diff --git a/CLAUDE.md b/CLAUDE.md
index 5129572..07236c5 100644
--- a/CLAUDE.md
+++ b/CLAUDE.md
@@ -87,6 +87,6 @@ testscript::run("testdata")
 
 ## Built-in Commands
 
-Core: `exec`, `cmp`, `stdout`, `stderr`, `cd`, `wait`, `exists`, `mkdir`, `cp`, `mv`, `rm`, `chmod`, `env`, `cmpenv`, `stdin`, `skip`, `stop`, `kill`, `unquote`, `grep`
+Core: `exec`, `cmp`, `stdout`, `stderr`, `cd`, `wait`, `exists`, `mkdir`, `cp`, `mv`, `rm`, `chmod`, `env`, `cmpenv`, `stdin`, `skip`, `stop`, `kill`, `unquote`, `grep`, `symlink`
 
 The command dispatch checks custom commands first, then falls back to built-ins, enabling easy extension.
diff --git a/README.md b/README.md
index 0727fae..f58443a 100644
--- a/README.md
+++ b/README.md
@@ -137,6 +137,7 @@ Test scripts use the [`txtar`](https://pkg.go.dev/github.com/rogpeppe/go-interna
 - **stop** - Stop test early (pass)
 - **unquote** - Remove leading `>` from file lines
 - **grep** - Search files with regex
+- **symlink** - Create symbolic links
 
 Commands can be prefixed with conditions (`[unix]`) or negated (`!`).
 
diff --git a/src/run/commands.rs b/src/run/commands.rs
index 2ce1f97..8d8f519 100644
--- a/src/run/commands.rs
+++ b/src/run/commands.rs
@@ -271,12 +271,12 @@ impl TestEnvironment {
 
     /// Create a symbolic link
     pub fn create_symlink(&self, target: &str, link_name: &str) -> Result<()> {
-        let target_path = self.work_dir.join(target);
         let link_path = self.work_dir.join(link_name);
-
+        
         #[cfg(unix)]
         {
-            std::os::unix::fs::symlink(&target_path, &link_path).map_err(|e| {
+            // For Unix systems, preserve the target path as-is to support relative links
+            std::os::unix::fs::symlink(target, &link_path).map_err(|e| {
                 Error::command_error(
                     "symlink",
                     format!(
@@ -292,6 +292,8 @@ impl TestEnvironment {
             // On Windows, try to create a symlink but fall back gracefully
             use std::os::windows::fs::symlink_file;
 
+            // For Windows, we need to resolve the path to check if it's a file
+            let target_path = self.work_dir.join(target);
             if target_path.is_file() {
                 symlink_file(&target_path, &link_path).map_err(|e| {
                     Error::command_error(
diff --git a/test_symlink.rs b/test_symlink.rs
deleted file mode 100644
index c828ff7..0000000
--- a/test_symlink.rs
+++ /dev/null
@@ -1,9 +0,0 @@
-use testscript_rs::testscript;
-
-#[test]
-fn test_symlink() {
-    testscript::run("/tmp")
-        .filter_file("test_symlink.txtar")
-        .execute()
-        .unwrap();
-}
diff --git a/testdata/test_symlink.txt b/testdata/test_symlink.txt
deleted file mode 100644
index cc8a412..0000000
--- a/testdata/test_symlink.txt
+++ /dev/null
@@ -1,8 +0,0 @@
-# Test symlink functionality
-symlink original.txt link.txt
-exists link.txt
-exec cat link.txt
-stdout "original content"
-
--- original.txt --
-original content
\ No newline at end of file
diff --git a/tests/builtin_commands.rs b/tests/builtin_commands.rs
index 5559aaa..9e18449 100644
--- a/tests/builtin_commands.rs
+++ b/tests/builtin_commands.rs
@@ -181,3 +181,99 @@ hello from stdout"#;
     let result = run_test(&script_path);
     assert!(result.is_ok(), "CP stdout test failed: {:?}", result);
 }
+
+#[cfg(unix)]
+#[test]
+fn test_symlink_command() {
+    let temp_dir = TempDir::new().unwrap();
+    let script_path = temp_dir.path().join("symlink_test.txt");
+
+    let script_content = r#"# Test symlink command
+symlink original.txt link.txt
+exists link.txt
+exec cat link.txt
+stdout "original content"
+
+-- original.txt --
+original content"#;
+
+    fs::write(&script_path, script_content).unwrap();
+
+    let result = run_test(&script_path);
+    assert!(result.is_ok(), "Symlink test failed: {:?}", result);
+}
+
+#[cfg(unix)]
+#[test]
+fn test_symlink_directory() {
+    let temp_dir = TempDir::new().unwrap();
+    let script_path = temp_dir.path().join("symlink_dir_test.txt");
+
+    let script_content = r#"# Test symlink with directory
+mkdir test_dir
+symlink test_dir link_dir
+exists link_dir
+exec ls link_dir"#;
+
+    fs::write(&script_path, script_content).unwrap();
+
+    let result = run_test(&script_path);
+    assert!(result.is_ok(), "Directory symlink test failed: {:?}", result);
+}
+
+#[cfg(unix)]
+#[test]
+fn test_symlink_relative_path() {
+    let temp_dir = TempDir::new().unwrap();
+    let script_path = temp_dir.path().join("symlink_relative_test.txt");
+
+    let script_content = r#"# Test symlink with relative path
+mkdir subdir
+symlink ../original.txt subdir/link.txt
+exists subdir/link.txt
+exec cat subdir/link.txt
+stdout "relative content"
+
+-- original.txt --
+relative content"#;
+
+    fs::write(&script_path, script_content).unwrap();
+
+    let result = run_test(&script_path);
+    assert!(result.is_ok(), "Relative path symlink test failed: {:?}", result);
+}
+
+#[test]
+fn test_symlink_error_cases() {
+    let temp_dir = TempDir::new().unwrap();
+    let script_path = temp_dir.path().join("symlink_error_test.txt");
+
+    let script_content = r#"# Test symlink error cases
+! symlink
+! symlink only_one_arg"#;
+
+    fs::write(&script_path, script_content).unwrap();
+
+    let result = run_test(&script_path);
+    assert!(result.is_ok(), "Symlink error test failed: {:?}", result);
+}
+
+#[test]
+fn test_issue_example() {
+    let temp_dir = TempDir::new().unwrap();
+    let script_path = temp_dir.path().join("issue_example.txt");
+
+    let script_content = r#"# Create a symlink
+symlink original.txt link.txt
+exists link.txt
+exec cat link.txt
+stdout "original content"
+
+-- original.txt --
+original content"#;
+
+    fs::write(&script_path, script_content).unwrap();
+
+    let result = run_test(&script_path);
+    assert!(result.is_ok(), "Issue example test failed: {:?}", result);
+}