diff --git a/mempalace/config.py b/mempalace/config.py
index a9bcc7f..616334e 100644
--- a/mempalace/config.py
+++ b/mempalace/config.py
@@ -168,7 +168,10 @@ class MempalaceConfig:
         """Path to the memory palace data directory."""
         env_val = os.environ.get("MEMPALACE_PALACE_PATH") or os.environ.get("MEMPAL_PALACE_PATH")
         if env_val:
-            return env_val
+            # Normalize: expand ~ and collapse .. to match the CLI --palace
+            # code path (mcp_server.py:62) and prevent surprise redirection
+            # when the env var contains unresolved components.
+            return os.path.abspath(os.path.expanduser(env_val))
         return self._file_config.get("palace_path", DEFAULT_PALACE_PATH)
 
     @property
diff --git a/tests/test_config.py b/tests/test_config.py
index e6dffc3..f41b3df 100644
--- a/tests/test_config.py
+++ b/tests/test_config.py
@@ -27,6 +27,42 @@ def test_env_override():
     del os.environ["MEMPALACE_PALACE_PATH"]
 
 
+def test_env_path_expanduser():
+    os.environ["MEMPALACE_PALACE_PATH"] = "~/mempalace-test"
+    try:
+        cfg = MempalaceConfig(config_dir=tempfile.mkdtemp())
+        # Tilde must be expanded to match the --palace CLI code path.
+        assert "~" not in cfg.palace_path
+        assert cfg.palace_path.endswith("mempalace-test")
+        assert cfg.palace_path == os.path.expanduser("~/mempalace-test")
+    finally:
+        del os.environ["MEMPALACE_PALACE_PATH"]
+
+
+def test_env_path_abspath_collapses_traversal():
+    os.environ["MEMPALACE_PALACE_PATH"] = "/tmp/palace/../mempalace-test"
+    try:
+        cfg = MempalaceConfig(config_dir=tempfile.mkdtemp())
+        # .. segments must be collapsed, not preserved literally.
+        assert ".." not in cfg.palace_path
+        assert cfg.palace_path == "/tmp/mempalace-test"
+    finally:
+        del os.environ["MEMPALACE_PALACE_PATH"]
+
+
+def test_env_path_legacy_alias_normalized():
+    # Legacy MEMPAL_PALACE_PATH gets the same normalization treatment.
+    os.environ.pop("MEMPALACE_PALACE_PATH", None)
+    os.environ["MEMPAL_PALACE_PATH"] = "~/legacy-alias/../mempalace-test"
+    try:
+        cfg = MempalaceConfig(config_dir=tempfile.mkdtemp())
+        assert "~" not in cfg.palace_path
+        assert ".." not in cfg.palace_path
+        assert cfg.palace_path == os.path.expanduser("~/mempalace-test")
+    finally:
+        del os.environ["MEMPAL_PALACE_PATH"]
+
+
 def test_init():
     tmpdir = tempfile.mkdtemp()
     cfg = MempalaceConfig(config_dir=tmpdir)