diff --git a/HISTORY.rst b/HISTORY.rst
index 86f150a8..caa8d74b 100644
--- a/HISTORY.rst
+++ b/HISTORY.rst
@@ -16,7 +16,8 @@ PlatformIO Core 5
 - Upgraded build engine to the SCons 4.3 (`release notes <https://github.com/SCons/scons/blob/rel_4.3.0/CHANGES.txt>`__)
 - Fixed an issue with the CLion project generator when a macro contains a space (`issue #4102 <https://github.com/platformio/platformio-core/issues/4102>`_)
 - Fixed an issue with the NetBeans project generator when the path to PlatformIO contains a space (`issue #4096 <https://github.com/platformio/platformio-core/issues/4096>`_)
-- Fixed a bug when the system environment variable does not override a project configuration option (`issue #4125 <https://github.com/platformio/platformio-core/issues/4125>`_)
+- Fixed an issue when the system environment variable does not override a project configuration option (`issue #4125 <https://github.com/platformio/platformio-core/issues/4125>`_)
+- Fixed an issue when referencing "*_dir" option from a custom project configuration environment (`issue #4110 <https://github.com/platformio/platformio-core/issues/4110>`_)
 
 5.2.3 (2021-11-05)
 ~~~~~~~~~~~~~~~~~~
diff --git a/platformio/project/config.py b/platformio/project/config.py
index 492bacf2..8e4ec096 100644
--- a/platformio/project/config.py
+++ b/platformio/project/config.py
@@ -279,9 +279,6 @@ class ProjectConfigBase(object):
         if value == MISSING:
             return None
 
-        if option_meta.validate:
-            value = option_meta.validate(value)
-
         return self._expand_interpolations(value)
 
     def _expand_interpolations(self, value):
@@ -318,6 +315,8 @@ class ProjectConfigBase(object):
         if not option_meta:
             return value
 
+        if option_meta.validate:
+            value = option_meta.validate(value)
         if option_meta.multiple:
             value = self.parse_multi_values(value or [])
         try:
diff --git a/platformio/project/options.py b/platformio/project/options.py
index d9103161..c12679b9 100644
--- a/platformio/project/options.py
+++ b/platformio/project/options.py
@@ -117,14 +117,13 @@ def validate_dir(path):
     return fs.normalize_path(path)
 
 
-def validate_core_dir(path):
-    default_dir = ProjectOptions["platformio.core_dir"].default
-    win_core_dir = None
-    if IS_WINDOWS and path == default_dir:
+def get_default_core_dir():
+    path = os.path.join(fs.expanduser("~"), ".platformio")
+    if IS_WINDOWS:
         win_core_dir = os.path.splitdrive(path)[0] + "\\.platformio"
         if os.path.isdir(win_core_dir):
-            path = win_core_dir
-    return validate_dir(path)
+            return win_core_dir
+    return path
 
 
 ProjectOptions = OrderedDict(
@@ -169,8 +168,8 @@ ProjectOptions = OrderedDict(
                 ),
                 oldnames=["home_dir"],
                 sysenvvar="PLATFORMIO_CORE_DIR",
-                default=os.path.join(fs.expanduser("~"), ".platformio"),
-                validate=validate_core_dir,
+                default=get_default_core_dir(),
+                validate=validate_dir,
             ),
             ConfigPlatformioOption(
                 group="directory",
diff --git a/tests/test_projectconf.py b/tests/test_projectconf.py
index 350bdeaa..b3e85863 100644
--- a/tests/test_projectconf.py
+++ b/tests/test_projectconf.py
@@ -26,7 +26,8 @@ from platformio.project.exception import InvalidProjectConfError, UnknownEnvName
 BASE_CONFIG = """
 [platformio]
 env_default = base, extra_2
-build_dir = ~/tmp/pio-$PROJECT_HASH
+src_dir = ${custom.src_dir}
+build_dir = ${custom.build_dir}
 extra_configs =
   extra_envs.ini
   extra_debug.ini
@@ -53,6 +54,8 @@ extends = strict_ldf, monitor_custom
 build_flags = -D RELEASE
 
 [custom]
+src_dir = source
+build_dir = ~/tmp/pio-$PROJECT_HASH
 debug_flags = -D RELEASE
 lib_flags = -lc -lm
 extra_flags = ${sysenv.__PIO_TEST_CNF_EXTRA_FLAGS}
@@ -297,6 +300,7 @@ def test_getraw_value(config):
         config.getraw("custom", "debug_server")
         == f"\n{packages_dir}/tool-openocd/openocd\n--help"
     )
+    assert config.getraw("platformio", "build_dir") == "~/tmp/pio-$PROJECT_HASH"
 
 
 def test_get_value(config):
@@ -327,10 +331,16 @@ def test_get_value(config):
         os.path.join(DEFAULT_CORE_DIR, "packages/tool-openocd/openocd"),
         "--help",
     ]
+    # test relative dir
+    assert config.get("platformio", "src_dir") == os.path.abspath(
+        os.path.join(os.getcwd(), "source")
+    )
 
 
 def test_items(config):
     assert config.items("custom") == [
+        ("src_dir", "source"),
+        ("build_dir", "~/tmp/pio-$PROJECT_HASH"),
         ("debug_flags", "-D DEBUG=1"),
         ("lib_flags", "-lc -lm"),
         ("extra_flags", ""),
@@ -473,7 +483,8 @@ def test_dump(tmpdir_factory):
         (
             "platformio",
             [
-                ("build_dir", "~/tmp/pio-$PROJECT_HASH"),
+                ("src_dir", "${custom.src_dir}"),
+                ("build_dir", "${custom.build_dir}"),
                 ("extra_configs", ["extra_envs.ini", "extra_debug.ini"]),
                 ("default_envs", ["base", "extra_2"]),
             ],
@@ -497,6 +508,8 @@ def test_dump(tmpdir_factory):
         (
             "custom",
             [
+                ("src_dir", "source"),
+                ("build_dir", "~/tmp/pio-$PROJECT_HASH"),
                 ("debug_flags", "-D RELEASE"),
                 ("lib_flags", "-lc -lm"),
                 ("extra_flags", "${sysenv.__PIO_TEST_CNF_EXTRA_FLAGS}"),