diff --git a/docs/Built-ins.md b/docs/Built-ins.md
index 84c0f4d355..60b94c95cb 100755
--- a/docs/Built-ins.md
+++ b/docs/Built-ins.md
@@ -658,9 +658,6 @@ Defaults to `[]`
 
 A mapping of npm package names to bazel targets to linked into node_modules.
 
-If `package_path` is also set, the bazel target will be linked to the node_modules at `package_path`
-along with other 3rd party npm packages from this rule.
-
 For example,
 
 ```
@@ -668,7 +665,6 @@ yarn_install(
     name = "npm",
     package_json = "//web:package.json",
     yarn_lock = "//web:yarn.lock",
-    package_path = "web",
     links = {
         "@scope/target": "//some/scoped/target",
         "target": "//some/target",
@@ -802,11 +798,10 @@ Defaults to `{}`
 
 <h4 id="npm_install-package_path">package_path</h4>
 
-(*String*): If set, link the 3rd party node_modules dependencies under the package path specified.
+(*String*): The directory to link `node_modules` to in the execroot and in runfiles.
 
-In most cases, this should be the directory of the package.json file so that the linker links the node_modules
-in the same location they are found in the source tree. In a future release, this will default to the package.json
-directory. This is planned for 4.0: https://github.com/bazelbuild/rules_nodejs/issues/2451
+If unset, link `node_modules` to the directory of the `package.json` file specified in the
+`package_json` attribute. Set to "/" to link to the root directory.
 
 Defaults to `""`
 
@@ -1345,9 +1340,6 @@ Defaults to `[]`
 
 A mapping of npm package names to bazel targets to linked into node_modules.
 
-If `package_path` is also set, the bazel target will be linked to the node_modules at `package_path`
-along with other 3rd party npm packages from this rule.
-
 For example,
 
 ```
@@ -1355,7 +1347,6 @@ yarn_install(
     name = "npm",
     package_json = "//web:package.json",
     yarn_lock = "//web:yarn.lock",
-    package_path = "web",
     links = {
         "@scope/target": "//some/scoped/target",
         "target": "//some/target",
@@ -1473,11 +1464,10 @@ Defaults to `{}`
 
 <h4 id="yarn_install-package_path">package_path</h4>
 
-(*String*): If set, link the 3rd party node_modules dependencies under the package path specified.
+(*String*): The directory to link `node_modules` to in the execroot and in runfiles.
 
-In most cases, this should be the directory of the package.json file so that the linker links the node_modules
-in the same location they are found in the source tree. In a future release, this will default to the package.json
-directory. This is planned for 4.0: https://github.com/bazelbuild/rules_nodejs/issues/2451
+If unset, link `node_modules` to the directory of the `package.json` file specified in the
+`package_json` attribute. Set to "/" to link to the root directory.
 
 Defaults to `""`
 
diff --git a/e2e/packages/WORKSPACE b/e2e/packages/WORKSPACE
index ac262495dd..cefc37ae04 100644
--- a/e2e/packages/WORKSPACE
+++ b/e2e/packages/WORKSPACE
@@ -26,6 +26,7 @@ npm_install(
     exports_directories_only = False,
     package_json = "//:npm1/package.json",
     package_lock_json = "//:npm1/package-lock.json",
+    package_path = "/",
 )
 
 npm_install(
@@ -35,6 +36,7 @@ npm_install(
     exports_directories_only = False,
     package_json = "//:npm2/package.json",
     package_lock_json = "//:npm2/package-lock.json",
+    package_path = "/",
 )
 
 yarn_install(
@@ -43,6 +45,7 @@ yarn_install(
     data = ["//:postinstall.js"],
     exports_directories_only = False,
     package_json = "//:yarn1/package.json",
+    package_path = "/",
     yarn_lock = "//:yarn1/yarn.lock",
 )
 
