diff --git a/news/changelog-1.9.md b/news/changelog-1.9.md
index 14f341aa6d9..30679e759b0 100644
--- a/news/changelog-1.9.md
+++ b/news/changelog-1.9.md
@@ -41,6 +41,7 @@ All changes included in 1.9:
 - ([#13555](https://github.com/quarto-dev/quarto-cli/issues/13555)): Add support for `icon=false` in callouts when used in `format: typst`.
 - ([#13589](https://github.com/quarto-dev/quarto-cli/issues/13589)): Fix callouts with invalid ID prefixes crashing with "attempt to index a nil value". Callouts with unknown reference types now render as non-crossreferenceable callouts with a warning, ignoring the invalid ID.
 - ([#13602](https://github.com/quarto-dev/quarto-cli/issues/13602)): Fix support for multiple files set in `bibliography` field in `biblio.typ` template partial.
+- ([#13745](https://github.com/quarto-dev/quarto-cli/issues/13745)): Fix relative `font-paths` in custom Typst format extensions not working when the input document is in a subdirectory. Extension font paths are now resolved relative to the input file directory.
 - ([#13775](https://github.com/quarto-dev/quarto-cli/issues/13775)): Fix brand fonts not being applied when using `citeproc: true` with Typst format. Format detection now properly handles Pandoc format variants like `typst-citations`.
 - ([#13249](https://github.com/quarto-dev/quarto-cli/pull/13249)): Update to Pandoc's Typst template following Pandoc 3.8.3 and Typst 0.14.2 support:
   - Code syntax highlighting now uses Skylighting by default.
diff --git a/src/command/render/output-typst.ts b/src/command/render/output-typst.ts
index 83a5b3f9cac..956560f91df 100644
--- a/src/command/render/output-typst.ts
+++ b/src/command/render/output-typst.ts
@@ -4,7 +4,13 @@
  * Copyright (C) 2020-2022 Posit Software, PBC
  */
 
-import { dirname, join, normalize, relative } from "../../deno_ral/path.ts";
+import {
+  dirname,
+  isAbsolute,
+  join,
+  normalize,
+  relative,
+} from "../../deno_ral/path.ts";
 import { ensureDirSync, safeRemoveSync } from "../../deno_ral/fs.ts";
 
 import {
@@ -63,9 +69,26 @@ export function typstPdfOutputRecipe(
     // run typst
     await validateRequiredTypstVersion();
     const pdfOutput = join(inputDir, inputStem + ".pdf");
+    // Resolve extension font paths to absolute paths since typst compile runs
+    // from the project root, not the input file's directory. Extension paths
+    // (containing _extensions or starting with ..) need resolution relative to
+    // inputDir, while other paths (like .quarto/font-cache) should remain
+    // relative to the working directory.
+    const fontPaths = asArray(format.metadata?.[kFontPaths]).map((p) => {
+      const fontPath = p as string;
+      if (isAbsolute(fontPath)) {
+        return fontPath;
+      }
+      // Extension-resolved paths need to be resolved relative to input file
+      if (fontPath.includes("_extensions") || fontPath.startsWith("..")) {
+        return join(inputDir, fontPath);
+      }
+      // Other relative paths (like .quarto/...) stay relative to working dir
+      return fontPath;
+    });
     const typstOptions: TypstCompileOptions = {
       quiet: options.flags?.quiet,
-      fontPaths: asArray(format.metadata?.[kFontPaths]) as string[],
+      fontPaths,
     };
     if (project?.dir) {
       typstOptions.rootDir = project.dir;
diff --git a/tests/docs/smoke-all/typst/extension-font-paths/_extensions/test-fonts/_extension.yml b/tests/docs/smoke-all/typst/extension-font-paths/_extensions/test-fonts/_extension.yml
new file mode 100644
index 00000000000..b5e682eeca9
--- /dev/null
+++ b/tests/docs/smoke-all/typst/extension-font-paths/_extensions/test-fonts/_extension.yml
@@ -0,0 +1,9 @@
+title: test-fonts
+author: Quarto
+version: 1.0.0
+quarto-required: ">=1.4.0"
+contributes:
+  formats:
+    typst:
+      font-paths:
+        - fonts
diff --git a/tests/docs/smoke-all/typst/extension-font-paths/_extensions/test-fonts/fonts/Amaranth-Regular.ttf b/tests/docs/smoke-all/typst/extension-font-paths/_extensions/test-fonts/fonts/Amaranth-Regular.ttf
new file mode 100644
index 00000000000..944ccf7d0a5
Binary files /dev/null and b/tests/docs/smoke-all/typst/extension-font-paths/_extensions/test-fonts/fonts/Amaranth-Regular.ttf differ
diff --git a/tests/docs/smoke-all/typst/extension-font-paths/_quarto.yml b/tests/docs/smoke-all/typst/extension-font-paths/_quarto.yml
new file mode 100644
index 00000000000..b8bae5830fa
--- /dev/null
+++ b/tests/docs/smoke-all/typst/extension-font-paths/_quarto.yml
@@ -0,0 +1,2 @@
+project:
+  type: default
diff --git a/tests/docs/smoke-all/typst/extension-font-paths/subdir/doc.qmd b/tests/docs/smoke-all/typst/extension-font-paths/subdir/doc.qmd
new file mode 100644
index 00000000000..4e2df733d6d
--- /dev/null
+++ b/tests/docs/smoke-all/typst/extension-font-paths/subdir/doc.qmd
@@ -0,0 +1,16 @@
+---
+title: Extension Font Paths Test
+format: test-fonts-typst
+_quarto:
+  tests:
+    typst:
+      printsMessage:
+        level: INFO
+        regex: 'warning: unknown font family'
+        negate: true
+---
+
+```{=typst}
+#set text(font: "Amaranth")
+Testing font from extension with relative font-paths.
+```