diff --git a/extensions/terminal-suggest/src/terminalSuggestMain.ts b/extensions/terminal-suggest/src/terminalSuggestMain.ts
index 95654ffe418..599f4b93849 100644
--- a/extensions/terminal-suggest/src/terminalSuggestMain.ts
+++ b/extensions/terminal-suggest/src/terminalSuggestMain.ts
@@ -413,6 +413,13 @@ export async function resolveCwdFromCurrentCommandString(currentCommandString: s
 		}
 		const relativeFolder = lastSlashIndex === -1 ? '' : prefix.slice(0, lastSlashIndex);
 
+		// Don't pre-resolve paths with .. segments - let the completion service handle those
+		// to avoid double-navigation (e.g., typing ../ would resolve cwd to parent here,
+		// then completion service would navigate up again from the already-parent cwd)
+		if (relativeFolder.includes('..')) {
+			return undefined;
+		}
+
 		// Use vscode.Uri.joinPath for path resolution
 		const resolvedUri = vscode.Uri.joinPath(currentCwd, relativeFolder);
 
diff --git a/extensions/terminal-suggest/src/test/completions/cd.test.ts b/extensions/terminal-suggest/src/test/completions/cd.test.ts
index a40d5ee2103..cee2f62e55a 100644
--- a/extensions/terminal-suggest/src/test/completions/cd.test.ts
+++ b/extensions/terminal-suggest/src/test/completions/cd.test.ts
@@ -37,7 +37,8 @@ export const cdTestSuiteSpec: ISuiteSpec = {
 
 		// Relative directories (changes cwd due to /)
 		{ input: 'cd child/|', expectedCompletions, expectedResourceRequests: { type: 'folders', cwd: testPaths.cwdChild } },
-		{ input: 'cd ../|', expectedCompletions, expectedResourceRequests: { type: 'folders', cwd: testPaths.cwdParent } },
-		{ input: 'cd ../sibling|', expectedCompletions, expectedResourceRequests: { type: 'folders', cwd: testPaths.cwdParent } },
+		// Paths with .. are handled by the completion service to avoid double-navigation (no cwd resolution)
+		{ input: 'cd ../|', expectedCompletions, expectedResourceRequests: { type: 'folders' } },
+		{ input: 'cd ../sibling|', expectedCompletions, expectedResourceRequests: { type: 'folders' } },
 	]
 };
diff --git a/extensions/terminal-suggest/src/test/completions/upstream/ls.test.ts b/extensions/terminal-suggest/src/test/completions/upstream/ls.test.ts
index e08b755e60a..1b06db30546 100644
--- a/extensions/terminal-suggest/src/test/completions/upstream/ls.test.ts
+++ b/extensions/terminal-suggest/src/test/completions/upstream/ls.test.ts
@@ -84,8 +84,9 @@ export const lsTestSuiteSpec: ISuiteSpec = {
 
 		// Relative directories (changes cwd due to /)
 		{ input: 'ls child/|', expectedCompletions: allOptions, expectedResourceRequests: { type: 'both', cwd: testPaths.cwdChild } },
-		{ input: 'ls ../|', expectedCompletions: allOptions, expectedResourceRequests: { type: 'both', cwd: testPaths.cwdParent } },
-		{ input: 'ls ../sibling|', expectedCompletions: allOptions, expectedResourceRequests: { type: 'both', cwd: testPaths.cwdParent } },
+		// Paths with .. are handled by the completion service to avoid double-navigation (no cwd resolution)
+		{ input: 'ls ../|', expectedCompletions: allOptions, expectedResourceRequests: { type: 'both' } },
+		{ input: 'ls ../sibling|', expectedCompletions: allOptions, expectedResourceRequests: { type: 'both' } },
 	]
 };
 
