diff --git a/gopls/internal/regtest/diagnostics_test.go b/gopls/internal/regtest/diagnostics_test.go
index d3685dd..e8190cf 100644
--- a/gopls/internal/regtest/diagnostics_test.go
+++ b/gopls/internal/regtest/diagnostics_test.go
@@ -1246,7 +1246,7 @@
 			env.DiagnosticAtRegexp("main.go", "x"),
 		)
 	})
-	withOptions(WithRootPath("a"), WithLimitWorkspaceScope()).run(t, mod, func(t *testing.T, env *Env) {
+	withOptions(WithRootPath("a"), LimitWorkspaceScope()).run(t, mod, func(t *testing.T, env *Env) {
 		env.OpenFile("a/main.go")
 		env.Await(
 			NoDiagnostics("main.go"),
diff --git a/gopls/internal/regtest/modfile_test.go b/gopls/internal/regtest/modfile_test.go
index 2f897a2..22d780a 100644
--- a/gopls/internal/regtest/modfile_test.go
+++ b/gopls/internal/regtest/modfile_test.go
@@ -33,6 +33,15 @@
 const Name = "Hello"
 `
 
+func runModfileTest(t *testing.T, files, proxy string, f TestFunc) {
+	t.Run("normal", func(t *testing.T) {
+		withOptions(WithProxyFiles(proxy)).run(t, files, f)
+	})
+	t.Run("nested", func(t *testing.T) {
+		withOptions(WithProxyFiles(proxy), NestWorkdir(), WithModes(Experimental)).run(t, files, f)
+	})
+}
+
 func TestModFileModification(t *testing.T) {
 	testenv.NeedsGo1Point(t, 14)
 
@@ -50,7 +59,7 @@
 }
 `
 	t.Run("basic", func(t *testing.T) {
-		withOptions(WithProxyFiles(proxy)).run(t, untidyModule, func(t *testing.T, env *Env) {
+		runModfileTest(t, untidyModule, proxy, func(t *testing.T, env *Env) {
 			// Open the file and make sure that the initial workspace load does not
 			// modify the go.mod file.
 			goModContent := env.ReadWorkspaceFile("go.mod")
@@ -77,7 +86,7 @@
 	t.Run("delete main.go", func(t *testing.T) {
 		t.Skip("This test will be flaky until golang/go#40269 is resolved.")
 
-		withOptions(WithProxyFiles(proxy)).run(t, untidyModule, func(t *testing.T, env *Env) {
+		runModfileTest(t, untidyModule, proxy, func(t *testing.T, env *Env) {
 			goModContent := env.ReadWorkspaceFile("go.mod")
 			mainContent := env.ReadWorkspaceFile("main.go")
 			env.OpenFile("main.go")
@@ -126,7 +135,7 @@
 require random.org v1.2.3
 `
 
-	withOptions(WithProxyFiles(proxy)).run(t, mod, func(t *testing.T, env *Env) {
+	runModfileTest(t, mod, proxy, func(t *testing.T, env *Env) {
 		env.OpenFile("main.go")
 		var d protocol.PublishDiagnosticsParams
 		env.Await(
@@ -172,7 +181,7 @@
 
 require example.com v1.2.3
 `
-	runner.Run(t, mod, func(t *testing.T, env *Env) {
+	runModfileTest(t, mod, proxy, func(t *testing.T, env *Env) {
 		env.OpenFile("go.mod")
 		var d protocol.PublishDiagnosticsParams
 		env.Await(
@@ -185,7 +194,7 @@
 		if got := env.Editor.BufferText("go.mod"); got != want {
 			t.Fatalf("unexpected go.mod content:\n%s", tests.Diff(want, got))
 		}
-	}, WithProxyFiles(proxy))
+	})
 }
 
 func TestUnusedDiag(t *testing.T) {
@@ -212,7 +221,7 @@
 go 1.14
 `
 
-	withOptions(WithProxyFiles(proxy)).run(t, files, func(t *testing.T, env *Env) {
+	runModfileTest(t, files, proxy, func(t *testing.T, env *Env) {
 		env.OpenFile("go.mod")
 		var d protocol.PublishDiagnosticsParams
 		env.Await(
@@ -266,7 +275,7 @@
 func _() {
     caire.RemoveTempImage()
 }`
-	runner.Run(t, repro, func(t *testing.T, env *Env) {
+	runModfileTest(t, repro, proxy, func(t *testing.T, env *Env) {
 		env.OpenFile("main.go")
 		var d protocol.PublishDiagnosticsParams
 		env.Await(
@@ -288,7 +297,7 @@
 		if got := env.ReadWorkspaceFile("go.mod"); got != want {
 			t.Fatalf("TestNewDepWithUnusedDep failed:\n%s", tests.Diff(want, got))
 		}
-	}, WithProxyFiles(proxy))
+	})
 }
 
