diff --git a/app/lib/pty.ts b/app/lib/pty.ts
index 140d668b4..2ced71c33 100644
--- a/app/lib/pty.ts
+++ b/app/lib/pty.ts
@@ -143,8 +143,20 @@ export class PTYManager {
     init (app: Application): void {
         ipcMain.on('pty:spawn', (event, ...options) => {
             const id = uuidv4().toString()
-            event.returnValue = id
-            this.ptys[id] = new PTY(id, app, ...options)
+            try {
+                this.ptys[id] = new PTY(id, app, ...options)
+            } catch (error) {
+                // Spawning fails for reasons the user can act on - an invalid
+                // working directory being by far the most common one. Reporting
+                // that back beats taking down the main process with an
+                // uncaught exception.
+                const cwd = options[2]?.cwd
+                event.returnValue = {
+                    error: cwd ? `${error.message} (working directory: ${cwd})` : error.message,
+                }
+                return
+            }
+            event.returnValue = { id }
         })
 
         ipcMain.on('pty:exists', (event, id) => {
diff --git a/tabby-electron/src/pty.ts b/tabby-electron/src/pty.ts
index 2d4e13b02..390da13e0 100644
--- a/tabby-electron/src/pty.ts
+++ b/tabby-electron/src/pty.ts
@@ -15,8 +15,11 @@ try {
 
 export class ElectronPTYInterface extends PTYInterface {
     async spawn (...options: any[]): Promise<PTYProxy> {
-        const id = ipcRenderer.sendSync('pty:spawn', ...options)
-        return new ElectronPTYProxy(id)
+        const result = ipcRenderer.sendSync('pty:spawn', ...options)
+        if (result.error) {
+            throw new Error(result.error)
+        }
+        return new ElectronPTYProxy(result.id)
     }
 
     async restore (id: string): Promise<ElectronPTYProxy|null> {
diff --git a/tabby-local/src/services/terminal.service.ts b/tabby-local/src/services/terminal.service.ts
index d1d17aec2..0b8f9603b 100644
--- a/tabby-local/src/services/terminal.service.ts
+++ b/tabby-local/src/services/terminal.service.ts
@@ -1,8 +1,8 @@
-import * as fsSync from 'fs'
 import { Injectable } from '@angular/core'
 import { Logger, LogService, ConfigService, ProfilesService, PartialProfile } from 'tabby-core'
 import { TerminalTabComponent } from '../components/terminalTab.component'
 import { LocalProfile } from '../api'
+import { isDirectorySync } from '../util'
 
 @Injectable({ providedIn: 'root' })
 export class TerminalService {
@@ -39,8 +39,8 @@ export class TerminalService {
 
         cwd = cwd ?? fullProfile.options.cwd
 
-        if (cwd && !fsSync.existsSync(cwd)) {
-            console.warn('Ignoring non-existent CWD:', cwd)
+        if (cwd && !isDirectorySync(cwd)) {
+            console.warn('Ignoring invalid CWD:', cwd)
             cwd = null
         }
 
diff --git a/tabby-local/src/session.ts b/tabby-local/src/session.ts
index 6927e1520..46d02cf6a 100644
--- a/tabby-local/src/session.ts
+++ b/tabby-local/src/session.ts
@@ -1,10 +1,10 @@
 import * as fs from 'mz/fs'
-import * as fsSync from 'fs'
 import { Injector } from '@angular/core'
 import { HostAppService, ConfigService, WIN_BUILD_CONPTY_SUPPORTED, isWindowsBuild, Platform, BootstrapData, BOOTSTRAP_DATA, LogService } from 'tabby-core'
 import { BaseSession } from 'tabby-terminal'
 import { SessionOptions, ChildProcess, PTYInterface, PTYProxy } from './api'
 import { getEnvironment, substituteEnv } from './environment'
+import { isDirectory, isDirectorySync } from './util'
 
 const windowsDirectoryRegex = /([a-zA-Z]:[^\:\[\]\?\"\<\>\|]+)/mi
 
@@ -89,21 +89,27 @@ export class Session extends BaseSession {
             // eslint-disable-next-line @typescript-eslint/prefer-nullish-coalescing
             let cwd = options.cwd || process.env.HOME
 
