diff --git a/packages/angular/build/src/builders/application/options.ts b/packages/angular/build/src/builders/application/options.ts
index ab5f7de7dfae..4ec810ff3c07 100644
--- a/packages/angular/build/src/builders/application/options.ts
+++ b/packages/angular/build/src/builders/application/options.ts
@@ -8,7 +8,6 @@
 
 import type { BuilderContext } from '@angular-devkit/architect';
 import type { Plugin } from 'esbuild';
-import { realpathSync } from 'node:fs';
 import { access, constants, readFile } from 'node:fs/promises';
 import { createRequire } from 'node:module';
 import path from 'node:path';
@@ -18,6 +17,7 @@ import { useJSONBuildLogs, usePartialSsrBuild } from '../../utils/environment-op
 import { I18nOptions, createI18nOptions } from '../../utils/i18n-options';
 import { IndexHtmlTransform } from '../../utils/index-file/index-html-generator';
 import { normalizeCacheOptions } from '../../utils/normalize-cache';
+import { canonicalizePath } from '../../utils/path';
 import {
   SearchDirectory,
   findTailwindConfiguration,
@@ -160,12 +160,7 @@ export async function normalizeOptions(
     options.preserveSymlinks ?? process.execArgv.includes('--preserve-symlinks');
 
   // Setup base paths based on workspace root and project information
-  const workspaceRoot = preserveSymlinks
-    ? context.workspaceRoot
-    : // NOTE: promises.realpath should not be used here since it uses realpath.native which
-      // can cause case conversion and other undesirable behavior on Windows systems.
-      // ref: https://github.com/nodejs/node/issues/7726
-      realpathSync(context.workspaceRoot);
+  const workspaceRoot = canonicalizePath(context.workspaceRoot, preserveSymlinks);
   const projectMetadata = await context.getProjectMetadata(projectName);
   const { projectRoot, projectSourceRoot } = getProjectRootPaths(workspaceRoot, projectMetadata);
 
@@ -213,8 +208,7 @@ export async function normalizeOptions(
   }
 
   let loaderExtensions:
-    | Record<string, 'text' | 'binary' | 'file' | 'dataurl' | 'base64'>
-    | undefined;
+    Record<string, 'text' | 'binary' | 'file' | 'dataurl' | 'base64'> | undefined;
   if (options.loader) {
     for (const [extension, value] of Object.entries(options.loader)) {
       if (extension[0] !== '.' || /\.[cm]?[jt]sx?$/.test(extension)) {
diff --git a/packages/angular/build/src/builders/unit-test/builder.ts b/packages/angular/build/src/builders/unit-test/builder.ts
index c01b7b69d75e..146ce6654bd0 100644
--- a/packages/angular/build/src/builders/unit-test/builder.ts
+++ b/packages/angular/build/src/builders/unit-test/builder.ts
@@ -286,10 +286,6 @@ export async function* execute(
     return;
   }
 
-  // Resolve final preserveSymlinks option
-  normalizedOptions.preserveSymlinks =
-    buildTargetOptions.preserveSymlinks ?? process.execArgv.includes('--preserve-symlinks');
-
   // Get runner-specific build options
   let runnerBuildOptions;
   let virtualFiles;
diff --git a/packages/angular/build/src/builders/unit-test/options.ts b/packages/angular/build/src/builders/unit-test/options.ts
index 7ff4d3fa753f..d3402b090e0f 100644
--- a/packages/angular/build/src/builders/unit-test/options.ts
+++ b/packages/angular/build/src/builders/unit-test/options.ts
@@ -10,6 +10,7 @@ import { type BuilderContext, targetFromTargetString } from '@angular-devkit/arc
 import { constants, promises as fs } from 'node:fs';
 import path from 'node:path';
 import { normalizeCacheOptions } from '../../utils/normalize-cache';
+import { canonicalizePath } from '../../utils/path';
 import { getProjectRootPaths } from '../../utils/project-metadata';
 import { isTTY } from '../../utils/tty';
 import { Runner, type Schema as UnitTestBuilderOptions } from './schema';
@@ -41,8 +42,24 @@ export async function normalizeOptions(
   projectName: string,
   options: UnitTestBuilderOptions,
 ) {
+  // Target specifier defaults to the current project's build target using a development configuration
+  const buildTargetSpecifier = options.buildTarget ?? `::development`;
+  const buildTarget = targetFromTargetString(buildTargetSpecifier, projectName, 'build');
+
+  // Load target options to determine preserveSymlinks setting
+  let buildTargetOptions: Record<string, unknown> | undefined;
+  try {
+    buildTargetOptions = await context.getTargetOptions(buildTarget);
+  } catch {}
+
+  const preserveSymlinks =
+    typeof buildTargetOptions?.preserveSymlinks === 'boolean'
+      ? buildTargetOptions.preserveSymlinks
+      : process.execArgv.includes('--preserve-symlinks');
+
   // Setup base paths based on workspace root and project information
-  const workspaceRoot = context.workspaceRoot;
+  const workspaceRoot = canonicalizePath(context.workspaceRoot, preserveSymlinks);
+
   const projectMetadata = await context.getProjectMetadata(projectName);
   const { projectRoot, projectSourceRoot } = getProjectRootPaths(workspaceRoot, projectMetadata);
 
@@ -50,10 +67,6 @@ export async function normalizeOptions(
   const cacheOptions = normalizeCacheOptions(projectMetadata, workspaceRoot);
   cacheOptions.path = path.join(cacheOptions.path, projectName);
 
-  // Target specifier defaults to the current project's build target using a development configuration
-  const buildTargetSpecifier = options.buildTarget ?? `::development`;
-  const buildTarget = targetFromTargetString(buildTargetSpecifier, projectName, 'build');
-
   const { runner, browsers, progress, filter, browserViewport, ui, runnerConfig, isolate } =
     options;
 
@@ -134,7 +147,7 @@ export async function normalizeOptions(
       : [],
     dumpVirtualFiles: options.dumpVirtualFiles,
     listTests: options.listTests,
-    preserveSymlinks: undefined as boolean | undefined,
+    preserveSymlinks,
     runnerConfig:
       typeof runnerConfig === 'string'
         ? runnerConfig.length === 0
diff --git a/packages/angular/build/src/utils/path.ts b/packages/angular/build/src/utils/path.ts
index e969d420e429..5b881f1a4206 100644
--- a/packages/angular/build/src/utils/path.ts
+++ b/packages/angular/build/src/utils/path.ts
@@ -6,6 +6,7 @@
  * found in the LICENSE file at https://angular.dev/license
  */
 
+import { realpathSync } from 'node:fs';
 import { isAbsolute, posix, relative, resolve } from 'node:path';
 import { platform } from 'node:process';
 
@@ -50,3 +51,20 @@ export function isSubDirectory(parent: string, child: string): boolean {
 
   return relativePath !== '..' && !relativePath.startsWith('../') && !isAbsolute(relativePath);
 }
+
+/**
+ * Canonicalizes a file path by normalising Windows drive-letter casing to uppercase
+ * and optionally resolving symbolic links.
+ *
+ * @param pathString - The file path to canonicalize.
+ * @param preserveSymlinks - If true, symbolic links will not be resolved.
+ * @returns The canonicalized file path.
+ */
+export function canonicalizePath(pathString: string, preserveSymlinks = false): string {
+  const resolved = preserveSymlinks ? pathString : realpathSync(pathString);
+  if (platform === 'win32' && /^[a-zA-Z]:/.test(resolved)) {
+    return resolved[0].toUpperCase() + resolved.slice(1);
+  }
+
+  return resolved;
+}