diff --git a/packages/app/src/cli/services/build/extension.test.ts b/packages/app/src/cli/services/build/extension.test.ts
index adf92867b84..7f4be985566 100644
--- a/packages/app/src/cli/services/build/extension.test.ts
+++ b/packages/app/src/cli/services/build/extension.test.ts
@@ -7,7 +7,8 @@ import {beforeEach, describe, expect, test, vi} from 'vitest'
 import {exec} from '@shopify/cli-kit/node/system'
 import lockfile from 'proper-lockfile'
 import {AbortError} from '@shopify/cli-kit/node/error'
-import {fileExistsSync} from '@shopify/cli-kit/node/fs'
+import {fileExistsSync, touchFile, writeFile} from '@shopify/cli-kit/node/fs'
+import {joinPath} from '@shopify/cli-kit/node/path'
 
 vi.mock('@shopify/cli-kit/node/system')
 vi.mock('../function/build.js')
@@ -416,4 +417,26 @@ describe('buildFunctionExtension', () => {
     expect(releaseLock).toHaveBeenCalled()
     expect(runWasmOpt).toHaveBeenCalled()
   })
+
+  test('does not rebundle when build.path stays in the default output directory', async () => {
+    // Given
+    extension.configuration.build!.path = 'dist/custom.wasm'
+    vi.mocked(fileExistsSync).mockReturnValue(true)
+
+    // When
+    await expect(
+      buildFunctionExtension(extension, {
+        stdout,
+        stderr,
+        signal,
+        app,
+        environment: 'production',
+      }),
+    ).resolves.toBeUndefined()
+
+    // Then
+    expect(fileExistsSync).toHaveBeenCalledWith(joinPath(extension.directory, 'dist/custom.wasm'))
+    expect(touchFile).not.toHaveBeenCalled()
+    expect(writeFile).not.toHaveBeenCalled()
+  })
 })
diff --git a/packages/app/src/cli/services/build/extension.ts b/packages/app/src/cli/services/build/extension.ts
index 9e056d5ecee..d14164e17b2 100644
--- a/packages/app/src/cli/services/build/extension.ts
+++ b/packages/app/src/cli/services/build/extension.ts
@@ -159,7 +159,11 @@ export async function buildFunctionExtension(
       await runTrampoline(extension.outputPath)
     }
 
-    if (fileExistsSync(extension.outputPath) && bundlePath !== extension.outputPath) {
+    if (
+      fileExistsSync(extension.outputPath) &&
+      bundlePath !== extension.outputPath &&
+      dirname(bundlePath) !== dirname(extension.outputPath)
+    ) {
       await bundleFunctionExtension(extension.outputPath, bundlePath)
     }
     // eslint-disable-next-line @typescript-eslint/no-explicit-any
diff --git a/packages/app/src/cli/services/function/runner.test.ts b/packages/app/src/cli/services/function/runner.test.ts
index 2e78d04d545..6f32757e3af 100644
--- a/packages/app/src/cli/services/function/runner.test.ts
+++ b/packages/app/src/cli/services/function/runner.test.ts
@@ -3,6 +3,7 @@ import {functionRunnerBinary, downloadBinary} from './binaries.js'
 import {testFunctionExtension} from '../../models/app/app.test-data.js'
 import {describe, test, vi, expect} from 'vitest'
 import {exec} from '@shopify/cli-kit/node/system'
+import {joinPath} from '@shopify/cli-kit/node/path'
 import {Readable, Writable} from 'stream'
 
 vi.mock('@shopify/cli-kit/node/system')
@@ -71,4 +72,21 @@ describe('runFunction', () => {
       },
     )
   })
+
+  test('uses build.path when configured', async () => {
+    // Given
+    vi.mocked(exec).mockResolvedValue()
+    const functionExtension = await testFunctionExtension()
+    functionExtension.configuration.build!.path = 'dist/custom.wasm'
+
+    // When
+    await runFunction({functionExtension})
+
+    // Then
+    expect(exec).toHaveBeenCalledWith(
+      functionRunnerBinary().path,
+      ['-f', joinPath(functionExtension.directory, 'dist/custom.wasm')],
+      expect.objectContaining({cwd: functionExtension.directory}),
+    )
+  })
 })
diff --git a/packages/app/src/cli/services/function/runner.ts b/packages/app/src/cli/services/function/runner.ts
index e81fe684461..29336bc6069 100644
--- a/packages/app/src/cli/services/function/runner.ts
+++ b/packages/app/src/cli/services/function/runner.ts
@@ -3,6 +3,7 @@ import {validateShopifyFunctionPackageVersion} from './build.js'
 import {ExtensionInstance} from '../../models/extensions/extension-instance.js'
 import {FunctionConfigType} from '../../models/extensions/specifications/function.js'
 import {exec} from '@shopify/cli-kit/node/system'
+import {joinPath} from '@shopify/cli-kit/node/path'
 import {Readable, Writable} from 'stream'
 
 interface FunctionRunnerOptions {
@@ -26,6 +27,13 @@ async function getFunctionRunnerBinary(ext: ExtensionInstance<FunctionConfigType
   return functionRunnerBinary()
 }
 
+function getFunctionPath(ext: ExtensionInstance<FunctionConfigType>) {
+  if (ext.configuration.build?.path) {
+    return joinPath(ext.directory, ext.configuration.build.path)
+  }
+  return ext.outputPath
+}
+
 export async function runFunction(options: FunctionRunnerOptions) {
   const ext = options.functionExtension
 
@@ -47,7 +55,9 @@ export async function runFunction(options: FunctionRunnerOptions) {
     args.push('--query-path', options.queryPath)
   }
 
-  return exec(functionRunner.path, ['-f', options.functionExtension.outputPath, ...args], {
+  const functionPath = getFunctionPath(ext)
+
+  return exec(functionRunner.path, ['-f', functionPath, ...args], {
     cwd: options.functionExtension.directory,
     stdin: options.stdin,
     stdout: options.stdout ?? 'inherit',