diff --git a/packages/vitest/src/node/core.ts b/packages/vitest/src/node/core.ts
index da61fcfb2838..010dba90732f 100644
--- a/packages/vitest/src/node/core.ts
+++ b/packages/vitest/src/node/core.ts
@@ -1,6 +1,6 @@
 import { existsSync, promises as fs } from 'node:fs'
 import type { ViteDevServer } from 'vite'
-import { basename, dirname, normalize, relative } from 'pathe'
+import { basename, dirname, join, normalize, relative } from 'pathe'
 import fg from 'fast-glob'
 import mm from 'micromatch'
 import c from 'picocolors'
@@ -151,20 +151,23 @@ export class Vitest {
   }
 
   private async resolveWorkspaces(options: UserConfig) {
-    const rootFiles = await fs.readdir(this.config.root)
-    const workspacesConfigPath = workspacesFiles.find((configFile) => {
+    const configDir = dirname(this.server.config.configFile || this.config.root)
+    const rootFiles = await fs.readdir(configDir)
+    const workspacesConfigName = workspacesFiles.find((configFile) => {
       return rootFiles.includes(configFile)
     })
 
-    if (!workspacesConfigPath)
+    if (!workspacesConfigName)
       return [await this.createCoreWorkspace(options)]
 
-    const workspacesModule = await this.runner.executeFile(workspacesConfigPath) as {
+    const workspacesConcigPath = join(configDir, workspacesConfigName)
+
+    const workspacesModule = await this.runner.executeFile(workspacesConcigPath) as {
       default: string[]
     }
 
     if (!workspacesModule.default || !Array.isArray(workspacesModule.default))
-      throw new Error(`Workspaces config file ${workspacesConfigPath} must export a default array of workspace paths`)
+      throw new Error(`Workspaces config file ${workspacesConcigPath} must export a default array of workspace paths`)
 
     const workspacesGlobMatches = workspacesModule.default.map((workspacePath) => {
       return workspacePath.replace('<rootDir>', this.config.root)
@@ -453,7 +456,7 @@ export class Vitest {
   }
 
   private _rerunTimer: any
-  private async scheduleRerun(triggerId: string) {
+  private async scheduleRerun(triggerId: string[]) {
     const currentCount = this.restartsCount
     clearTimeout(this._rerunTimer)
     await this.runningPromise
@@ -492,7 +495,9 @@ export class Vitest {
       if (this.coverageProvider && this.config.coverage.cleanOnRerun)
         await this.coverageProvider.clean()
 
-      await this.report('onWatcherRerun', files, triggerId)
+      const triggerIds = new Set(triggerId.map(id => relative(this.config.root, id)))
+      const triggerLabel = Array.from(triggerIds).join(', ')
+      await this.report('onWatcherRerun', files, triggerLabel)
 
       await this.runFiles(files.flatMap(file => this.getWorkspacesByTestFile(file)))
 
@@ -525,8 +530,8 @@ export class Vitest {
       id = slash(id)
       updateLastChanged(id)
       const needsRerun = this.handleFileChanged(id)
-      if (needsRerun)
-        this.scheduleRerun(id)
+      if (needsRerun.length)
+        this.scheduleRerun(needsRerun)
     }
     const onUnlink = (id: string) => {
       id = slash(id)
@@ -546,7 +551,7 @@ export class Vitest {
       if (await this.isTargetFile(id)) {
         this.changedTests.add(id)
         await this.cache.stats.updateStats(id)
-        this.scheduleRerun(id)
+        this.scheduleRerun([id])
       }
     }
     const watcher = this.server.watcher
@@ -571,18 +576,20 @@ export class Vitest {
   /**
    * @returns A value indicating whether rerun is needed (changedTests was mutated)
    */
-  private handleFileChanged(id: string): boolean {
+  private handleFileChanged(id: string): string[] {
     if (this.changedTests.has(id) || this.invalidates.has(id))
-      return false
+      return []
 
     if (mm.isMatch(id, this.config.forceRerunTriggers)) {
       this.state.getFilepaths().forEach(file => this.changedTests.add(file))
-      return true
+      return []
     }
 
     const workspaces = this.getModuleWorkspaces(id)
     if (!workspaces.length)
-      return false
+      return []
+
+    const files: string[] = []
 
     for (const { server, browser } of workspaces) {
       const mod = server.moduleGraph.getModuleById(id) || browser?.moduleGraph.getModuleById(id)
@@ -590,13 +597,15 @@ export class Vitest {
         // files with `?v=` query from the browser
         const mods = browser?.moduleGraph.getModulesByFile(id)
         if (!mods?.size)
-          return false
+          return []
         let rerun = false
         mods.forEach((m) => {
           if (m.id && this.handleFileChanged(m.id))
             rerun = true
         })
-        return rerun
+        if (rerun)
+          files.push(id)
+        continue
       }
 
