diff --git a/CHANGELOG.md b/CHANGELOG.md
index afce7f5e..321c223f 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -2,6 +2,8 @@
 
 ## Unreleased
 
+- Fixed some bugs and regressions regarding dynamic variables and directories
+  ([#426](https://github.com/go-task/task/issues/426)).
 - The [slim-sprig](https://github.com/go-task/slim-sprig) package was updated
   with the upstream [sprig](https://github.com/Masterminds/sprig).
 
diff --git a/internal/compiler/v3/compiler_v3.go b/internal/compiler/v3/compiler_v3.go
index 1c0e2d5b..9530dd8f 100644
--- a/internal/compiler/v3/compiler_v3.go
+++ b/internal/compiler/v3/compiler_v3.go
@@ -32,29 +32,27 @@ func (c *CompilerV3) GetVariables(t *taskfile.Task, call taskfile.Call) (*taskfi
 	result := compiler.GetEnviron()
 	result.Set("TASK", taskfile.Var{Static: t.Task})
 
-	// NOTE(@andreynering): We're manually joining these paths here because
-	// this is the raw task, not the compiled one.
-	dir := t.Dir
-	if !filepath.IsAbs(dir) {
-		dir = filepath.Join(c.Dir, dir)
-	}
+	getRangeFunc := func(dir string) func(k string, v taskfile.Var) error {
+		return func(k string, v taskfile.Var) error {
+			tr := templater.Templater{Vars: result, RemoveNoValue: true}
 
-	rangeFunc := func(k string, v taskfile.Var) error {
-		tr := templater.Templater{Vars: result, RemoveNoValue: true}
-		v = taskfile.Var{
-			Static: tr.Replace(v.Static),
-			Sh:     tr.Replace(v.Sh),
+			v = taskfile.Var{
+				Static: tr.Replace(v.Static),
+				Sh:     tr.Replace(v.Sh),
+				Dir:    v.Dir,
+			}
+			if err := tr.Err(); err != nil {
+				return err
+			}
+			static, err := c.HandleDynamicVar(v, dir)
+			if err != nil {
+				return err
+			}
+			result.Set(k, taskfile.Var{Static: static})
+			return nil
 		}
-		if err := tr.Err(); err != nil {
-			return err
-		}
-		static, err := c.HandleDynamicVar(v, dir)
-		if err != nil {
-			return err
-		}
-		result.Set(k, taskfile.Var{Static: static})
-		return nil
 	}
+	rangeFunc := getRangeFunc(c.Dir)
 
 	if err := c.TaskfileVars.Range(rangeFunc); err != nil {
 		return nil, err
@@ -62,7 +60,20 @@ func (c *CompilerV3) GetVariables(t *taskfile.Task, call taskfile.Call) (*taskfi
 	if err := call.Vars.Range(rangeFunc); err != nil {
 		return nil, err
 	}
-	if err := t.Vars.Range(rangeFunc); err != nil {
+
+	// NOTE(@andreynering): We're manually joining these paths here because
+	// this is the raw task, not the compiled one.
+	tr := templater.Templater{Vars: result, RemoveNoValue: true}
+	dir := tr.Replace(t.Dir)
+	if err := tr.Err(); err != nil {
+		return nil, err
+	}
+	if !filepath.IsAbs(dir) {
+		dir = filepath.Join(c.Dir, dir)
+	}
+	taskRangeFunc := getRangeFunc(dir)
+
+	if err := t.Vars.Range(taskRangeFunc); err != nil {
 		return nil, err
 	}
 
@@ -84,6 +95,11 @@ func (c *CompilerV3) HandleDynamicVar(v taskfile.Var, dir string) (string, error
 		return result, nil
 	}
 
+	// NOTE(@andreynering): If a var have a specific dir, use this instead
+	if v.Dir != "" {
+		dir = v.Dir
+	}
+
 	var stdout bytes.Buffer
 	opts := &execext.RunCommandOptions{
 		Command: v.Sh,
diff --git a/task_test.go b/task_test.go
index dbfc64b9..1b131921 100644
--- a/task_test.go
+++ b/task_test.go
@@ -308,7 +308,7 @@ func TestGenerates(t *testing.T) {
 	const (
 		srcTask        = "sub/src.txt"
 		relTask        = "rel.txt"
-		absTask        = "sub/abs.txt"
+		absTask        = "abs.txt"
 		fileWithSpaces = "my text file.txt"
 	)
 