-            if (!fsSync.existsSync(cwd!)) {
-                console.warn('Ignoring non-existent CWD:', cwd)
+            if (!isDirectorySync(cwd)) {
+                console.warn('Ignoring invalid CWD:', cwd)
                 cwd = undefined
             }
 
-            pty = await this.ptyInterface.spawn(options.command, options.args, {
-                name: 'xterm-256color',
-                cols: options.width ?? 80,
-                rows: options.height ?? 30,
-                encoding: null,
-                cwd,
-                env: env,
-                // `1` instead of `true` forces ConPTY even if unstable
-                useConpty: isWindowsBuild(WIN_BUILD_CONPTY_SUPPORTED) && this.config.store.terminal.useConPTY ? 1 : false,
-            })
+            try {
+                pty = await this.ptyInterface.spawn(options.command, options.args, {
+                    name: 'xterm-256color',
+                    cols: options.width ?? 80,
+                    rows: options.height ?? 30,
+                    encoding: null,
+                    cwd,
+                    env: env,
+                    // `1` instead of `true` forces ConPTY even if unstable
+                    useConpty: isWindowsBuild(WIN_BUILD_CONPTY_SUPPORTED) && this.config.store.terminal.useConPTY ? 1 : false,
+                })
+            } catch (error) {
+                this.logger.error('Could not spawn the shell:', error)
+                this.emitOutput(Buffer.from(`\r\nCould not start ${options.command}:\r\n${error.message}\r\n`))
+                return
+            }
 
             this.guessedCWD = cwd ?? null
         }
@@ -219,18 +225,23 @@ export class Session extends BaseSession {
         // eslint-disable-next-line @typescript-eslint/prefer-nullish-coalescing
         cwd = cwd || this.guessedCWD
 
-        try {
-            await fs.access(cwd)
-        } catch {
+        if (!await isDirectory(cwd)) {
             return null
         }
         return cwd
     }
 
-    private guessWindowsCWD (data: string) {
+    private async guessWindowsCWD (data: string): Promise<void> {
         const match = windowsDirectoryRegex.exec(data)
-        if (match) {
-            this.guessedCWD = match[0]
+        if (!match) {
+            return
+        }
+        // The regex also matches file paths (e.g. an echoed command line
+        // containing `D:\tools\7z.exe`), which are useless as a CWD and
+        // break process spawning once inherited by another tab.
+        const guess = match[0].trim()
+        if (await isDirectory(guess)) {
+            this.guessedCWD = guess
         }
     }
 }
diff --git a/tabby-local/src/util.ts b/tabby-local/src/util.ts
new file mode 100644
index 000000000..0f54d01a1
--- /dev/null
+++ b/tabby-local/src/util.ts
@@ -0,0 +1,32 @@
+import * as fs from 'mz/fs'
+import * as fsSync from 'fs'
+
+/**
+ * Returns `true` only if `path` exists *and* is a directory.
+ *
+ * A plain existence check is not enough for anything that will be used as a
+ * process' working directory: `CreateProcessW` fails with `ERROR_DIRECTORY`
+ * (267) when `lpCurrentDirectory` points at a file.
+ */
+export async function isDirectory (path: string|null|undefined): Promise<boolean> {
+    if (!path) {
+        return false
+    }
+    try {
+        return (await fs.stat(path)).isDirectory()
+    } catch {
+        return false
+    }
+}
+
+/** Synchronous counterpart of [[isDirectory]]. */
+export function isDirectorySync (path: string|null|undefined): boolean {
+    if (!path) {
+        return false
+    }
+    try {
+        return fsSync.statSync(path).isDirectory()
+    } catch {
+        return false
+    }
+}