       // remove queries from id
@@ -606,7 +615,8 @@ export class Vitest {
 
       if (this.state.filesMap.has(id)) {
         this.changedTests.add(id)
-        return true
+        files.push(id)
+        continue
       }
 
       let rerun = false
@@ -620,10 +630,10 @@ export class Vitest {
       })
 
       if (rerun)
-        return rerun
+        files.push(id)
     }
 
-    return false
+    return files
   }
 
   private async reportCoverage(allTestsRun: boolean) {
diff --git a/packages/vitest/src/node/reporters/base.ts b/packages/vitest/src/node/reporters/base.ts
index 7ffb28d24ca7..7478d3977c29 100644
--- a/packages/vitest/src/node/reporters/base.ts
+++ b/packages/vitest/src/node/reporters/base.ts
@@ -80,7 +80,11 @@ export abstract class BaseReporter implements Reporter {
         if (this.ctx.config.logHeapUsage && task.result.heap != null)
           suffix += c.magenta(` ${Math.floor(task.result.heap / 1024 / 1024)} MB heap used`)
 
-        logger.log(` ${getStateSymbol(task)} ${task.name} ${suffix}`)
+        let title = ` ${getStateSymbol(task)} `
+        if (task.projectName)
+          title += formatProjectName(task.projectName)
+        title += `${task.name} ${suffix}`
+        logger.log(title)
 
         // print short errors, full errors will be at the end in summary
         for (const test of failed) {
diff --git a/packages/vitest/src/node/reporters/verbose.ts b/packages/vitest/src/node/reporters/verbose.ts
index 9791cbc0175b..dd17b8d4b0f2 100644
--- a/packages/vitest/src/node/reporters/verbose.ts
+++ b/packages/vitest/src/node/reporters/verbose.ts
@@ -3,7 +3,7 @@ import type { TaskResultPack } from '../../types'
 import { getFullName } from '../../utils'
 import { F_RIGHT } from '../../utils/figures'
 import { DefaultReporter } from './default'
-import { getStateSymbol } from './renderers/utils'
+import { formatProjectName, getStateSymbol } from './renderers/utils'
 
 export class VerboseReporter extends DefaultReporter {
   constructor() {
@@ -17,7 +17,10 @@ export class VerboseReporter extends DefaultReporter {
     for (const pack of packs) {
       const task = this.ctx.state.idMap.get(pack[0])
       if (task && task.type === 'test' && task.result?.state && task.result?.state !== 'run') {
-        let title = ` ${getStateSymbol(task)} ${getFullName(task, c.dim(' > '))}`
+        let title = ` ${getStateSymbol(task)} `
+        if (task.suite?.projectName)
+          title += formatProjectName(task.suite.projectName)
+        title += getFullName(task, c.dim(' > '))
         if (this.ctx.config.logHeapUsage && task.result.heap != null)
           title += c.magenta(` ${Math.floor(task.result.heap / 1024 / 1024)} MB heap used`)
         this.ctx.logger.log(title)
diff --git a/packages/vitest/src/node/workspace.ts b/packages/vitest/src/node/workspace.ts
index 73e0ceb17ef4..6a60a44a7388 100644
--- a/packages/vitest/src/node/workspace.ts
+++ b/packages/vitest/src/node/workspace.ts
@@ -66,8 +66,8 @@ export class VitestWorkspace {
     public ctx: Vitest,
   ) { }
 
-  getName() {
-    return this.config.name
+  getName(): string {
+    return this.config.name || dirname(this.path).split('/').pop() || ''
   }
 
   isCore() {
@@ -228,7 +228,7 @@ export class VitestWorkspace {
         },
       },
       snapshotOptions: {
-        ...this.ctx.config.snapshotOptions,
+        ...this.config.snapshotOptions,
         resolveSnapshotPath: undefined,
       },
       onConsoleLog: undefined!,
diff --git a/test/watch/test/file-watching.test.ts b/test/watch/test/file-watching.test.ts
index 5c173524d2e6..1d01e0ac2330 100644
--- a/test/watch/test/file-watching.test.ts
+++ b/test/watch/test/file-watching.test.ts
@@ -31,7 +31,7 @@ test('editing source file triggers re-run', async () => {
   writeFileSync(sourceFile, editFile(sourceFileContent), 'utf8')
 
   await vitest.waitForOutput('New code running')
-  await vitest.waitForOutput('RERUN  math.ts')
+  await vitest.waitForOutput('RERUN  ../math.ts')
   await vitest.waitForOutput('1 passed')
 })
 