@@ -805,7 +805,10 @@ func TestDynamicVariablesShouldRunOnTheTaskDir(t *testing.T) {
 		Target:    "default",
 		TrimSpace: false,
 		Files: map[string]string{
-			"subdirectory/dir.txt": "subdirectory\n",
+			"subdirectory/from_root_taskfile.txt":          "subdirectory\n",
+			"subdirectory/from_included_taskfile.txt":      "subdirectory\n",
+			"subdirectory/from_included_taskfile_task.txt": "subdirectory\n",
+			"subdirectory/from_interpolated_dir.txt":       "subdirectory\n",
 		},
 	}
 	tt.Run(t)
diff --git a/taskfile/read/taskfile.go b/taskfile/read/taskfile.go
index c6171227..e7fa6ba2 100644
--- a/taskfile/read/taskfile.go
+++ b/taskfile/read/taskfile.go
@@ -97,6 +97,17 @@ func Taskfile(dir string, entrypoint string) (*taskfile.Taskfile, error) {
 		}
 
 		if includedTask.AdvancedImport {
+			for k, v := range includedTaskfile.Vars.Mapping {
+				o := v
+				o.Dir = filepath.Join(dir, includedTask.Dir)
+				includedTaskfile.Vars.Mapping[k] = o
+			}
+			for k, v := range includedTaskfile.Env.Mapping {
+				o := v
+				o.Dir = filepath.Join(dir, includedTask.Dir)
+				includedTaskfile.Env.Mapping[k] = o
+			}
+
 			for _, task := range includedTaskfile.Tasks {
 				if !filepath.IsAbs(task.Dir) {
 					task.Dir = filepath.Join(includedTask.Dir, task.Dir)
diff --git a/taskfile/var.go b/taskfile/var.go
index e552c94a..bd7ea28f 100644
--- a/taskfile/var.go
+++ b/taskfile/var.go
@@ -98,6 +98,7 @@ type Var struct {
 	Static string
 	Live   interface{}
 	Sh     string
+	Dir    string
 }
 
 // UnmarshalYAML implements yaml.Unmarshaler interface.
diff --git a/testdata/dir/dynamic_var/.gitignore b/testdata/dir/dynamic_var/.gitignore
index 5e4f4543..2211df63 100644
--- a/testdata/dir/dynamic_var/.gitignore
+++ b/testdata/dir/dynamic_var/.gitignore
@@ -1 +1 @@
-subdirectory/dir.txt
+*.txt
diff --git a/testdata/dir/dynamic_var/Taskfile.yml b/testdata/dir/dynamic_var/Taskfile.yml
index 9a2d8cd6..81824024 100644
--- a/testdata/dir/dynamic_var/Taskfile.yml
+++ b/testdata/dir/dynamic_var/Taskfile.yml
@@ -1,11 +1,33 @@
 version: '3'
 
+includes:
+  sub:
+    taskfile: subdirectory
+    dir: subdirectory
+
+vars:
+  DIRECTORY: subdirectory
+
 tasks:
   default:
+    - task: from-root-taskfile
+    - task: sub:from-included-taskfile
+    - task: sub:from-included-taskfile-task
+    - task: from-interpolated-dir
+
+  from-root-taskfile:
     cmds:
-      - echo '{{.FOLDER}}' > dir.txt
+      - echo '{{.TASK_DIR}}' > from_root_taskfile.txt
     dir: subdirectory
     vars:
-      FOLDER:
+      TASK_DIR:
         sh: basename $(pwd)
     silent: true
+
+  from-interpolated-dir:
+    cmds:
+      - echo '{{.INTERPOLATED_DIR}}' > from_interpolated_dir.txt
+    dir: '{{.DIRECTORY}}'
+    vars:
+      INTERPOLATED_DIR:
+        sh: basename $(pwd)
diff --git a/testdata/dir/dynamic_var/subdirectory/Taskfile.yml b/testdata/dir/dynamic_var/subdirectory/Taskfile.yml
new file mode 100644
index 00000000..9ca02611
--- /dev/null
+++ b/testdata/dir/dynamic_var/subdirectory/Taskfile.yml
@@ -0,0 +1,19 @@
+version: '3'
+
+vars:
+  TASKFILE_DIR:
+    sh: basename $(pwd)
+
+tasks:
+  from-included-taskfile:
+    cmds:
+      - echo '{{.TASKFILE_DIR}}' > from_included_taskfile.txt
+    silent: true
+
+  from-included-taskfile-task:
+    cmds:
+      - echo '{{.TASKFILE_TASK_DIR}}' > from_included_taskfile_task.txt
+    silent: true
+    vars:
+      TASKFILE_TASK_DIR:
+        sh: basename $(pwd)
diff --git a/testdata/dir/dynamic_var/subdirectory/dir.txt b/testdata/dir/dynamic_var/subdirectory/dir.txt
deleted file mode 100644
index bcba6aa2..00000000
--- a/testdata/dir/dynamic_var/subdirectory/dir.txt
+++ /dev/null
@@ -1 +0,0 @@
-subdirectory
diff --git a/testdata/generates/Taskfile.yml b/testdata/generates/Taskfile.yml
index e2f4a87b..217a9626 100644
--- a/testdata/generates/Taskfile.yml
+++ b/testdata/generates/Taskfile.yml
@@ -1,10 +1,11 @@
 version: '3'
 
 vars:
-  BUILD_DIR: $pwd
+  BUILD_DIR:
+    sh: pwd
 
 tasks:
-  sub/abs.txt:
+  abs.txt:
     desc: generates dest file based on absolute paths
     deps:
       - sub/src.txt