diff --git a/tests/pkg/assets/install/gold/10-install.gold b/tests/pkg/assets/install/gold/10-install.gold
new file mode 100644
index 000000000..c7fa06f11
--- /dev/null
+++ b/tests/pkg/assets/install/gold/10-install.gold
@@ -0,0 +1,20 @@
+OK
+[pkg, registry, add, --local, test-reg, registry]
+==================
+OK
+[pkg, install, foo]
+Package 'foo@1.2.3' installed with prefix 'foo'.
+==================
+OK
+[pkg, install, bar]
+Package 'bar@2.0.1' installed with prefix 'bar'.
+==================
+OK
+[pkg, install, --local, target]
+Package 'target' installed with prefix 'target'.
+==================
+exec main.toit
+hello from foo 1.2.3
+hello from bar 2.0.1
+hello from target
+Exit Code: 0
diff --git a/tests/pkg/assets/install/gold/20-fail.gold b/tests/pkg/assets/install/gold/20-fail.gold
new file mode 100644
index 000000000..c1a24a6ef
--- /dev/null
+++ b/tests/pkg/assets/install/gold/20-fail.gold
@@ -0,0 +1,23 @@
+exec main.toit
+
+STDERR---
+<[*WORKING-DIR*]>/package.lock:11:10: error: Package 'http://localhost:<[*PORT*]>/pkg/bar-2.0.1' not found
+    url: http://localhost:<[*PORT*]>/pkg/bar
+         ^~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
+<[*WORKING-DIR*]>/package.lock:15:10: error: Package 'http://localhost:<[*PORT*]>/pkg/foo-1.2.3' not found
+    url: http://localhost:<[*PORT*]>/pkg/foo
+         ^~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
+main.toit:5:8: error: Package 'http_//localhost_<[*PORT*]>/pkg/foo-1' for prefix 'foo' not found
+import foo
+       ^~~
+main.toit:6:8: error: Package 'http_//localhost_<[*PORT*]>/pkg/bar-2' for prefix 'bar' not found
+import bar
+       ^~~
+main.toit:10:7: error: Unresolved identifier: 'say-hello'
+  foo.say-hello
+      ^~~~~~~~~
+main.toit:11:7: error: Unresolved identifier: 'say-hello'
+  bar.say-hello
+      ^~~~~~~~~
+Compilation failed
+Exit Code: 1
diff --git a/tests/pkg/assets/install/gold/30-install.gold b/tests/pkg/assets/install/gold/30-install.gold
new file mode 100644
index 000000000..6b8107666
--- /dev/null
+++ b/tests/pkg/assets/install/gold/30-install.gold
@@ -0,0 +1,2 @@
+OK
+[pkg, install]
diff --git a/tests/pkg/assets/install/main.toit b/tests/pkg/assets/install/main.toit
new file mode 100644
index 000000000..cd6452454
--- /dev/null
+++ b/tests/pkg/assets/install/main.toit
@@ -0,0 +1,12 @@
+// Copyright (C) 2025 Toit contributors.
+// Use of this source code is governed by a Zero-Clause BSD license that can
+// be found in the tests/LICENSE file.
+
+import foo
+import bar
+import target
+
+main:
+  foo.say-hello
+  bar.say-hello
+  target.say-hello
diff --git a/tests/pkg/assets/install/target/package.yaml b/tests/pkg/assets/install/target/package.yaml
new file mode 100644
index 000000000..07c7c9808
--- /dev/null
+++ b/tests/pkg/assets/install/target/package.yaml
@@ -0,0 +1,2 @@
+name: target
+description: desc
diff --git a/tests/pkg/assets/install/target/src/target.toit b/tests/pkg/assets/install/target/src/target.toit
new file mode 100644
index 000000000..f8bdbd25e
--- /dev/null
+++ b/tests/pkg/assets/install/target/src/target.toit
@@ -0,0 +1,6 @@
+// Copyright (C) 2025 Toit contributors.