@@ -41,7 +41,7 @@ test('editing test file triggers re-run', async () => {
   writeFileSync(testFile, editFile(testFileContent), 'utf8')
 
   await vitest.waitForOutput('New code running')
-  await vitest.waitForOutput('RERUN  math.test.ts')
+  await vitest.waitForOutput('RERUN  ../math.test.ts')
   await vitest.waitForOutput('1 passed')
 })
 
@@ -71,7 +71,7 @@ describe('browser', () => {
     writeFileSync(sourceFile, editFile(sourceFileContent), 'utf8')
 
     await vitest.waitForOutput('New code running')
-    await vitest.waitForOutput('RERUN  math.ts')
+    await vitest.waitForOutput('RERUN  ../math.ts')
     await vitest.waitForOutput('1 passed')
 
     vitest.write('q')
diff --git a/test/watch/test/utils.ts b/test/watch/test/utils.ts
index 1125742e78a5..4f3b12954daf 100644
--- a/test/watch/test/utils.ts
+++ b/test/watch/test/utils.ts
@@ -1,9 +1,12 @@
 import { afterEach } from 'vitest'
-import { execa } from 'execa'
+import { type Options, execa } from 'execa'
 import stripAnsi from 'strip-ansi'
 
-export async function startWatchMode(...args: string[]) {
-  const subprocess = execa('vitest', ['--root', 'fixtures', ...args])
+export async function startWatchMode(options?: Options | string, ...args: string[]) {
+  if (typeof options === 'string')
+    args.unshift(options)
+  const argsWithRoot = args.includes('--root') ? args : ['--root', 'fixtures', ...args]
+  const subprocess = execa('vitest', argsWithRoot, typeof options === 'string' ? undefined : options)
 
   let setDone: (value?: unknown) => void
   const isDone = new Promise(resolve => (setDone = resolve))
diff --git a/test/watch/test/workspaces.test.ts b/test/watch/test/workspaces.test.ts
new file mode 100644
index 000000000000..6870cdcce395
--- /dev/null
+++ b/test/watch/test/workspaces.test.ts
@@ -0,0 +1,66 @@
+import { fileURLToPath } from 'node:url'
+import { readFileSync, writeFileSync } from 'node:fs'
+import { afterAll, it } from 'vitest'
+import { dirname, resolve } from 'pathe'
+import { startWatchMode } from './utils'
+
+const file = fileURLToPath(import.meta.url)
+const dir = dirname(file)
+const root = resolve(dir, '..', '..', 'workspaces')
+const config = resolve(root, 'vitest.config.ts')
+
+const srcMathFile = resolve(root, 'src', 'math.ts')
+const specSpace2File = resolve(root, 'space_2', 'test', 'node.spec.ts')
+
+const srcMathContent = readFileSync(srcMathFile, 'utf-8')
+const specSpace2Content = readFileSync(specSpace2File, 'utf-8')
+
+function startVitest() {
+  return startWatchMode(
+    { cwd: root, env: { TEST_WATCH: 'true' } },
+    '--root',
+    root,
+    '--config',
+    config,
+    '--no-coverage',
+  )
+}
+
+afterAll(() => {
+  writeFileSync(srcMathFile, srcMathContent, 'utf8')
+  writeFileSync(specSpace2File, specSpace2Content, 'utf8')
+})
+
+it('editing a test file in a suite with workspaces reruns test', async () => {
+  const vitest = await startVitest()
+
+  writeFileSync(specSpace2File, `${specSpace2Content}\n`, 'utf8')
+
+  await vitest.waitForOutput('RERUN  space_2/test/node.spec.ts x1')
+  await vitest.waitForOutput('|space_2| test/node.spec.ts')
+  await vitest.waitForOutput('Test Files  1 passed')
+})
+
+it('editing a file that is imported in different workspaces reruns both files', async () => {
+  const vitest = await startVitest()
+
+  writeFileSync(srcMathFile, `${srcMathContent}\n`, 'utf8')
+
+  await vitest.waitForOutput('RERUN  src/math.ts')
+  await vitest.waitForOutput('|space_3| math.space-test.ts')
+  await vitest.waitForOutput('|space_1| test/math.spec.ts')
+  await vitest.waitForOutput('Test Files  2 passed')
+})
+
+it('filters by test name inside a workspace', async () => {
+  const vitest = await startVitest()
+
+  vitest.write('t')
+
+  await vitest.waitForOutput('Input test name pattern')
+
+  vitest.write('2 x 2 = 4\n')
+
+  await vitest.waitForOutput('Test name pattern: /2 x 2 = 4/')
+  await vitest.waitForOutput('Test Files  1 passed')
+})
diff --git a/test/watch/vitest.config.ts b/test/watch/vitest.config.ts
index c689a4b3316c..48120e0f368d 100644
--- a/test/watch/vitest.config.ts
+++ b/test/watch/vitest.config.ts
@@ -6,7 +6,7 @@ export default defineConfig({
     include: ['test/**/*.test.*'],
 