@@ -52,5 +55,6 @@ yarn_install(
     data = ["//:postinstall.js"],
     exports_directories_only = False,
     package_json = "//:yarn2/package.json",
+    package_path = "/",
     yarn_lock = "//:yarn2/yarn.lock",
 )
diff --git a/internal/npm_install/npm_install.bzl b/internal/npm_install/npm_install.bzl
index 0e829540af..f342f5b2e4 100644
--- a/internal/npm_install/npm_install.bzl
+++ b/internal/npm_install/npm_install.bzl
@@ -25,6 +25,7 @@ load("@rules_nodejs//nodejs/private:os_name.bzl", "is_windows_os", "os_name")
 load("//:version.bzl", "VERSION")
 load("//internal/common:check_bazel_version.bzl", "check_bazel_version")
 load("//internal/node:node_labels.bzl", "get_node_label", "get_npm_label", "get_yarn_label")
+load("//third_party/github.com/bazelbuild/bazel-skylib:lib/paths.bzl", "paths")
 
 COMMON_ATTRIBUTES = dict(dict(), **{
     "data": attr.label_list(
@@ -135,9 +136,6 @@ as well as the fine grained targets such as `@wksp//foo`.
 
 A mapping of npm package names to bazel targets to linked into node_modules.
 
-If `package_path` is also set, the bazel target will be linked to the node_modules at `package_path`
-along with other 3rd party npm packages from this rule.
-
 For example,
 
 ```
@@ -145,7 +143,6 @@ yarn_install(
     name = "npm",
     package_json = "//web:package.json",
     yarn_lock = "//web:yarn.lock",
-    package_path = "web",
     links = {
         "@scope/target": "//some/scoped/target",
         "target": "//some/target",
@@ -211,11 +208,10 @@ fine grained npm dependencies.
     ),
     "package_path": attr.string(
         default = "",
-        doc = """If set, link the 3rd party node_modules dependencies under the package path specified.
+        doc = """The directory to link `node_modules` to in the execroot and in runfiles.
 
-In most cases, this should be the directory of the package.json file so that the linker links the node_modules
-in the same location they are found in the source tree. In a future release, this will default to the package.json
-directory. This is planned for 4.0: https://github.com/bazelbuild/rules_nodejs/issues/2451""",
+If unset, link `node_modules` to the directory of the `package.json` file specified in the
+`package_json` attribute. Set to "/" to link to the root directory.""",
     ),
     "patch_args": attr.string_list(
         default = ["-p0"],
@@ -452,6 +448,15 @@ def _create_build_files(repository_ctx, rule_type, node, lock_file, generate_loc
         if not v.startswith("@"):
             fail("link target must be label of form '@wksp//path/to:target', '@//path/to:target' or '//path/to:target'")
         validated_links[k] = v
+
+    package_path = repository_ctx.attr.package_path
+    if not package_path:
+        # By default the package_path is the directory of the package.json file
+        package_path = paths.dirname(paths.join(repository_ctx.attr.package_json.package, repository_ctx.attr.package_json.name))
+    elif package_path == "/":
+        # User specified root path
+        package_path = ""
+
     generate_config_json = json.encode(
         struct(
             exports_directories_only = repository_ctx.attr.exports_directories_only,
@@ -460,7 +465,7 @@ def _create_build_files(repository_ctx, rule_type, node, lock_file, generate_loc
             links = validated_links,
             package_json = str(repository_ctx.path(repository_ctx.attr.package_json)),
             package_lock = str(repository_ctx.path(lock_file)),
-            package_path = repository_ctx.attr.package_path,
+            package_path = package_path,
             rule_type = rule_type,
             strict_visibility = repository_ctx.attr.strict_visibility,
             workspace = repository_ctx.attr.name,
diff --git a/npm_deps.bzl b/npm_deps.bzl
index fd30315d52..27358d0214 100644
--- a/npm_deps.bzl
+++ b/npm_deps.bzl
@@ -138,7 +138,6 @@ js_library(
             "@test_multi_linker/lib-d2": "@//internal/linker/test/multi_linker/lib_d",
         },
