diff --git a/bin/common.ml b/bin/common.ml
index 8d3e9f492f6..84bf05c03a7 100644
--- a/bin/common.ml
+++ b/bin/common.ml
@@ -58,7 +58,22 @@ open struct
   module Manpage = Manpage
 end
 
-let default_trace_file = Path.Local.of_string "_build/trace.csexp"
+let default_build_dir = "_build"
+let trace_file_name = "trace.csexp"
+
+let find_default_trace_file () =
+  let trace_file = Filename.concat default_build_dir trace_file_name in
+  let cwd = Sys.getcwd () in
+  let rec loop dir =
+    let candidate = Filename.concat dir trace_file in
+    if Sys.file_exists candidate
+    then candidate
+    else (
+      let parent = Filename.dirname dir in
+      if parent = dir then Filename.concat cwd trace_file else loop parent)
+  in
+  loop cwd
+;;
 
 module Package = Dune_lang.Package
 open Let_syntax
@@ -75,8 +90,6 @@ let debug_backtraces =
         ~doc:(Some "Always print exception backtraces."))
 ;;
 
-let default_build_dir = "_build"
-
 let one_of term1 term2 =
   Term.ret
   @@ let+ x, args1 = Term.with_used_args term1
@@ -584,7 +597,7 @@ module Builder = struct
     ; watch_exclusions : string list
     ; build_dir : string
     ; root : string option
-    ; trace_file : string option
+    ; trace_file : [ `Default | `User_specified of string ] option
     ; allow_builds : bool
     ; default_root_is_cwd : bool
     ; target_exec : string option
@@ -614,7 +627,7 @@ module Builder = struct
     Buffer.contents b
   ;;
 
-  let make_term ~trace ~allow_pkg_flag =
+  let make_term ~(trace : bool) ~allow_pkg_flag =
     let docs = copts_sect in
     let+ config_from_command_line = shared_with_config_file ~allow_pkg_flag
     and+ debug_dep_path =
@@ -793,7 +806,7 @@ module Builder = struct
     and+ trace_file =
       Arg.(
         value
-        & opt (some string) trace
+        & opt (some string) None
         & info
             [ "trace-file" ]
             ~docs
@@ -952,21 +965,18 @@ module Builder = struct
     ; watch_exclusions
     ; build_dir = Option.value ~default:default_build_dir build_dir
     ; root
-    ; trace_file
+    ; trace_file =
+        (match trace_file with
+         | Some s -> Some (`User_specified s)
+         | None -> if trace then Some `Default else None)
     ; allow_builds = true
     ; default_root_is_cwd = false
     ; target_exec
     }
   ;;
 
-  let term_no_trace_no_pkg = make_term ~trace:None ~allow_pkg_flag:false
-
-  let term =
-    make_term
-      ~trace:(Some (Stdune.Path.Local.to_string default_trace_file))
-      ~allow_pkg_flag:true
-  ;;
-
+  let term_no_trace_no_pkg = make_term ~trace:false ~allow_pkg_flag:false
+  let term = make_term ~trace:true ~allow_pkg_flag:true
   let default = Term.eval_no_args_empty_env term
 
   let equal
@@ -1029,7 +1039,14 @@ module Builder = struct
     && List.equal String.equal t.watch_exclusions watch_exclusions
     && String.equal t.build_dir build_dir
     && Option.equal String.equal t.root root
-    && Option.equal String.equal t.trace_file trace_file
+    && Option.equal
+         (fun a b ->
+            match a, b with
+            | `Default, `Default -> true
+            | `User_specified a, `User_specified b -> String.equal a b
+            | _ -> false)
+         t.trace_file
+         trace_file
     && Bool.equal t.allow_builds allow_builds
     && Bool.equal t.default_root_is_cwd default_root_is_cwd
     && Option.equal String.equal t.target_exec target_exec
@@ -1171,20 +1188,24 @@ let init_with_root ~(root : Workspace_root.t) (builder : Builder.t) =
   let () =
     match builder.trace_file with
     | None -> Log.init No_log_file
-    | Some stats ->
+    | Some trace_config ->
       (match
          (* For default location, try to acquire lock first to avoid corrupting
            an existing trace from another dune process *)
-         if String.equal stats (Stdune.Path.Local.to_string default_trace_file)
-         then (
-           match Global_lock.lock ~timeout:None with
-           | Ok () -> `Create
-           | Error _ -> `Skip)
-         else `Create
+         match trace_config with
+         | `Default ->
+           (match Global_lock.lock ~timeout:None with
+            | Ok () -> `Create
+            | Error _ -> `Skip)
+         | `User_specified _ -> `Create
        with
        | `Skip -> Log.init No_log_file
        | `Create ->
-         let trace = Path.of_filename_relative_to_initial_cwd stats in
+         let trace =
+           match trace_config with
+           | `Default -> Path.build (Path.Build.relative Path.Build.root trace_file_name)
+           | `User_specified stats -> Path.of_filename_relative_to_initial_cwd stats
+         in
          Path.parent trace |> Option.iter ~f:Path.mkdir_p;
          let stats = Dune_trace.Out.create trace in
          Dune_trace.set_global stats;
diff --git a/bin/common.mli b/bin/common.mli
index 6d09f6e2c16..d26e707d12e 100644
--- a/bin/common.mli
+++ b/bin/common.mli
@@ -1,5 +1,4 @@
 open Dune_config_file
-open Stdune
 