     // For Windows CI mostly
-    testTimeout: process.env.CI ? 30_000 : 5_000,
+    testTimeout: process.env.CI ? 30_000 : 10_000,
 
     // Test cases may have side effects, e.g. files under fixtures/ are modified on the fly to trigger file watchers
     singleThread: true,
diff --git a/test/workspaces/space_1/test/math.spec.ts b/test/workspaces/space_1/test/math.spec.ts
new file mode 100644
index 000000000000..89170fcbbddd
--- /dev/null
+++ b/test/workspaces/space_1/test/math.spec.ts
@@ -0,0 +1,6 @@
+import { expect, test } from 'vitest'
+import { sum } from '../../src/math'
+
+test('3 + 3 = 6', () => {
+  expect(sum(3, 3)).toBe(6)
+})
diff --git a/test/workspaces/space_3/math.space-test.ts b/test/workspaces/space_3/math.space-test.ts
index 857b5a85ce4f..0036634657d8 100644
--- a/test/workspaces/space_3/math.space-test.ts
+++ b/test/workspaces/space_3/math.space-test.ts
@@ -1,6 +1,11 @@
 import { expect, test } from 'vitest'
+import { sum } from '../src/math'
 import { multiple } from './src/multiply'
 
 test('2 x 2 = 4', () => {
   expect(multiple(2, 2)).toBe(4)
 })
+
+test('2 + 2 = 4', () => {
+  expect(sum(2, 2)).toBe(4)
+})
diff --git a/test/workspaces/space_shared/setup.jsdom.ts b/test/workspaces/space_shared/setup.jsdom.ts
new file mode 100644
index 000000000000..c3ac6eeb2dc9
--- /dev/null
+++ b/test/workspaces/space_shared/setup.jsdom.ts
@@ -0,0 +1 @@
+Object.defineProperty(global, 'testValue', { value: 'jsdom' })
diff --git a/test/workspaces/space_shared/setup.node.ts b/test/workspaces/space_shared/setup.node.ts
new file mode 100644
index 000000000000..5250360056cb
--- /dev/null
+++ b/test/workspaces/space_shared/setup.node.ts
@@ -0,0 +1 @@
+Object.defineProperty(global, 'testValue', { value: 'node' })
diff --git a/test/workspaces/space_shared/test.spec.ts b/test/workspaces/space_shared/test.spec.ts
new file mode 100644
index 000000000000..aa826563be48
--- /dev/null
+++ b/test/workspaces/space_shared/test.spec.ts
@@ -0,0 +1,9 @@
+import { expect, it } from 'vitest'
+
+declare global {
+  const testValue: string
+}
+
+it('the same file works with different workspaces', () => {
+  expect(testValue).toBe(expect.getState().environment === 'node' ? 'node' : 'jsdom')
+})
diff --git a/test/workspaces/src/math.ts b/test/workspaces/src/math.ts
new file mode 100644
index 000000000000..5d8550bb9d4d
--- /dev/null
+++ b/test/workspaces/src/math.ts
@@ -0,0 +1,3 @@
+export function sum(a: number, b: number) {
+  return a + b
+}
diff --git a/test/workspaces/vitest.config.ts b/test/workspaces/vitest.config.ts
index 490da38490a0..057b449b3a3a 100644
--- a/test/workspaces/vitest.config.ts
+++ b/test/workspaces/vitest.config.ts
@@ -1,5 +1,11 @@
 import { defineConfig } from 'vitest/config'
 
+if (process.env.TEST_WATCH) {
+  // Patch stdin on the process so that we can fake it to seem like a real interactive terminal and pass the TTY checks
+  process.stdin.isTTY = true
+  process.stdin.setRawMode = () => process.stdin
+}
+
 export default defineConfig({
   test: {
     coverage: {