         package_json = "//internal/linker/test/multi_linker:package.json",
-        package_path = "internal/linker/test/multi_linker",
         yarn_lock = "//internal/linker/test/multi_linker:yarn.lock",
     )
 
@@ -155,28 +154,24 @@ js_library(
             "@test_multi_linker/lib-d2": "@//internal/linker/test/multi_linker/lib_d",
         },
         package_json = "//internal/linker/test/multi_linker/test_a:package.json",
-        package_path = "internal/linker/test/multi_linker/test_a",
         yarn_lock = "//internal/linker/test/multi_linker/test_a:yarn.lock",
     )
 
     yarn_install(
         name = "internal_test_multi_linker_test_b_deps",
         package_json = "//internal/linker/test/multi_linker/test_b:package.json",
-        package_path = "internal/linker/test/multi_linker/test_b",
         yarn_lock = "//internal/linker/test/multi_linker/test_b:yarn.lock",
     )
 
     yarn_install(
         name = "internal_test_multi_linker_test_c_deps",
         package_json = "//internal/linker/test/multi_linker/test_c:package.json",
-        package_path = "internal/linker/test/multi_linker/test_c",
         yarn_lock = "//internal/linker/test/multi_linker/test_c:yarn.lock",
     )
 
     yarn_install(
         name = "internal_test_multi_linker_test_d_deps",
         package_json = "//internal/linker/test/multi_linker/test_d:package.json",
-        package_path = "internal/linker/test/multi_linker/test_d",
         yarn_lock = "//internal/linker/test/multi_linker/test_d:yarn.lock",
     )
 
@@ -185,7 +180,6 @@ js_library(
         # transitive deps for this first party lib should not include dev dependencies
         args = ["--production"],
         package_json = "//internal/linker/test/multi_linker/lib_b:package.json",
-        package_path = "internal/linker/test/multi_linker/lib_b",
         yarn_lock = "//internal/linker/test/multi_linker/lib_b:yarn.lock",
     )
 
@@ -194,7 +188,6 @@ js_library(
         # transitive deps for this first party lib should not include dev dependencies
         args = ["--production"],
         package_json = "//internal/linker/test/multi_linker/lib_c:lib/package.json",
-        package_path = "internal/linker/test/multi_linker/lib_c/lib",
         yarn_lock = "//internal/linker/test/multi_linker/lib_c:lib/yarn.lock",
     )
 
@@ -230,7 +223,6 @@ js_library(
             "@test_multi_linker/lib-d2": "@build_bazel_rules_nodejs//internal/linker/test/multi_linker/lib_d",
         },
         package_json = "//internal/linker/test/multi_linker/sub:package.json",
-        package_path = "internal/linker/test/multi_linker/sub",
         yarn_lock = "//internal/linker/test/multi_linker/sub:yarn.lock",
     )
 
@@ -239,7 +231,6 @@ js_library(
         # transitive deps for this first party lib should not include dev dependencies
         args = ["--production"],
         package_json = "//internal/linker/test/multi_linker/onep_a:package.json",
-        package_path = "internal/linker/test/multi_linker/onep_a",
         yarn_lock = "//internal/linker/test/multi_linker/onep_a:yarn.lock",
     )
 
@@ -264,6 +255,7 @@ js_library(
         ],
         package_json = "//:tools/fine_grained_deps_yarn/package.json",
         yarn_lock = "//:tools/fine_grained_deps_yarn/yarn.lock",
+        package_path = "/",
         exports_directories_only = False,
     )
 
@@ -289,6 +281,7 @@ js_library(
         npm_command = "install",
         package_json = "//:tools/fine_grained_deps_npm/package.json",
         package_lock_json = "//:tools/fine_grained_deps_npm/package-lock.json",
+        package_path = "/",
         exports_directories_only = False,
     )
 
@@ -301,6 +294,7 @@ js_library(
             "SOME_USER_ENV": "yarn is great!",
         },
         package_json = "//:tools/fine_grained_deps_yarn_directory_artifacts/package.json",
+        package_path = "/",
         yarn_lock = "//:tools/fine_grained_deps_yarn_directory_artifacts/yarn.lock",
     )
 
@@ -314,12 +308,14 @@ js_library(
         },
         npm_command = "install",