 // TODO: For this test to be effective, the sandbox's file watcher must respect
@@ -310,13 +319,13 @@
 func main() {
 	fmt.Println(blah.Name)
 `
-	runner.Run(t, mod, func(t *testing.T, env *Env) {
+	runModfileTest(t, mod, proxy, func(t *testing.T, env *Env) {
 		env.Await(env.DiagnosticAtRegexp("go.mod", "require"))
 		env.RunGoCommand("mod", "tidy")
 		env.Await(
 			EmptyDiagnostics("go.mod"),
 		)
-	}, WithProxyFiles(proxy))
+	})
 }
 
 // Tests golang/go#39784: a missing indirect dependency, necessary
@@ -409,7 +418,7 @@
 
 	// Start from a bad state/bad IWL, and confirm that we recover.
 	t.Run("bad", func(t *testing.T) {
-		runner.Run(t, unknown, func(t *testing.T, env *Env) {
+		runModfileTest(t, unknown, proxy, func(t *testing.T, env *Env) {
 			env.OpenFile("go.mod")
 			env.Await(
 				env.DiagnosticAtRegexp("go.mod", "example.com v1.2.2"),
@@ -419,7 +428,7 @@
 			env.Await(
 				env.DiagnosticAtRegexp("main.go", "x = "),
 			)
-		}, WithProxyFiles(proxy))
+		})
 	})
 
 	const known = `
@@ -441,7 +450,7 @@
 	// Start from a good state, transform to a bad state, and confirm that we
 	// still recover.
 	t.Run("good", func(t *testing.T) {
-		runner.Run(t, known, func(t *testing.T, env *Env) {
+		runModfileTest(t, known, proxy, func(t *testing.T, env *Env) {
 			env.OpenFile("go.mod")
 			env.Await(
 				env.DiagnosticAtRegexp("main.go", "x = "),
@@ -456,7 +465,7 @@
 			env.Await(
 				env.DiagnosticAtRegexp("main.go", "x = "),
 			)
-		}, WithProxyFiles(proxy))
+		})
 	})
 }
 
@@ -501,7 +510,7 @@
 	println(blah.Name)
 }
 `
-	withOptions(WithProxyFiles(badProxy)).run(t, module, func(t *testing.T, env *Env) {
+	runModfileTest(t, module, badProxy, func(t *testing.T, env *Env) {
 		env.OpenFile("go.mod")
 		env.Await(
 			env.DiagnosticAtRegexp("go.mod", "require example.com v1.2.3"),
diff --git a/gopls/internal/regtest/runner.go b/gopls/internal/regtest/runner.go
index 8c5efe0..b9d646e 100644
--- a/gopls/internal/regtest/runner.go
+++ b/gopls/internal/regtest/runner.go
@@ -39,7 +39,6 @@
 	// and communicates over pipes to mimic the gopls sidecar execution mode,
 	// which communicates over stdin/stderr.
 	Singleton Mode = 1 << iota
-
 	// Forwarded forwards connections to a shared in-process gopls instance.
 	Forwarded
 	// SeparateProcess forwards connection to a shared separate gopls process.
@@ -77,13 +76,14 @@
 }
 
 type runConfig struct {
-	editor    fake.EditorConfig
-	sandbox   fake.SandboxConfig
-	modes     Mode
-	timeout   time.Duration
-	debugAddr string
-	skipLogs  bool
-	skipHooks bool
+	editor      fake.EditorConfig
+	sandbox     fake.SandboxConfig
+	modes       Mode
+	timeout     time.Duration
+	debugAddr   string
+	skipLogs    bool
+	skipHooks   bool
+	nestWorkdir bool
 }
 
 func (r *Runner) defaultConfig() *runConfig {
@@ -153,7 +153,7 @@
 // tests need to check other cases.
 func WithRootPath(path string) RunOption {
 	return optionSetter(func(opts *runConfig) {
-		opts.editor.EditorRootPath = path
+		opts.editor.WorkspaceRoot = path
 	})
 }
 
@@ -209,13 +209,21 @@
 	})
 }
 
-// WithLimitWorkspaceScope sets the LimitWorkspaceScope configuration.
-func WithLimitWorkspaceScope() RunOption {
+// LimitWorkspaceScope sets the LimitWorkspaceScope configuration.
+func LimitWorkspaceScope() RunOption {
 	return optionSetter(func(opts *runConfig) {
 		opts.editor.LimitWorkspaceScope = true
 	})
 }
 
