diff --git a/src/cargo/util/toml/mod.rs b/src/cargo/util/toml/mod.rs
index 4e5e8485e71..8d5edae44b6 100644
--- a/src/cargo/util/toml/mod.rs
+++ b/src/cargo/util/toml/mod.rs
@@ -379,10 +379,7 @@ fn normalize_toml(
             warnings,
         )?;
         let original_toml_bin = if is_embedded {
-            let manifest_file_stem = manifest_file
-                .file_stem()
-                .expect("file name enforced previously");
-            let name = embedded::sanitize_name(manifest_file_stem.to_string_lossy().as_ref());
+            let name = package_name.as_ref().to_owned();
             let manifest_file_name = manifest_file
                 .file_name()
                 .expect("file name enforced previously");
diff --git a/tests/testsuite/script/cargo.rs b/tests/testsuite/script/cargo.rs
index f5bb631cd1e..fe1abede0c5 100644
--- a/tests/testsuite/script/cargo.rs
+++ b/tests/testsuite/script/cargo.rs
@@ -673,6 +673,70 @@ args: []
         .run();
 }
 
+#[cargo_test(nightly, reason = "-Zscript is unstable")]
+fn test_name_is_deps_dir_implicit() {
+    let script = ECHO_SCRIPT;
+    let p = cargo_test_support::project()
+        .file("deps.rs", script)
+        .build();
+
+    p.cargo("-Zscript -v deps.rs")
+        .masquerade_as_nightly_cargo(&["script"])
+        .with_stdout_data(str![[r#"
+current_exe: [ROOT]/home/.cargo/target/[HASH]/debug/deps-[EXE]
+arg0: [..]
+args: []
+
+"#]])
+        .with_stderr_data(str![[r#"
+[WARNING] `package.edition` is unspecified, defaulting to `2024`
+[COMPILING] deps- v0.0.0 ([ROOT]/foo/deps.rs)
+[FINISHED] `dev` profile [unoptimized + debuginfo] target(s) in [ELAPSED]s
+[RUNNING] `[ROOT]/home/.cargo/target/[HASH]/debug/deps-[EXE]`
+
+"#]])
+        .run();
+}
+
+#[cargo_test(nightly, reason = "-Zscript is unstable")]
+fn test_name_is_deps_dir_explicit() {
+    let script = r#"#!/usr/bin/env cargo
+---
+package.name = "deps"
+---
+
+fn main() {
+    let current_exe = std::env::current_exe().unwrap().to_str().unwrap().to_owned();
+    let mut args = std::env::args_os();
+    let arg0 = args.next().unwrap().to_str().unwrap().to_owned();
+    let args = args.collect::<Vec<_>>();
+    println!("current_exe: {current_exe}");
+    println!("arg0: {arg0}");
+    println!("args: {args:?}");
+}
+
+#[test]
+fn test () {}
+"#;
+    let p = cargo_test_support::project()
+        .file("deps.rs", script)
+        .build();
+
+    p.cargo("-Zscript -v deps.rs")
+        .masquerade_as_nightly_cargo(&["script"])
+        .with_status(101)
+        .with_stdout_data(str![""])
+        .with_stderr_data(str![[r#"
+[WARNING] `package.edition` is unspecified, defaulting to `2024`
+[ERROR] failed to parse manifest at `[ROOT]/foo/deps.rs`
+
+Caused by:
+  the binary target name `deps` is forbidden, it conflicts with cargo's build directory names
+
+"#]])
+        .run();
+}
+
 #[cargo_test(nightly, reason = "-Zscript is unstable")]
 fn script_like_dir() {
     let p = cargo_test_support::project()