diff --git a/src/plugins/cmakeprojectmanager/cmakebuildconfiguration.cpp b/src/plugins/cmakeprojectmanager/cmakebuildconfiguration.cpp
index 817d02ed638..b6b0947dd59 100644
--- a/src/plugins/cmakeprojectmanager/cmakebuildconfiguration.cpp
+++ b/src/plugins/cmakeprojectmanager/cmakebuildconfiguration.cpp
@@ -1241,6 +1241,7 @@ static void addCMakeConfigurePresetToInitialArguments(QStringList &initialArgume
                                               env,
                                               project->projectDirectory(),
                                               buildDirectory);
+    CMakePresets::Macros::updateInstallDir(configurePreset, env, project->projectDirectory());
 
     // Merge the presets cache variables
     CMakeConfig cache;
diff --git a/src/plugins/cmakeprojectmanager/presetsmacros.cpp b/src/plugins/cmakeprojectmanager/presetsmacros.cpp
index 1a7b884ca9d..0e156ab4a47 100644
--- a/src/plugins/cmakeprojectmanager/presetsmacros.cpp
+++ b/src/plugins/cmakeprojectmanager/presetsmacros.cpp
@@ -253,6 +253,44 @@ void updateToolchainFile(
     configurePreset.cacheVariables = cache;
 }
 
+void updateInstallDir(PresetsDetails::ConfigurePreset &configurePreset,
+                      const Utils::Environment &env,
+                      const Utils::FilePath &sourceDirectory)
+{
+    if (!configurePreset.installDir)
+        return;
+
+    QString installDirString = configurePreset.installDir.value();
+    CMakePresets::Macros::expand(configurePreset, env, sourceDirectory, installDirString);
+
+    // Resolve the relative path first to source and afterwards to build directory
+    Utils::FilePath installDir = Utils::FilePath::fromString(installDirString);
+    if (installDir.isRelativePath()) {
+        Utils::FilePath probePath = sourceDirectory.resolvePath(installDir);
+        if (probePath != sourceDirectory) {
+            installDir = probePath;
+        }
+    }
+    installDirString = installDir.cleanPath().toString();
+
+    // installDir takes precedence to CMAKE_INSTALL_PREFIX
+    CMakeConfig cache = configurePreset.cacheVariables ? configurePreset.cacheVariables.value()
+                                                       : CMakeConfig();
+
+    auto it = std::find_if(cache.begin(), cache.end(), [](const CMakeConfigItem &item) {
+        return item.key == "CMAKE_INSTALL_PREFIX";
+    });
+    if (it != cache.end())
+        it->value = installDirString.toUtf8();
+    else
+        cache << CMakeConfigItem("CMAKE_INSTALL_PREFIX",
+                                 CMakeConfigItem::PATH,
+                                 installDirString.toUtf8());
+
+    configurePreset.cacheVariables = cache;
+}
+
+
 template<class PresetType>
 void expandConditionValues(const PresetType &preset,
                            const Utils::Environment &env,
diff --git a/src/plugins/cmakeprojectmanager/presetsmacros.h b/src/plugins/cmakeprojectmanager/presetsmacros.h
index 0acf4d37cb6..09083b11fa5 100644
--- a/src/plugins/cmakeprojectmanager/presetsmacros.h
+++ b/src/plugins/cmakeprojectmanager/presetsmacros.h
@@ -53,6 +53,13 @@ void updateToolchainFile(PresetsDetails::ConfigurePreset &configurePreset,
                          const Utils::FilePath &sourceDirectory,
                          const Utils::FilePath &buildDirectory);
 
+/**
+ * Updates the cacheVariables parameter of the configurePreset with the expanded installDir parameter.
+ * Including macro expansion and relative paths resolving.
+ */
+void updateInstallDir(PresetsDetails::ConfigurePreset &configurePreset,
+                      const Utils::Environment &env,
+                      const Utils::FilePath &sourceDirectory);
 /**
  * Expands the condition values and then evaluates the condition object of the preset and returns
  * the boolean result.
diff --git a/src/plugins/cmakeprojectmanager/presetsparser.cpp b/src/plugins/cmakeprojectmanager/presetsparser.cpp
index 441709109db..bd0d17d8cb8 100644
--- a/src/plugins/cmakeprojectmanager/presetsparser.cpp
+++ b/src/plugins/cmakeprojectmanager/presetsparser.cpp
@@ -177,6 +177,8 @@ bool parseConfigurePresets(const QJsonValue &jsonValue,
             preset.generator = object.value("generator").toString();
         if (object.contains("binaryDir"))
             preset.binaryDir = object.value("binaryDir").toString();
+        if (object.contains("installDir"))
+            preset.installDir = object.value("installDir").toString();
         if (object.contains("toolchainFile"))
             preset.toolchainFile = object.value("toolchainFile").toString();
         if (object.contains("cmakeExecutable"))
@@ -462,6 +464,9 @@ void PresetsDetails::ConfigurePreset::inheritFrom(const ConfigurePreset &other)
     if (!binaryDir && other.binaryDir)
         binaryDir = other.binaryDir;
 
+    if (!installDir && other.installDir)
+        installDir = other.installDir;
+
     if (!cmakeExecutable && other.cmakeExecutable)
         cmakeExecutable = other.cmakeExecutable;
 
diff --git a/src/plugins/cmakeprojectmanager/presetsparser.h b/src/plugins/cmakeprojectmanager/presetsparser.h
index 5577620d5d8..7717f19c666 100644
--- a/src/plugins/cmakeprojectmanager/presetsparser.h
+++ b/src/plugins/cmakeprojectmanager/presetsparser.h
@@ -100,6 +100,7 @@ public:
     std::optional<ValueStrategyPair> toolset;
     std::optional<QString> toolchainFile;
     std::optional<QString> binaryDir;
+    std::optional<QString> installDir;
     std::optional<QString> cmakeExecutable;
     std::optional<CMakeConfig> cacheVariables;
     std::optional<QHash<QString, QString>> environment;
diff --git a/tests/manual/cmakepresets/CMakePresets.json b/tests/manual/cmakepresets/CMakePresets.json
index 8f0ef76f8fc..f4eb2283263 100644
--- a/tests/manual/cmakepresets/CMakePresets.json
+++ b/tests/manual/cmakepresets/CMakePresets.json
@@ -10,6 +10,7 @@
       "name": "mingw",
       "displayName": "MinGW 11.2.0",
       "generator": "Ninja",
+      "installDir": "../inst-${presetName}",
       "cacheVariables": {
         "CMAKE_PREFIX_PATH": "c:/Qt/6.3.2/mingw_64"
       },