+// NestWorkdir inserts the sandbox working directory in a subdirectory of the
+// editor workspace.
+func NestWorkdir() RunOption {
+	return optionSetter(func(opts *runConfig) {
+		opts.nestWorkdir = true
+	})
+}
+
 type TestFunc func(t *testing.T, env *Env)
 
 // Run executes the test function in the default configured gopls execution
@@ -262,16 +270,25 @@
 				di.MonitorMemory(ctx)
 			}
 
-			tempDir := filepath.Join(r.TempDir, filepath.FromSlash(t.Name()))
-			if err := os.MkdirAll(tempDir, 0755); err != nil {
+			rootDir := filepath.Join(r.TempDir, filepath.FromSlash(t.Name()))
+			if err := os.MkdirAll(rootDir, 0755); err != nil {
 				t.Fatal(err)
 			}
+			if config.nestWorkdir {
+				config.sandbox.Workdir = "work/nested"
+			}
 			config.sandbox.Files = files
-			config.sandbox.RootDir = tempDir
+			config.sandbox.RootDir = rootDir
 			sandbox, err := fake.NewSandbox(&config.sandbox)
 			if err != nil {
 				t.Fatal(err)
 			}
+			workdir := sandbox.Workdir.RootURI().SpanURI().Filename()
+			if config.nestWorkdir {
+				// Now that we know the actual workdir, set our workspace to be the
+				// parent directory.
+				config.editor.WorkspaceRoot = filepath.Clean(filepath.Join(workdir, ".."))
+			}
 			// Deferring the closure of ws until the end of the entire test suite
 			// has, in testing, given the LSP server time to properly shutdown and
 			// release any file locks held in workspace, which is a problem on
diff --git a/internal/lsp/fake/editor.go b/internal/lsp/fake/editor.go
index 3cc1c06..fed01ec 100644
--- a/internal/lsp/fake/editor.go
+++ b/internal/lsp/fake/editor.go
@@ -81,9 +81,9 @@
 	// workspace folders nor a root URI.
 	WithoutWorkspaceFolders bool
 
-	// EditorRootPath specifies the root path of the workspace folder used when
+	// WorkspaceRoot specifies the root path of the workspace folder used when
 	// initializing gopls in the sandbox. If empty, the Workdir is used.
-	EditorRootPath string
+	WorkspaceRoot string
 
 	// EnableStaticcheck enables staticcheck analyzers.
 	EnableStaticcheck bool
@@ -121,7 +121,7 @@
 		protocol.Handlers(
 			protocol.ClientHandler(e.client,
 				jsonrpc2.MethodNotFound)))
-	if err := e.initialize(ctx, e.Config.WithoutWorkspaceFolders, e.Config.EditorRootPath); err != nil {
+	if err := e.initialize(ctx, e.Config.WithoutWorkspaceFolders, e.Config.WorkspaceRoot); err != nil {
 		return nil, err
 	}
 	e.sandbox.Workdir.AddWatcher(e.onFileChanges)
diff --git a/internal/lsp/fake/sandbox.go b/internal/lsp/fake/sandbox.go
index f240f9b..3b92dc0 100644
--- a/internal/lsp/fake/sandbox.go
+++ b/internal/lsp/fake/sandbox.go
@@ -22,7 +22,7 @@
 // code in tests.
 type Sandbox struct {
 	gopath  string
-	basedir string
+	rootdir string
 	goproxy string
 	Workdir *Workdir
 }
@@ -42,9 +42,12 @@
 	// InGoPath specifies that the working directory should be within the
 	// temporary GOPATH.
 	InGoPath bool
-	// Workdir configures the working directory of the Sandbox, for running in a
-	// pre-existing directory. If unset, a new working directory will be created
-	// under RootDir.
+	// Workdir configures the working directory of the Sandbox. It behaves as
+	// follows:
+	//  - if set to an absolute path, use that path as the working directory.
+	//  - if set to a relative path, create and use that path relative to the
+	//    sandbox.
+	//  - if unset, default to a the 'work' subdirectory of the sandbox.
 	//
 	// This option is incompatible with InGoPath or Files.
 	Workdir string
@@ -70,13 +73,8 @@
 	if config == nil {
 		config = new(SandboxConfig)
 	}
-
-	if config.Workdir != "" && (config.Files != "" || config.InGoPath) {
-		return nil, fmt.Errorf("invalid SandboxConfig: Workdir cannot be used in conjunction with Files or InGoPath. Got %+v", config)
-	}
-
-	if config.GOPROXY != "" && config.ProxyFiles != "" {
-		return nil, fmt.Errorf("invalid SandboxConfig: GOPROXY cannot be set in conjunction with ProxyFiles. Got %+v", config)
+	if err := validateConfig(*config); err != nil {
+		return nil, fmt.Errorf("invalid SandboxConfig: %v", err)
 	}
 
 	sb := &Sandbox{}
@@ -87,19 +85,22 @@
 		}
 	}()
 
