diff --git a/sources/commands/Hydrate.ts b/sources/commands/Hydrate.ts
index 8318baf2b..c1ceb31f7 100644
--- a/sources/commands/Hydrate.ts
+++ b/sources/commands/Hydrate.ts
@@ -1,4 +1,5 @@
 import {Command, Option, UsageError} from 'clipanion';
+import {mkdir}                       from 'fs/promises';
 import path                          from 'path';
 
 import * as folderUtils              from '../folderUtils';
@@ -63,6 +64,9 @@ export class HydrateCommand extends Command<Context> {
         else
           this.context.stdout.write(`Hydrating ${name}@${reference}...\n`);
 
+        // Recreate the folder in case it was deleted somewhere else:
+        await mkdir(installFolder, {recursive: true});
+
         await tar.x({file: fileName, cwd: installFolder}, [`${name}/${reference}`]);
 
         if (this.activate) {
diff --git a/sources/commands/Prepare.ts b/sources/commands/Prepare.ts
index 7a867d2d3..3911e5323 100644
--- a/sources/commands/Prepare.ts
+++ b/sources/commands/Prepare.ts
@@ -1,4 +1,5 @@
 import {Command, Option, UsageError} from 'clipanion';
+import {mkdir}                       from 'fs/promises';
 import path                          from 'path';
 
 import * as folderUtils              from '../folderUtils';
@@ -117,6 +118,8 @@ export class PrepareCommand extends Command<Context> {
         this.context.stdout.write(`Packing the selected tools in ${path.basename(outputPath)}...\n`);
 
       const {default: tar} = await import(/* webpackMode: 'eager' */ `tar`);
+      // Recreate the folder in case it was deleted somewhere else:
+      await mkdir(baseInstallFolder, {recursive: true});
       await tar.c({gzip: true, cwd: baseInstallFolder, file: path.resolve(outputPath)}, installLocations.map(location => {
         return path.relative(baseInstallFolder, location);
       }));
diff --git a/tests/main.test.ts b/tests/main.test.ts
index 9a505b24c..67cc90669 100644
--- a/tests/main.test.ts
+++ b/tests/main.test.ts
@@ -404,6 +404,44 @@ it(`should support hydrating package managers from cached archives`, async () =>
   });
 });
 
+it(`should support hydrating package managers if cache folder was removed`, async () => {
+  await xfs.mktempPromise(async cwd => {
+    await expect(runCli(cwd, [`prepare`, `yarn@2.2.2`, `-o`])).resolves.toMatchObject({
+      exitCode: 0,
+      stderr: ``,
+    });
+
+    // Use a new cache
+    process.env.COREPACK_HOME = npath.fromPortablePath(await xfs.mktempPromise());
+
+    // Simulate cache removal
+    await xfs.removePromise(npath.toPortablePath(process.env.COREPACK_HOME));
+
+    // Disable the network to make sure we don't succeed by accident
+    process.env.COREPACK_ENABLE_NETWORK = `0`;
+
+    try {
+      await expect(runCli(cwd, [`hydrate`, `corepack.tgz`])).resolves.toMatchObject({
+        stdout: `Hydrating yarn@2.2.2...\nAll done!\n`,
+        stderr: ``,
+        exitCode: 0,
+      });
+
+      await xfs.writeJsonPromise(ppath.join(cwd, `package.json` as Filename), {
+        packageManager: `yarn@2.2.2`,
+      });
+
+      await expect(runCli(cwd, [`yarn`, `--version`])).resolves.toMatchObject({
+        stdout: `2.2.2\n`,
+        stderr: ``,
+        exitCode: 0,
+      });
+    } finally {
+      delete process.env.COREPACK_ENABLE_NETWORK;
+    }
+  });
+});
+
 it(`should support hydrating multiple package managers from cached archives`, async () => {
   await xfs.mktempPromise(async cwd => {
     await expect(runCli(cwd, [`prepare`, `yarn@2.2.2`, `pnpm@5.8.0`, `-o`])).resolves.toMatchObject({
diff --git a/tests/nock/ToUs5E5EzXCAwMv31KqJGA-1.dat b/tests/nock/ToUs5E5EzXCAwMv31KqJGA-1.dat
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