diff --git a/src/Tgstation.Server.Host/Controllers/InstanceController.cs b/src/Tgstation.Server.Host/Controllers/InstanceController.cs
index 5db9cd5897..e220a74e39 100644
--- a/src/Tgstation.Server.Host/Controllers/InstanceController.cs
+++ b/src/Tgstation.Server.Host/Controllers/InstanceController.cs
@@ -9,7 +9,6 @@ using System.Linq;
 using System.Linq.Expressions;
 using System.Net;
 using System.Reflection;
-using System.Runtime.InteropServices;
 using System.Threading;
 using System.Threading.Tasks;
 using Tgstation.Server.Api;
@@ -121,6 +120,17 @@ namespace Tgstation.Server.Host.Controllers
 				return BadRequest(new ErrorMessage { Message = "path must not be empty!" });
 
 			NormalizeModelPath(model, out var rawPath);
+
+			var localPath = ioManager.ResolvePath(".");
+			NormalizeModelPath(new Api.Models.Instance
+			{
+				Path = localPath
+			}, out var normalizedLocalPath);
+
+			if (rawPath.StartsWith(normalizedLocalPath, StringComparison.Ordinal))
+				return Conflict("Instances cannot be created in the installation directory!");
+
+
 			var dirExistsTask = ioManager.DirectoryExists(model.Path, cancellationToken);
 			bool attached = false;
 			if (await ioManager.FileExists(model.Path, cancellationToken).ConfigureAwait(false) || await dirExistsTask.ConfigureAwait(false))
diff --git a/tests/Tgstation.Server.Tests/InstanceManagerTest.cs b/tests/Tgstation.Server.Tests/InstanceManagerTest.cs
index 0c9efe68b9..6a09d73d63 100644
--- a/tests/Tgstation.Server.Tests/InstanceManagerTest.cs
+++ b/tests/Tgstation.Server.Tests/InstanceManagerTest.cs
@@ -51,6 +51,13 @@ namespace Tgstation.Server.Tests
 			}, cancellationToken)).ConfigureAwait(false);
 			await Assert.ThrowsExceptionAsync<ConflictException>(() => instanceManagerClient.CreateOrAttach(firstTest, cancellationToken)).ConfigureAwait(false);
 
+			//can't create instances in installation directory
+			await Assert.ThrowsExceptionAsync<ConflictException>(() => instanceManagerClient.CreateOrAttach(new Api.Models.Instance
+			{
+				Path = "./A/Local/Path",
+				Name = "NoInstallDirTest"
+			}, cancellationToken)).ConfigureAwait(false);
+
 			//can't move to existent directories
 			await Assert.ThrowsExceptionAsync<ConflictException>(() => instanceManagerClient.Update(new Api.Models.Instance
 			{