diff --git a/.changeset/strong-bears-own.md b/.changeset/strong-bears-own.md
new file mode 100644
index 00000000000..ca50a9decf6
--- /dev/null
+++ b/.changeset/strong-bears-own.md
@@ -0,0 +1,6 @@
+---
+"@pnpm/resolve-dependencies": patch
+"pnpm": patch
+---
+
+Installation shouldn't fail when a package from node_modules is moved to the `node_modules/.ignored` subfolder and a package with that name is already present in `node_modules/.ignored'.
diff --git a/packages/resolve-dependencies/package.json b/packages/resolve-dependencies/package.json
index aa0c6264da8..5e81b45f2ae 100644
--- a/packages/resolve-dependencies/package.json
+++ b/packages/resolve-dependencies/package.json
@@ -52,6 +52,7 @@
     "is-subdir": "^1.1.1",
     "path-exists": "^4.0.0",
     "ramda": "^0.27.1",
+    "rename-overwrite": "^4.0.2",
     "replace-string": "^3.1.0",
     "semver": "^7.3.4",
     "semver-range-intersect": "^0.3.1",
diff --git a/packages/resolve-dependencies/src/safeIsInnerLink.ts b/packages/resolve-dependencies/src/safeIsInnerLink.ts
index eb55a315d6a..f88355b03ef 100644
--- a/packages/resolve-dependencies/src/safeIsInnerLink.ts
+++ b/packages/resolve-dependencies/src/safeIsInnerLink.ts
@@ -1,8 +1,8 @@
-import { promises as fs } from 'fs'
 import path from 'path'
 import logger from '@pnpm/logger'
 import isInnerLink from 'is-inner-link'
 import isSubdir from 'is-subdir'
+import renameOverwrite from 'rename-overwrite'
 
 export default async function safeIsInnerLink (
   projectModulesDir: string,
@@ -30,8 +30,7 @@ export default async function safeIsInnerLink (
         prefix: opts.projectDir,
       })
       const ignoredDir = path.join(projectModulesDir, '.ignored', depName)
-      await fs.mkdir(path.dirname(ignoredDir), { recursive: true })
-      await fs.rename(
+      await renameOverwrite(
         path.join(projectModulesDir, depName),
         ignoredDir
       )
diff --git a/pnpm-lock.yaml b/pnpm-lock.yaml
index fbf11189df6..9984a637016 100644
--- a/pnpm-lock.yaml
+++ b/pnpm-lock.yaml
@@ -3179,6 +3179,7 @@ importers:
       is-subdir: ^1.1.1
       path-exists: ^4.0.0
       ramda: ^0.27.1
+      rename-overwrite: ^4.0.2
       replace-string: ^3.1.0
       semver: ^7.3.4
       semver-range-intersect: ^0.3.1
@@ -3207,6 +3208,7 @@ importers:
       is-subdir: 1.2.0
       path-exists: 4.0.0
       ramda: 0.27.2
+      rename-overwrite: 4.0.2
       replace-string: 3.1.0
       semver: 7.3.7
       semver-range-intersect: 0.3.1