 type t
 
@@ -20,7 +19,7 @@ val watch_exclusions : t -> string list
 val watch : t -> Dune_rpc_impl.Watch_mode_config.t
 val file_watcher : t -> Dune_scheduler.Scheduler.Run.file_watcher
 val prefix_target : t -> string -> string
-val default_trace_file : Path.Local.t
+val find_default_trace_file : unit -> string
 
 (** [Builder] describes how to initialize Dune. *)
 module Builder : sig
diff --git a/bin/trace.ml b/bin/trace.ml
index 195153c0065..f58e8538aae 100644
--- a/bin/trace.ml
+++ b/bin/trace.ml
@@ -264,7 +264,7 @@ let cat =
     let trace_file =
       match trace_file with
       | Some s -> s
-      | None -> Path.Local.to_string Common.default_trace_file
+      | None -> Common.find_default_trace_file ()
     in
     if follow
     then iter_sexps_follow trace_file ~f:print_with_flush
@@ -294,7 +294,7 @@ let commands =
     let trace_file =
       match trace_file with
       | Some s -> s
-      | None -> Path.Local.to_string Common.default_trace_file
+      | None -> Common.find_default_trace_file ()
     in
     iter_sexps trace_file ~f:(fun sexp ->
       match parse_process_event sexp with
diff --git a/doc/changes/fixed/13735.md b/doc/changes/fixed/13735.md
new file mode 100644
index 00000000000..cc8e0a1d15e
--- /dev/null
+++ b/doc/changes/fixed/13735.md
@@ -0,0 +1,3 @@
+- Place the default trace file inside the build directory at the
+  workspace root, rather than relative to the current directory.
+  (#13735, @vouillon)
diff --git a/test/blackbox-tests/test-cases/custom-build-dir.t/run.t b/test/blackbox-tests/test-cases/custom-build-dir.t/run.t
index 5a73ce5a8c7..f0eb8f2a00d 100644
--- a/test/blackbox-tests/test-cases/custom-build-dir.t/run.t
+++ b/test/blackbox-tests/test-cases/custom-build-dir.t/run.t
@@ -2,6 +2,7 @@
   _foobar
   _foobar/default
   _foobar/default/foo
+  _foobar/trace.csexp
 
   $ rm -rf _foobar
 
@@ -34,6 +35,7 @@ Test with build directory being an absolute path
   build
   build/default
   build/default/foo
+  build/trace.csexp
 
   $ rm -rf build
 
diff --git a/test/blackbox-tests/test-cases/custom-cross-compilation/cross-compilation-ocamlfind.t b/test/blackbox-tests/test-cases/custom-cross-compilation/cross-compilation-ocamlfind.t
index 37dc2a9130b..cd0776de4a4 100644
--- a/test/blackbox-tests/test-cases/custom-cross-compilation/cross-compilation-ocamlfind.t
+++ b/test/blackbox-tests/test-cases/custom-cross-compilation/cross-compilation-ocamlfind.t
@@ -77,7 +77,7 @@ Dune should be able to find it too
   Entering directory 'app'
   Leaving directory 'app'
 
-  $ dune trace cat | jq '
+  $ dune trace cat --trace-file app/_build/trace.csexp | jq '
   > include "dune";
   >    processes
   > | .args
diff --git a/test/blackbox-tests/test-cases/exec/exec-cmd.t/run.t b/test/blackbox-tests/test-cases/exec/exec-cmd.t/run.t
index 3e1261a32c3..342d56473fb 100644
--- a/test/blackbox-tests/test-cases/exec/exec-cmd.t/run.t
+++ b/test/blackbox-tests/test-cases/exec/exec-cmd.t/run.t
@@ -29,4 +29,3 @@
   $ ls -a test/_build
   .
   ..
-  trace.csexp
diff --git a/test/blackbox-tests/test-cases/github7034.t/run.t b/test/blackbox-tests/test-cases/github7034.t/run.t
index df9d0f83b8b..569622bdbfd 100644
--- a/test/blackbox-tests/test-cases/github7034.t/run.t
+++ b/test/blackbox-tests/test-cases/github7034.t/run.t
@@ -111,7 +111,7 @@ But when lang dune is 3.3 or higher the warning becomes an error:
   Entering directory 'outer'
   Leaving directory 'outer'
 
