diff --git a/NEWS.md b/NEWS.md
index d88a36461..f69731a52 100644
--- a/NEWS.md
+++ b/NEWS.md
@@ -1,6 +1,9 @@
 
 # renv 1.1.0  (UNRELEASED)
 
+* Fixed an issue where `renv` library paths were not properly reset following
+  a suspend / resume in RStudio Server. (#2036)
+
 * `renv::run()` gains the `args` parameter, which can be used to pass command-line
   arguments to a script. (#2015)
 
diff --git a/R/project.R b/R/project.R
index c94d6862f..8f4dd1ac4 100644
--- a/R/project.R
+++ b/R/project.R
@@ -32,15 +32,19 @@ renv_project_get <- function(default = NULL) {
   the$project_path %||% default
 }
 
-# NOTE: RENV_PROJECT kept for backwards compatibility with RStudio
+# NOTE: 'RENV_PROJECT' kept for backwards compatibility with RStudio
 renv_project_set <- function(project) {
   the$project_path <- project
+  # https://github.com/rstudio/renv/issues/2036
+  options(renv.project.path = project)
   Sys.setenv(RENV_PROJECT = project)
 }
 
 # NOTE: 'RENV_PROJECT' kept for backwards compatibility with RStudio
 renv_project_clear <- function() {
   the$project_path <- NULL
+  # https://github.com/rstudio/renv/issues/2036
+  options(renv.project.path = NULL)
   Sys.unsetenv("RENV_PROJECT")
 }
 
diff --git a/R/zzz.R b/R/zzz.R
index cd211aa7c..faf8025e4 100644
--- a/R/zzz.R
+++ b/R/zzz.R
@@ -59,11 +59,16 @@
 
   # if an renv project already appears to be loaded, then re-activate
   # the sandbox now -- this is primarily done to support suspend and
-  # resume with RStudio where the user profile might not be run
+  # resume with RStudio where the user profile might not have been run,
+  # but RStudio would have restored options from the prior session
+  #
+  # https://github.com/rstudio/renv/issues/2036
   if (renv_rstudio_available()) {
     project <- getOption("renv.project.path")
-    if (!is.null(project))
+    if (!is.null(project)) {
+      renv_project_set(project)
       renv_sandbox_activate(project = project)
+    }
   }
 
   # make sure renv is unloaded on exit, so locks etc. are released