diff --git a/src/nix-env/nix-env.cc b/src/nix-env/nix-env.cc
index 177344044a6..1cc33558f10 100644
--- a/src/nix-env/nix-env.cc
+++ b/src/nix-env/nix-env.cc
@@ -109,7 +109,7 @@ static void getAllExprs(EvalState & state,
     const SourcePath & path, StringSet & seen, BindingsBuilder & attrs)
 {
     StringSet namesSorted;
-    for (auto & [name, _] : path.readDirectory()) namesSorted.insert(name);
+    for (auto & [name, _] : path.resolveSymlinks().readDirectory()) namesSorted.insert(name);
 
     for (auto & i : namesSorted) {
         /* Ignore the manifest.nix used by profiles.  This is
diff --git a/tests/functional/user-envs.sh b/tests/functional/user-envs.sh
index dcd6b1b97a6..7c643f3553c 100644
--- a/tests/functional/user-envs.sh
+++ b/tests/functional/user-envs.sh
@@ -189,3 +189,9 @@ nix-env --set $outPath10
 [ "$(nix-store -q --resolve $profiles/test)" = $outPath10 ]
 nix-env --set $drvPath10
 [ "$(nix-store -q --resolve $profiles/test)" = $outPath10 ]
+
+# Test the case where $HOME contains a symlink.
+mkdir -p $TEST_ROOT/real-home/alice/.nix-defexpr/channels
+ln -sfn $TEST_ROOT/real-home $TEST_ROOT/home
+ln -sfn $(pwd)/user-envs.nix $TEST_ROOT/home/alice/.nix-defexpr/channels/foo
+HOME=$TEST_ROOT/home/alice nix-env -i foo-0.1