-  $ dune trace cat | jq 'include "dune";
+  $ dune trace cat --trace-file outer/_build/trace.csexp | jq 'include "dune";
   >   processes
   > | .args
   > | select(.target_files and (.target_files | any(contains(".cmx"))))
diff --git a/test/blackbox-tests/test-cases/rocq/compose-installed-compat.t/run.t b/test/blackbox-tests/test-cases/rocq/compose-installed-compat.t/run.t
index 41c0faa8b53..fedd95ddf79 100644
--- a/test/blackbox-tests/test-cases/rocq/compose-installed-compat.t/run.t
+++ b/test/blackbox-tests/test-cases/rocq/compose-installed-compat.t/run.t
@@ -48,7 +48,7 @@ Next we go into our Dune project and build it.
 
 Now we check the flags that were passed to coqdep and coqc:
 
-  $ dune trace cat | jq 'include "dune"; coqcCoqdepFlags'
+  $ dune trace cat --trace-file A/_build/trace.csexp | jq 'include "dune"; coqcCoqdepFlags'
   {
     "name": "rocq",
     "args": [
diff --git a/test/blackbox-tests/test-cases/rocq/coq/compose-installed-compat.t/run.t b/test/blackbox-tests/test-cases/rocq/coq/compose-installed-compat.t/run.t
index 0a705c0bb65..19d445b4dff 100644
--- a/test/blackbox-tests/test-cases/rocq/coq/compose-installed-compat.t/run.t
+++ b/test/blackbox-tests/test-cases/rocq/coq/compose-installed-compat.t/run.t
@@ -58,7 +58,7 @@ Next we go into our Dune project and build it.
 
 Now we check the flags that were passed to coqdep and coqc:
 
-  $ dune trace cat | jq 'include "dune"; rocqFlags'
+  $ dune trace cat --trace-file A/_build/trace.csexp | jq 'include "dune"; rocqFlags'
   {
     "name": "coqc",
     "args": [
diff --git a/test/blackbox-tests/test-cases/rocq/rocq-native/compose-installed-compat.t/run.t b/test/blackbox-tests/test-cases/rocq/rocq-native/compose-installed-compat.t/run.t
index 878f3613df8..c9ec3abcb15 100644
--- a/test/blackbox-tests/test-cases/rocq/rocq-native/compose-installed-compat.t/run.t
+++ b/test/blackbox-tests/test-cases/rocq/rocq-native/compose-installed-compat.t/run.t
@@ -50,7 +50,7 @@ Next we go into our Dune project and build it.
 
 Now we check the flags that were passed to coqdep and coqc:
 
-  $ dune trace cat | jq 'include "dune"; coqcCoqdepFlags'
+  $ dune trace cat --trace-file A/_build/trace.csexp | jq 'include "dune"; coqcCoqdepFlags'
   {
     "name": "rocq",
     "args": [
diff --git a/test/blackbox-tests/test-cases/trace/trace-subdir.t b/test/blackbox-tests/test-cases/trace/trace-subdir.t
new file mode 100644
index 00000000000..ffa43877217
--- /dev/null
+++ b/test/blackbox-tests/test-cases/trace/trace-subdir.t
@@ -0,0 +1,32 @@
+Test that trace files are written to the correct location when running dune from
+a subdirectory.
+
+  $ make_dune_project 3.21
+  $ mkdir -p src
+
+Run dune build from the subdirectory:
+
+  $ (cd src && dune build --root ..)
+  Entering directory '..'
+  Leaving directory '..'
+
+Check that the trace file is not written in the incorrect location:
+
+  $ test -f src/_build/trace.csexp
+  [1]
+
+The trace file should be written in the correct location:
+
+  $ test -f _build/trace.csexp
+
+dune trace cat should work from both the root and subdirectory:
+
+  $ dune trace cat | jq 'select(.name == "exit") | {name}'
+  {
+    "name": "exit"
+  }
+
+  $ (cd src && dune trace cat | jq 'select(.name == "exit") | {name}')
+  {
+    "name": "exit"
+  }