diff --git a/copier/_main.py b/copier/_main.py
index ecb3a8c5d..12e6047ec 100644
--- a/copier/_main.py
+++ b/copier/_main.py
@@ -70,7 +70,7 @@
     VcsRef,
 )
 from ._user_data import AnswersMap, Question, load_answersfile_data
-from ._vcs import get_git, is_git_available
+from ._vcs import get_git, is_git_available, is_remote_url
 from .errors import (
     ConfigFileError,
     CopierAnswersInterrupt,
@@ -364,6 +364,21 @@ def _answers_to_remember(self) -> Mapping[str, Any]:
         answers: AnyByStrDict = {}
         commit = self.template.commit
         src = self.template.url
+        # Check if the original path was relative
+        src_path = Path(self.src_path) if self.src_path else None
+        if src_path is None:
+            last_src = self.subproject.last_answers.get("_src_path")
+            src_path = Path(last_src) if last_src else None
+        was_relative = src_path is not None and not src_path.is_absolute()
+
+        # If original was relative and it is not a remote Git repo, save as relative to the subproject root
+        if was_relative and src and not is_remote_url(src):
+            try:
+                src_resolved = Path(src).resolve()
+                dst_resolved = self.subproject.local_abspath.resolve()
+                src = os.path.relpath(str(src_resolved), str(dst_resolved))
+            except (ValueError, OSError):
+                pass
         for key, value in (("_commit", commit), ("_src_path", src)):
             if value is not None:
                 answers[key] = value
diff --git a/copier/_subproject.py b/copier/_subproject.py
index fbd2e5b6f..061c85eb9 100644
--- a/copier/_subproject.py
+++ b/copier/_subproject.py
@@ -16,7 +16,7 @@
 from ._template import Template
 from ._types import AbsolutePath, AnyByStrDict, VCSTypes
 from ._user_data import load_answersfile_data
-from ._vcs import get_git, is_in_git_repo
+from ._vcs import get_git, is_in_git_repo, is_remote_url
 
 
 @dataclass
@@ -76,7 +76,17 @@ def template(self) -> Template | None:
         last_url = self.last_answers.get("_src_path")
         last_ref = self.last_answers.get("_commit")
         if last_url:
-            result = Template(url=last_url, ref=last_ref)
+            url = last_url
+            if not is_remote_url(last_url):
+                try:
+                    path = Path(last_url)
+                    if not path.is_absolute():
+                        resolved_path = (self.local_abspath / path).resolve()
+                        if resolved_path.is_dir():
+                            url = str(resolved_path)
+                except OSError:
+                    pass
+            result = Template(url=url, ref=last_ref)
             self._cleanup_hooks.append(result._cleanup)
             return result
         return None
diff --git a/copier/_vcs.py b/copier/_vcs.py
index 2be5ee853..cdf41e1d8 100644
--- a/copier/_vcs.py
+++ b/copier/_vcs.py
@@ -69,6 +69,12 @@ def is_git_available() -> bool:
     (re.compile(r"^gl:/?(.*)$"), r"https://gitlab.com/\1.git"),
 )
 
+REMOTE_URL_PREFIXES = ("http://", "https://", "git@", "git+", "gh:", "gl:", "bb:")
+
+
+def is_remote_url(url: str) -> bool:
+    return url.startswith(REMOTE_URL_PREFIXES)
+
 
 def is_git_repo_root(path: StrOrPath) -> bool:
     """Indicate if a given path is a git repo root directory."""
diff --git a/tests/test_answersfile.py b/tests/test_answersfile.py
index 5173d6c20..282016901 100644
--- a/tests/test_answersfile.py
+++ b/tests/test_answersfile.py
@@ -1,6 +1,7 @@
 from __future__ import annotations
 
 import json
+import os
 from contextlib import AbstractContextManager, nullcontext as does_not_raise
 from pathlib import Path
 from textwrap import dedent
@@ -549,3 +550,181 @@ def test_external_data_path_outside_destination_root_is_unsafe_on_update(
 