         package_json = "//:tools/fine_grained_deps_npm_directory_artifacts/package.json",
+        package_path = "/",
         package_lock_json = "//:tools/fine_grained_deps_npm_directory_artifacts/package-lock.json",
     )
 
     yarn_install(
         name = "fine_grained_no_bin",
         package_json = "//:tools/fine_grained_no_bin/package.json",
+        package_path = "/",
         yarn_lock = "//:tools/fine_grained_no_bin/yarn.lock",
     )
 
@@ -368,6 +364,7 @@ filegroup(
   ],
 )""",
         package_json = "//:tools/fine_grained_goldens/package.json",
+        package_path = "/",
         yarn_lock = "//:tools/fine_grained_goldens/yarn.lock",
         exports_directories_only = False,
     )
@@ -407,13 +404,13 @@ filegroup(
   ],
 )""",
         package_json = "//:tools/fine_grained_goldens/package.json",
+        package_path = "/",
         yarn_lock = "//:tools/fine_grained_goldens/yarn.lock",
     )
 
     yarn_install(
         name = "internal_npm_install_test_patches_yarn",
         package_json = "//internal/npm_install/test/patches_yarn:package.json",
-        package_path = "internal/npm_install/test/patches_yarn",
         patch_args = ["-p0"],
         patch_tool = "patch",
         post_install_patches = ["//internal/npm_install/test/patches_yarn:semver+1.0.0.patch"],
@@ -439,7 +436,6 @@ filegroup(
         name = "internal_npm_install_test_patches_npm",
         package_json = "//internal/npm_install/test/patches_npm:package.json",
         package_lock_json = "//internal/npm_install/test/patches_npm:package-lock.json",
-        package_path = "internal/npm_install/test/patches_npm",
         patch_args = ["-p0"],
         patch_tool = "patch",
         post_install_patches = ["//internal/npm_install/test/patches_npm:semver+1.0.0.patch"],
@@ -463,7 +459,6 @@ filegroup(
     yarn_install(
         name = "internal_npm_install_test_patches_yarn_symlinked",
         package_json = "//internal/npm_install/test/patches_yarn_symlinked:package.json",
-        package_path = "internal/npm_install/test/patches_yarn_symlinked",
         patch_args = ["-p0"],
         patch_tool = "patch",
         post_install_patches = ["//internal/npm_install/test/patches_yarn_symlinked:semver+1.0.0.patch"],
@@ -476,7 +471,6 @@ filegroup(
         name = "internal_npm_install_test_patches_npm_symlinked",
         package_json = "//internal/npm_install/test/patches_npm_symlinked:package.json",
         package_lock_json = "//internal/npm_install/test/patches_npm_symlinked:package-lock.json",
-        package_path = "internal/npm_install/test/patches_npm_symlinked",
         patch_args = ["-p0"],
         patch_tool = "patch",
         post_install_patches = ["//internal/npm_install/test/patches_npm_symlinked:semver+1.0.0.patch"],
@@ -529,7 +523,6 @@ filegroup(
   ],
 )""",
         package_json = "//:tools/fine_grained_goldens/package.json",
-        package_path = "tools/fine_grained_goldens",
         yarn_lock = "//:tools/fine_grained_goldens/yarn.lock",
     )
 
@@ -537,6 +530,7 @@ filegroup(
         name = "npm_node_patches",
         package_json = "//packages/node-patches:package.json",
         package_lock_json = "//packages/node-patches:package-lock.json",
+        package_path = "/",
         # TODO: fix tests when this flag is flipped
         exports_directories_only = False,
     )
@@ -544,6 +538,7 @@ filegroup(
     yarn_install(
         name = "cypress_deps",
         package_json = "//packages/cypress/test:package.json",
+        package_path = "/",
         yarn_lock = "//packages/cypress/test:yarn.lock",
         # TODO: get cypress rule working with symlink_node_modules = False
         symlink_node_modules = True,
@@ -554,6 +549,5 @@ filegroup(
     yarn_install(
         name = "rollup_test_multi_linker_deps",
         package_json = "//packages/rollup/test/multi_linker:package.json",
-        package_path = "packages/rollup/test/multi_linker",
         yarn_lock = "//packages/rollup/test/multi_linker:yarn.lock",
     )