+// Use of this source code is governed by a Zero-Clause BSD license that can
+// be found in the tests/LICENSE file.
+
+say-hello:
+  print "hello from target"
diff --git a/tests/pkg/install-gold-test.toit b/tests/pkg/install-gold-test.toit
new file mode 100644
index 000000000..20689b71f
--- /dev/null
+++ b/tests/pkg/install-gold-test.toit
@@ -0,0 +1,67 @@
+// Copyright (C) 2025 Toit contributors.
+// Use of this source code is governed by a Zero-Clause BSD license that can
+// be found in the tests/LICENSE file.
+
+import encoding.json
+import expect show *
+import host.directory
+import host.file
+import .gold-tester
+
+main args:
+  with-gold-tester args: test it
+
+test tester/GoldTester:
+  tester.gold "10-install" [
+    ["pkg", "registry", "add", "--local", "test-reg", "registry"],
+    ["pkg", "install", "foo"],
+    ["pkg", "install", "bar"],
+    ["pkg", "install", "--local", "target"],
+    ["exec", "main.toit"],
+  ]
+
+  contents := file.read-contents "$tester.working-dir/.packages/contents.json"
+  mapping/Map := json.decode contents
+
+  foo-url/string? := null
+  bar-url/string? := null
+  mapping.do --keys: | key |
+    if key.ends-with "pkg/foo": foo-url = key
+    if key.ends-with "pkg/bar": bar-url = key
+
+  foo-version := "1.2.3"
+  foo-rel-path := mapping[foo-url][foo-version]
+  foo-path := "$tester.working-dir/.packages/$foo-rel-path"
+  expect (file.is-directory foo-path)
+  directory.rmdir --recursive --force foo-path
+
+  bar-version := "2.0.1"
+  bar-rel-path := mapping[bar-url][bar-version]
+  bar-path := "$tester.working-dir/.packages/$bar-rel-path"
+  expect (file.is-directory bar-path)
+  directory.rmdir --recursive --force bar-path
+
+  tester.gold "20-fail" [
+    ["exec", "main.toit"],
+  ]
+
+  tester.gold "30-install" [
+    ["pkg", "install"],
+  ]
+
+  // Ensure that the directories are back.
+  // We don't guarantee that the directories are the same as before.
+  contents = file.read-contents "$tester.working-dir/.packages/contents.json"
+  mapping = json.decode contents
+
+  mapping.do --keys: | key |
+    if key.ends-with "pkg/foo": foo-url = key
+    if key.ends-with "pkg/bar": bar-url = key
+
+  foo-rel-path = mapping[foo-url][foo-version]
+  foo-path = "$tester.working-dir/.packages/$foo-rel-path"
+  expect (file.is-directory foo-path)
+
+  bar-rel-path = mapping[bar-url][bar-version]
+  bar-path = "$tester.working-dir/.packages/$bar-rel-path"
+  expect (file.is-directory bar-path)
diff --git a/tools/pkg/project/project.toit b/tools/pkg/project/project.toit
index dd49f0afd..6af14e399 100644
--- a/tools/pkg/project/project.toit
+++ b/tools/pkg/project/project.toit
@@ -185,6 +185,8 @@ class Project:
 
   /** The directory within the cache where the given package is cached. */
   relative-cached-repository-dir_ url/string version/SemanticVersion -> string:
+    url = url.trim --left "http://"
+    url = url.trim --left "https://"
     return escape-path "$url/$version"
 
   /** The full path of the directory within the cache where the given package is cached. */
@@ -213,7 +215,9 @@ class Project:
       --hash/string:
     if not cached-contents: cached-contents = cached-repository-contents_
     version-string := version.to-string
-    if cached-contents.contains url and cached-contents[url].contains version-string:
+    if cached-contents.contains url and
+        cached-contents[url].contains version-string and
+        file.is-directory "$packages-cache-dir/$cached-contents[url][version-string]":
       return cached-contents
     cached-repository-dir := cached-repository-dir_ url version
     relative-dir := relative-cached-repository-dir_ url version