diff --git a/index.d.ts b/index.d.ts
index fdf9de1c3..bcf04f922 100644
--- a/index.d.ts
+++ b/index.d.ts
@@ -33,9 +33,11 @@ export interface CommonOptions<EncodingType> {
 	/**
 	Preferred path to find locally installed binaries in (use with `preferLocal`).
 
+	Using a `URL` is only supported in Node.js `14.18.0`, `16.14.0` or above.
+
 	@default process.cwd()
 	*/
-	readonly localDir?: string;
+	readonly localDir?: string | URL;
 
 	/**
 	Path to the Node.js executable to use in child processes.
@@ -111,9 +113,11 @@ export interface CommonOptions<EncodingType> {
 	/**
 	Current working directory of the child process.
 
+	Using a `URL` is only supported in Node.js `14.18.0`, `16.14.0` or above.
+
 	@default process.cwd()
 	*/
-	readonly cwd?: string;
+	readonly cwd?: string | URL;
 
 	/**
 	Environment key-value pairs. Extends automatically from `process.env`. Set `extendEnv` to `false` if you don't want this.
diff --git a/index.test-d.ts b/index.test-d.ts
index 5e06366a5..e8d0a0d11 100644
--- a/index.test-d.ts
+++ b/index.test-d.ts
@@ -90,6 +90,7 @@ try {
 execa('unicorns', {cleanup: false});
 execa('unicorns', {preferLocal: false});
 execa('unicorns', {localDir: '.'});
+execa('unicorns', {localDir: new URL('file:///test')});
 execa('unicorns', {execPath: '/path'});
 execa('unicorns', {buffer: false});
 execa('unicorns', {input: ''});
@@ -121,6 +122,7 @@ execa('unicorns', {reject: false});
 execa('unicorns', {stripFinalNewline: false});
 execa('unicorns', {extendEnv: false});
 execa('unicorns', {cwd: '.'});
+execa('unicorns', {cwd: new URL('file:///test')});
 // eslint-disable-next-line @typescript-eslint/naming-convention
 execa('unicorns', {env: {PATH: ''}});
 execa('unicorns', {argv0: ''});
diff --git a/package.json b/package.json
index 360439757..187138879 100644
--- a/package.json
+++ b/package.json
@@ -58,6 +58,7 @@
 		"get-node": "^12.0.0",
 		"is-running": "^2.1.0",
 		"p-event": "^5.0.1",
+		"semver": "^7.3.5",
 		"tempfile": "^4.0.0",
 		"tsd": "^0.18.0",
 		"xo": "^0.46.4"
diff --git a/readme.md b/readme.md
index a9db621b9..c1aa8ea30 100644
--- a/readme.md
+++ b/readme.md
@@ -357,11 +357,13 @@ If you `$ npm install foo`, you can then `execa('foo')`.
 
 #### localDir
 
-Type: `string`\
+Type: `string | URL`\
 Default: `process.cwd()`
 
 Preferred path to find locally installed binaries in (use with `preferLocal`).
 
+Using a `URL` is only supported in Node.js `14.18.0`, `16.14.0` or above.
+
 #### execPath
 
 Type: `string`\
@@ -446,11 +448,13 @@ Execa also accepts the below options which are the same as the options for [`chi
 
 #### cwd
 
-Type: `string`\
+Type: `string | URL`\
 Default: `process.cwd()`
 
 Current working directory of the child process.
 
+Using a `URL` is only supported in Node.js `14.18.0`, `16.14.0` or above.
+
 #### env
 
 Type: `object`\
diff --git a/test/test.js b/test/test.js
index 23449f52b..d24607631 100644
--- a/test/test.js
+++ b/test/test.js
@@ -1,9 +1,10 @@
 import path from 'node:path';
 import process from 'node:process';
-import {fileURLToPath} from 'node:url';
+import {fileURLToPath, pathToFileURL} from 'node:url';
 import test from 'ava';
 import isRunning from 'is-running';
 import getNode from 'get-node';
+import semver from 'semver';
 import {execa, execaSync} from '../index.js';
 
 process.env.PATH = fileURLToPath(new URL('./fixtures', import.meta.url)) + path.delimiter + process.env.PATH;
@@ -198,6 +199,28 @@ test('do not extend environment with `extendEnv: false`', async t => {
 	t.deepEqual(stdout.split('\n'), ['undefined', 'bar']);
 });
 
+test('can use `options.cwd` as a string', async t => {
+	const cwd = '/';
+	const {stdout} = await execa('node', ['-p', 'process.cwd()'], {cwd});
+	t.is(path.toNamespacedPath(stdout), path.toNamespacedPath(cwd));
+});
+
+if (semver.satisfies(process.version, '^14.18.0 || >=16.4.0')) {
+	test('localDir option can be a URL', async t => {
+		const command = process.platform === 'win32' ? 'echo %PATH%' : 'echo $PATH';
+		const {stdout} = await execa(command, {shell: true, preferLocal: true, localDir: pathToFileURL('/test')});
+		const envPaths = stdout.split(path.delimiter);
+		t.true(envPaths.some(envPath => envPath.endsWith('.bin')));
+	});
+
+	test('can use `options.cwd` as a URL', async t => {
+		const cwd = '/';
+		const cwdUrl = pathToFileURL(cwd);
+		const {stdout} = await execa('node', ['-p', 'process.cwd()'], {cwd: cwdUrl});
+		t.is(path.toNamespacedPath(stdout), path.toNamespacedPath(cwd));
+	});
+}
+
 test('can use `options.shell: true`', async t => {
 	const {stdout} = await execa('node test/fixtures/noop.js foo', {shell: true});
 	t.is(stdout, 'foo');