diff --git a/Sources/Container-Compose/Commands/ComposeUp.swift b/Sources/Container-Compose/Commands/ComposeUp.swift
index d274ff9..664526b 100644
--- a/Sources/Container-Compose/Commands/ComposeUp.swift
+++ b/Sources/Container-Compose/Commands/ComposeUp.swift
@@ -673,26 +673,24 @@ public struct ComposeUp: AsyncParsableCommand, @unchecked Sendable {
             var isDirectory: ObjCBool = false
             // Ensure the path is absolute or relative to the current directory for FileManager
             let fullHostPath = (source.starts(with: "/") || source.starts(with: "~")) ? source : (cwd + "/" + source)
-
-            if fileManager.fileExists(atPath: fullHostPath, isDirectory: &isDirectory) {
-                if isDirectory.boolValue {
-                    // Host path exists and is a directory, add the volume
-                    runCommandArgs.append("-v")
-                    // Reconstruct the volume string without mode, ensuring it's source:destination
-                    runCommandArgs.append("\(source):\(destination)")  // Use original source for command argument
-                } else {
-                    // Host path exists but is a file
-                    print("Warning: Volume mount source '\(source)' is a file. The 'container' tool does not support direct file mounts. Skipping this volume.")
-                }
+            // Normalize the path to remove ./ and ../ components, and convert to absolute path
+            let normalizedHostPath = URL(fileURLWithPath: fullHostPath).standardizedFileURL.path(percentEncoded: false)
+
+            if fileManager.fileExists(atPath: normalizedHostPath, isDirectory: &isDirectory) {
+                // Host path exists (file or directory), add the volume.
+                runCommandArgs.append("-v")
+                // Use normalized absolute path for container command (container tool requires absolute paths)
+                runCommandArgs.append("\(normalizedHostPath):\(destination)")
             } else {
                 // Host path does not exist, assume it's meant to be a directory and try to create it.
                 do {
-                    try fileManager.createDirectory(atPath: fullHostPath, withIntermediateDirectories: true, attributes: nil)
-                    print("Info: Created missing host directory for volume: \(fullHostPath)")
+                    try fileManager.createDirectory(atPath: normalizedHostPath, withIntermediateDirectories: true, attributes: nil)
+                    print("Info: Created missing host directory for volume: \(normalizedHostPath)")
                     runCommandArgs.append("-v")
-                    runCommandArgs.append("\(source):\(destination)")  // Use original source for command argument
+                    // Use normalized absolute path for container command (container tool requires absolute paths)
+                    runCommandArgs.append("\(normalizedHostPath):\(destination)")
                 } catch {
-                    print("Error: Could not create host directory '\(fullHostPath)' for volume '\(resolvedVolume)': \(error.localizedDescription). Skipping this volume.")
+                    print("Error: Could not create host directory '\(normalizedHostPath)' for volume '\(resolvedVolume)': \(error.localizedDescription). Skipping this volume.")
                 }
             }
         } else {
@@ -700,9 +698,6 @@ public struct ComposeUp: AsyncParsableCommand, @unchecked Sendable {
             let volumeUrl = URL.homeDirectory.appending(path: ".containers/Volumes/\(projectName)/\(source)")
             let volumePath = volumeUrl.path(percentEncoded: false)
 
-            let destinationUrl = URL(fileURLWithPath: destination).deletingLastPathComponent()
-            let destinationPath = destinationUrl.path(percentEncoded: false)
-
             print(
                 "Warning: Volume source '\(source)' appears to be a named volume reference. The 'container' tool does not support named volume references in 'container run -v' command. Linking to \(volumePath) instead."
             )
@@ -711,7 +706,7 @@ public struct ComposeUp: AsyncParsableCommand, @unchecked Sendable {
             // Host path exists and is a directory, add the volume
             runCommandArgs.append("-v")
             // Reconstruct the volume string without mode, ensuring it's source:destination
-            runCommandArgs.append("\(volumePath):\(destinationPath)")  // Use original source for command argument
+            runCommandArgs.append("\(volumePath):\(destination)")  // Use original source for command argument
         }
 