diff --git a/extensions/terminal-suggest/src/test/helpers.ts b/extensions/terminal-suggest/src/test/helpers.ts
index a4101a49194..b5080535fcf 100644
--- a/extensions/terminal-suggest/src/test/helpers.ts
+++ b/extensions/terminal-suggest/src/test/helpers.ts
@@ -21,7 +21,7 @@ export interface ITestSpec {
 	input: string;
 	expectedResourceRequests?: {
 		type: 'files' | 'folders' | 'both';
-		cwd: Uri;
+		cwd?: Uri;
 	};
 	expectedCompletions?: (string | ICompletionResource)[];
 }
diff --git a/extensions/terminal-suggest/src/test/terminalSuggestMain.test.ts b/extensions/terminal-suggest/src/test/terminalSuggestMain.test.ts
index 793cc9a634b..57749d2df68 100644
--- a/extensions/terminal-suggest/src/test/terminalSuggestMain.test.ts
+++ b/extensions/terminal-suggest/src/test/terminalSuggestMain.test.ts
@@ -85,7 +85,7 @@ suite('Terminal Suggest', () => {
 				let expectedString = testSpec.expectedCompletions ? `[${testSpec.expectedCompletions.map(e => `'${e}'`).join(', ')}]` : '[]';
 				if (testSpec.expectedResourceRequests) {
 					expectedString += ` + ${testSpec.expectedResourceRequests.type}`;
-					if (testSpec.expectedResourceRequests.cwd.fsPath !== testPaths.cwd.fsPath) {
+					if (testSpec.expectedResourceRequests.cwd && testSpec.expectedResourceRequests.cwd.fsPath !== testPaths.cwd.fsPath) {
 						expectedString += ` @ ${basename(testSpec.expectedResourceRequests.cwd.fsPath)}/`;
 					}
 				}
diff --git a/src/vs/workbench/contrib/terminalContrib/suggest/browser/terminalCompletionService.ts b/src/vs/workbench/contrib/terminalContrib/suggest/browser/terminalCompletionService.ts
index bf819a3c6d7..c8bbbaa6d2d 100644
--- a/src/vs/workbench/contrib/terminalContrib/suggest/browser/terminalCompletionService.ts
+++ b/src/vs/workbench/contrib/terminalContrib/suggest/browser/terminalCompletionService.ts
@@ -591,7 +591,7 @@ export class TerminalCompletionService extends Disposable implements ITerminalCo
 			if (lastWordFolder.length > 0) {
 				label = addPathRelativePrefix(lastWordFolder + label, resourceOptions, lastWordFolderHasDotPrefix);
 			}
-			const parentDir = URI.joinPath(cwd, '..' + resourceOptions.pathSeparator);
+			const parentDir = URI.joinPath(lastWordFolderResource, '..' + resourceOptions.pathSeparator);
 			resourceCompletions.push({
 				label,
 				provider,
diff --git a/src/vs/workbench/contrib/terminalContrib/suggest/test/browser/terminalCompletionService.test.ts b/src/vs/workbench/contrib/terminalContrib/suggest/test/browser/terminalCompletionService.test.ts
index f6ba7c0cc09..00367e498ad 100644
--- a/src/vs/workbench/contrib/terminalContrib/suggest/test/browser/terminalCompletionService.test.ts
+++ b/src/vs/workbench/contrib/terminalContrib/suggest/test/browser/terminalCompletionService.test.ts
@@ -198,6 +198,32 @@ suite('TerminalCompletionService', () => {
 			], { replacementRange: [1, 3] });
 		});
 
+		test('../| should return parent folder completions', async () => {
+			// Scenario: cwd is /parent/folder1, sibling is /parent/folder2
+			// When typing ../, should see contents of /parent/ (folder1 and folder2)
+			validResources = [
+				URI.parse('file:///parent/folder1'),
+				URI.parse('file:///parent'),
+			];
+			childResources = [
+				{ resource: URI.parse('file:///parent/folder1/'), isDirectory: true },
+				{ resource: URI.parse('file:///parent/folder2/'), isDirectory: true },
+			];
+			const resourceOptions: TerminalCompletionResourceOptions = {
+				cwd: URI.parse('file:///parent/folder1'),
+				showDirectories: true,
+				pathSeparator
+			};
+			const result = await terminalCompletionService.resolveResources(resourceOptions, '../', 3, provider, capabilities);
+
+			assertCompletions(result, [
+				{ label: '../', detail: '/parent/' },
+				{ label: '../folder1/', detail: '/parent/folder1/' },
+				{ label: '../folder2/', detail: '/parent/folder2/' },
+				{ label: '../../', detail: '/' },
+			], { replacementRange: [0, 3] });
+		});
+
 		test('cd ./| should return folder completions', async () => {
 			const resourceOptions: TerminalCompletionResourceOptions = {
 				cwd: URI.parse('file:///test'),
@@ -564,7 +590,8 @@ suite('TerminalCompletionService', () => {
 			assertCompletions(result, [
 				{ label: './test/', detail: '/test/test/' },
 				{ label: './test/inner/', detail: '/test/test/inner/' },
-				{ label: './test/../', detail: '/' }
+				// ../` from the viewed folder (/test/test/) goes to /test/, not /
+				{ label: './test/../', detail: '/test/' }
 			], { replacementRange: [0, 5] });
 		});
 		test('test/| should normalize current and parent folders', async () => {