diff --git a/src/nix-build/nix-build.cc b/src/nix-build/nix-build.cc
index 5346641eb..ba0e47c44 100644
--- a/src/nix-build/nix-build.cc
+++ b/src/nix-build/nix-build.cc
@@ -340,13 +340,15 @@ static void main_nix_build(int argc, char * * argv)
         exprs = {state->parseStdin()};
     else
         for (auto i : remainingArgs) {
-            auto baseDir = inShebang && !packages ? absPath(dirOf(script)) : i;
-
-            if (fromArgs)
+            if (fromArgs) {
+                auto shebangBaseDir = absPath(dirOf(script));
                 exprs.push_back(state->parseExprFromString(
                     std::move(i),
-                    (inShebang && compatibilitySettings.nixShellShebangArgumentsRelativeToScript) ? lookupFileArg(*state, baseDir) : state->rootPath(".")
+                    (inShebang && compatibilitySettings.nixShellShebangArgumentsRelativeToScript)
+                        ? lookupFileArg(*state, shebangBaseDir)
+                        : state->rootPath(".")
                 ));
+            }
             else {
                 auto absolute = i;
                 try {
diff --git a/tests/functional/nix-shell.sh b/tests/functional/nix-shell.sh
index b14e3dc6a..43d9e959c 100755
--- a/tests/functional/nix-shell.sh
+++ b/tests/functional/nix-shell.sh
@@ -167,6 +167,35 @@ EOF
 chmod a+x $TEST_ROOT/marco/polo/default.nix
 (cd $TEST_ROOT/marco && ./polo/default.nix | grepQuiet "Polo")
 
+# https://github.com/NixOS/nix/issues/11892
+mkdir $TEST_ROOT/issue-11892
+cat >$TEST_ROOT/issue-11892/shebangscript <<EOF
+#!$(type -P env) nix-shell
+#! nix-shell -I nixpkgs=$shellDotNix
+#! nix-shell -p 'callPackage (import ./my_package.nix) {}'
+#! nix-shell -i bash
+set -euxo pipefail
+my_package
+EOF
+cat >$TEST_ROOT/issue-11892/my_package.nix <<EOF
+{ stdenv, shell, ... }:
+stdenv.mkDerivation {
+  name = "my_package";
+  buildCommand = ''
+    mkdir -p \$out/bin
+    ( echo "#!\${shell}"
+      echo "echo 'ok' 'baz11892'"
+    ) > \$out/bin/my_package
+    cat \$out/bin/my_package
+    chmod a+x \$out/bin/my_package
+  '';
+}
+EOF
+chmod a+x $TEST_ROOT/issue-11892/shebangscript
+$TEST_ROOT/issue-11892/shebangscript \
+  | tee /dev/stderr \
+  | grepQuiet "ok baz11892"
+
 
 #####################
 # Flake equivalents #
diff --git a/tests/functional/shell.nix b/tests/functional/shell.nix
index 9cae14b78..4b1a0623a 100644
--- a/tests/functional/shell.nix
+++ b/tests/functional/shell.nix
@@ -37,7 +37,7 @@ let pkgs = rec {
       mkdir -p $out
       ln -s ${setupSh} $out/setup
     '';
-  };
+  } // { inherit mkDerivation; };
 
   shellDrv = mkDerivation {
     name = "shellDrv";
@@ -94,5 +94,9 @@ let pkgs = rec {
     chmod a+rx $out/bin/ruby
   '';
 
+  inherit (cfg) shell;
+
+  callPackage = f: args: f (pkgs // args);
+
   inherit pkgs;
 }; in pkgs