         return runCommandArgs
diff --git a/Tests/Container-Compose-DynamicTests/ComposeUpTests.swift b/Tests/Container-Compose-DynamicTests/ComposeUpTests.swift
index 779b789..42fcd42 100644
--- a/Tests/Container-Compose-DynamicTests/ComposeUpTests.swift
+++ b/Tests/Container-Compose-DynamicTests/ComposeUpTests.swift
@@ -267,6 +267,119 @@ struct ComposeUpTests {
                 #expect(appContainer.configuration.resources.cpus == 1)
                 #expect(appContainer.configuration.resources.memoryInBytes == 512.mib())
         }
+
+    @Test("Test compose mounts existing host file as volume")
+    func testComposeMountsExistingHostFileAsVolume() async throws {
+        let yaml = """
+            version: "3.8"
+            services:
+              app:
+                image: nginx:alpine
+                volumes:
+                  - ./config.txt:/etc/myconfig.txt
+            """
+
+        let project = try DockerComposeYamlFiles.copyYamlToTemporaryLocation(yaml: yaml)
+        let hostFileURL = project.base.appending(path: "config.txt")
+        try "single-file-mount".write(to: hostFileURL, atomically: true, encoding: .utf8)
+        let expectedHostFilePath = hostFileURL.standardizedFileURL.path(percentEncoded: false)
+
+        var composeUp = try ComposeUp.parse(["-d", "--cwd", project.base.path(percentEncoded: false)])
+        try await composeUp.run()
+
+        let containers = try await ClientContainer.list()
+            .filter { $0.configuration.id.contains(project.name) }
+
+        guard let appContainer = containers.first(where: { $0.configuration.id == "\(project.name)-app" }) else {
+            throw Errors.containerNotFound
+        }
+
+        #expect(
+            appContainer.configuration.mounts.contains {
+                $0.source == expectedHostFilePath && $0.destination == "/etc/myconfig.txt"
+            },
+            "Expected file mount source '\(expectedHostFilePath)' to '/etc/myconfig.txt', found mounts: \(appContainer.configuration.mounts)"
+        )
+    }
+
+    @Test("Test compose normalizes and creates relative directory mount paths")
+    func testComposeNormalizesAndCreatesRelativeDirectoryMountPaths() async throws {
+        let yaml = """
+            version: "3.8"
+            services:
+              app:
+                image: nginx:alpine
+                volumes:
+                  - ./mounts/../mounts/rel-data:/mnt/data
+            """
+
+        let project = try DockerComposeYamlFiles.copyYamlToTemporaryLocation(yaml: yaml)
+        let expectedDirectoryPath = project.base.appending(path: "mounts/rel-data")
+            .standardizedFileURL
+            .path(percentEncoded: false)
+
+        var composeUp = try ComposeUp.parse(["-d", "--cwd", project.base.path(percentEncoded: false)])
+        try await composeUp.run()
+
+        let containers = try await ClientContainer.list()
+            .filter { $0.configuration.id.contains(project.name) }
+
+        guard let appContainer = containers.first(where: { $0.configuration.id == "\(project.name)-app" }) else {
+            throw Errors.containerNotFound
+        }
+
+        #expect(
+            appContainer.configuration.mounts.contains {
+                normalizePath($0.source) == normalizePath(expectedDirectoryPath) && $0.destination == "/mnt/data"
+            },
+            "Expected normalized relative mount source '\(expectedDirectoryPath)' to '/mnt/data', found mounts: \(appContainer.configuration.mounts)"
+        )
+
+        var isDirectory: ObjCBool = false
+        #expect(FileManager.default.fileExists(atPath: expectedDirectoryPath, isDirectory: &isDirectory))
+        #expect(isDirectory.boolValue)
+    }
+
+    @Test("Test compose named volume mount preserves full destination path")
+    func testComposeNamedVolumeMountPreservesFullDestinationPath() async throws {
+        let destinationPath = "/var/lib/app/data"
+        let yaml = """
+            version: "3.8"
+            services:
+              app:
+                image: nginx:alpine
+                volumes:
+                  - app_data:\(destinationPath)
+            volumes:
+              app_data:
+            """
+
+        let project = try DockerComposeYamlFiles.copyYamlToTemporaryLocation(yaml: yaml)
+        let expectedVolumeSource = URL.homeDirectory
+            .appending(path: ".containers/Volumes/\(project.name)/app_data")
+            .path(percentEncoded: false)
+
+        var composeUp = try ComposeUp.parse(["-d", "--cwd", project.base.path(percentEncoded: false)])
+        try await composeUp.run()
+
+        let containers = try await ClientContainer.list()
+            .filter { $0.configuration.id.contains(project.name) }
+
+        guard let appContainer = containers.first(where: { $0.configuration.id == "\(project.name)-app" }) else {
+            throw Errors.containerNotFound
+        }
+
+        #expect(
+            appContainer.configuration.mounts.contains {
+                normalizePath($0.source) == normalizePath(expectedVolumeSource) && $0.destination == destinationPath
+            },
+            "Expected named volume source '\(expectedVolumeSource)' to mount at '\(destinationPath)', found mounts: \(appContainer.configuration.mounts)"
+        )
+
+        var isDirectory: ObjCBool = false
+        #expect(FileManager.default.fileExists(atPath: expectedVolumeSource, isDirectory: &isDirectory))
+        #expect(isDirectory.boolValue)
+    }
     
     enum Errors: Error {
         case containerNotFound
@@ -278,6 +391,10 @@ struct ComposeUpTests {
         
         return dict
     }
+
+    private func normalizePath(_ path: String) -> String {
+        URL(fileURLWithPath: path).standardizedFileURL.path(percentEncoded: false)
+    }
 }
 
 struct ContainerDependentTrait: TestScoping, TestTrait, SuiteTrait {