     with expected:
         copier.run_update(project, defaults=True, overwrite=True, unsafe=unsafe)
+
+
+
+def test_relative_template_path_stored_as_relative_when_outside_destination(
+    tmp_path: Path,
+) -> None:
+    """Template path not under destination -> stored as relative."""
+    root = tmp_path
+    template_dir = root / "template"
+    project_dir = root / "project"
+
+    build_file_tree(
+        {
+            (template_dir / "{{ _copier_conf.answers_file }}.jinja"): (
+                "{{ _copier_answers|to_nice_yaml }}"
+            ),
+        }
+    )
+
+    project_dir.mkdir(exist_ok=True)
+
+    old_cwd = Path.cwd()
+    try:
+        os.chdir(root)
+        copier.run_copy("./template", "./project", defaults=True, overwrite=True)
+    finally:
+        os.chdir(old_cwd)
+
+    answers = load_answersfile_data(project_dir)
+    assert answers["_src_path"] == os.path.relpath(str(template_dir.resolve()), str(project_dir.resolve()))
+
+
+def test_relative_template_path_stored_as_relative_when_inside_destination(
+    tmp_path: Path,
+) -> None:
+    """Template path inside destination -> stored as relative."""
+    root = tmp_path
+    project_dir = root / "project"
+    hidden_template_dir = project_dir / ".hidden_template"
+
+    build_file_tree(
+        {
+            (hidden_template_dir / "{{ _copier_conf.answers_file }}.jinja"): (
+                "{{ _copier_answers|to_nice_yaml }}"
+            ),
+        }
+    )
+
+    project_dir.mkdir(exist_ok=True)
+
+    old_cwd = Path.cwd()
+    try:
+        os.chdir(root)
+        copier.run_copy(
+            "./project/.hidden_template", "./project", defaults=True, overwrite=True
+        )
+    finally:
+        os.chdir(old_cwd)
+
+    answers = load_answersfile_data(project_dir)
+    assert answers["_src_path"] == os.path.relpath(str(hidden_template_dir.resolve()), str(project_dir.resolve()))
+
+
+def test_absolute_template_path_stored_as_is(
+    tmp_path: Path,
+) -> None:
+    """Absolute template path -> stored unchanged (skips resolution block)."""
+    template_dir = tmp_path / "template"
+    project_dir = tmp_path / "project"
+
+    build_file_tree(
+        {
+            (template_dir / "{{ _copier_conf.answers_file }}.jinja"): (
+                "{{ _copier_answers|to_nice_yaml }}"
+            ),
+        }
+    )
+
+    project_dir.mkdir(exist_ok=True)
+
+    copier.run_copy(
+        str(template_dir), str(project_dir), defaults=True, overwrite=True
+    )
+
+    answers = load_answersfile_data(project_dir)
+    assert answers["_src_path"] == str(template_dir)
+
+
+def test_relative_template_path_resolved_relative_to_project_root(
+    tmp_path: Path,
+) -> None:
+    """Template path resolved relative to project root on update, even if CWD is different."""
+    root = tmp_path
+    template_dir = root / "template"
+    project_dir = root / "project"
+
+    build_file_tree(
+        {
+            (template_dir / "{{ _copier_conf.answers_file }}.jinja"): (
+                "{{ _copier_answers|to_nice_yaml }}"
+            ),
+        }
+    )
+    git_save(template_dir, tag="v1")
+
+    project_dir.mkdir(exist_ok=True)
+
+    # Initial copy
+    old_cwd = Path.cwd()
+    try:
+        os.chdir(root)
+        copier.run_copy("./template", "./project", defaults=True, overwrite=True)
+    finally:
+        os.chdir(old_cwd)
+
+    answers = load_answersfile_data(project_dir)
+    # Verify it was saved as relative
+    assert answers["_src_path"] == os.path.relpath(str(template_dir.resolve()), str(project_dir.resolve()))
+
+    # Initialize project as git repository and commit answers file
+    git_save(project_dir)
+
+    # Run update from a completely different directory (so relative to CWD would fail)
+    other_dir = root / "other"
+    other_dir.mkdir(exist_ok=True)
+    try:
+        os.chdir(other_dir)
+        # update should succeed because template path is resolved relative to project root
+        copier.run_update(str(project_dir), defaults=True, overwrite=True)
+    finally:
+        os.chdir(old_cwd)
+
+
+def test_relative_template_path_fallback_resolved_relative_to_cwd(
+    tmp_path: Path,
+) -> None:
+    """Template path fallback resolved relative to CWD if not found relative to project root."""
+    root = tmp_path
+    template_dir = root / "template"
+    project_dir = root / "project"
+
+    build_file_tree(
+        {
+            (template_dir / "{{ _copier_conf.answers_file }}.jinja"): (
+                "{{ _copier_answers|to_nice_yaml }}"
+            ),
+        }
+    )
+    git_save(template_dir, tag="v1")
+
+    project_dir.mkdir(exist_ok=True)
+
+    # Initial copy
+    old_cwd = Path.cwd()
+    try:
+        os.chdir(root)
+        copier.run_copy("./template", "./project", defaults=True, overwrite=True)
+    finally:
+        os.chdir(old_cwd)
+
+    # Manually modify _src_path to be "template" (which is relative to CWD 'root',
+    # but "project/template" does not exist).
+    answers_file = project_dir / ".copier-answers.yml"
+    content = answers_file.read_text()
+    # Replace relative path (e.g. "../template") with "template"
+    rel_path = os.path.relpath(str(template_dir.resolve()), str(project_dir.resolve()))
+    assert rel_path in content
+    answers_file.write_text(content.replace(rel_path, "template"))
+
+    # Initialize project as git repository and commit answers file
+    git_save(project_dir)
+
+    try:
+        os.chdir(root)
+        # update should succeed because fallback resolves "template" relative to CWD (root)
+        copier.run_update(str(project_dir), defaults=True, overwrite=True)
+    finally:
+        os.chdir(old_cwd)
\ No newline at end of file