-	baseDir, err := ioutil.TempDir(config.RootDir, "gopls-sandbox-")
-	if err != nil {
-		return nil, fmt.Errorf("creating temporary workdir: %v", err)
+	rootDir := config.RootDir
+	if rootDir == "" {
+		rootDir, err = ioutil.TempDir(config.RootDir, "gopls-sandbox-")
+		if err != nil {
+			return nil, fmt.Errorf("creating temporary workdir: %v", err)
+		}
 	}
-	sb.basedir = baseDir
-	sb.gopath = filepath.Join(sb.basedir, "gopath")
+	sb.rootdir = rootDir
+	sb.gopath = filepath.Join(sb.rootdir, "gopath")
 	if err := os.Mkdir(sb.gopath, 0755); err != nil {
 		return nil, err
 	}
 	if config.GOPROXY != "" {
 		sb.goproxy = config.GOPROXY
 	} else {
-		proxydir := filepath.Join(sb.basedir, "proxy")
+		proxydir := filepath.Join(sb.rootdir, "proxy")
 		if err := os.Mkdir(proxydir, 0755); err != nil {
 			return nil, err
 		}
@@ -108,27 +109,32 @@
 			return nil, err
 		}
 	}
-	if config.Workdir != "" {
+	// Short-circuit writing the workdir if we're given an absolute path, since
+	// this is used for running in an existing directory.
+	// TODO(findleyr): refactor this to be less of a workaround.
+	if filepath.IsAbs(config.Workdir) {
 		sb.Workdir = NewWorkdir(config.Workdir)
-	} else {
-		workdir := config.Workdir
-		// If we don't have a pre-existing work dir, we want to create either
-		// $GOPATH/src or <RootDir/work>.
+		return sb, nil
+	}
+	var workdir string
+	if config.Workdir == "" {
 		if config.InGoPath {
 			// Set the working directory as $GOPATH/src.
 			workdir = filepath.Join(sb.gopath, "src")
 		} else if workdir == "" {
-			workdir = filepath.Join(sb.basedir, "work")
+			workdir = filepath.Join(sb.rootdir, "work")
 		}
-		if err := os.Mkdir(workdir, 0755); err != nil {
-			return nil, err
-		}
-		sb.Workdir = NewWorkdir(workdir)
-		if err := sb.Workdir.writeInitialFiles(config.Files); err != nil {
-			return nil, err
-		}
+	} else {
+		// relative path
+		workdir = filepath.Join(sb.rootdir, config.Workdir)
 	}
-
+	if err := os.MkdirAll(workdir, 0755); err != nil {
+		return nil, err
+	}
+	sb.Workdir = NewWorkdir(workdir)
+	if err := sb.Workdir.writeInitialFiles(config.Files); err != nil {
+		return nil, err
+	}
 	return sb, nil
 }
 
@@ -155,6 +161,19 @@
 	return dataMap
 }
 
+func validateConfig(config SandboxConfig) error {
+	if filepath.IsAbs(config.Workdir) && (config.Files != "" || config.InGoPath) {
+		return errors.New("absolute Workdir cannot be set in conjunction with Files or InGoPath")
+	}
+	if config.Workdir != "" && config.InGoPath {
+		return errors.New("Workdir cannot be set in conjunction with InGoPath")
+	}
+	if config.GOPROXY != "" && config.ProxyFiles != "" {
+		return errors.New("GOPROXY cannot be set in conjunction with ProxyFiles")
+	}
+	return nil
+}
+
 // splitModuleVersionPath extracts module information from files stored in the
 // directory structure modulePath@version/suffix.
 // For example:
@@ -174,6 +193,10 @@
 	return path, "", ""
 }
 
+func (sb *Sandbox) RootDir() string {
+	return sb.rootdir
+}
+
 // GOPATH returns the value of the Sandbox GOPATH.
 func (sb *Sandbox) GOPATH() string {
 	return sb.gopath
@@ -236,7 +259,7 @@
 	if sb.gopath != "" {
 		goCleanErr = sb.RunGoCommand(context.Background(), "", "clean", []string{"-modcache"})
 	}
-	err := os.RemoveAll(sb.basedir)
+	err := os.RemoveAll(sb.rootdir)
 	if err != nil || goCleanErr != nil {
 		return fmt.Errorf("error(s) cleaning sandbox: cleaning modcache: %v; removing files: %v", goCleanErr, err)
 	}