv\pyenv-win\bin\pyenv.bat -> C:\Users\user\.pyenv\pyenv-win
+        const pyenvBin = path.join('C:', 'Users', 'user', '.pyenv', 'pyenv-win', 'bin', 'pyenv.bat');
+        const result = getPyenvDir(pyenvBin);
+        assert.strictEqual(result, path.join('C:', 'Users', 'user', '.pyenv', 'pyenv-win'));
+    });
+});