diff --git a/packages/compat/src/v1-app.ts b/packages/compat/src/v1-app.ts
index 10ade69c9..db93f9372 100644
--- a/packages/compat/src/v1-app.ts
+++ b/packages/compat/src/v1-app.ts
@@ -477,7 +477,7 @@ export default class V1App {
     };
 
     let nestedInput = buildFunnel(this.combinedStyles(addonTrees), { destDir: 'app/styles' });
-    let styles = this.preprocessors.preprocessCss(nestedInput, 'app/styles', '/assets', options);
+    let styles = this.preprocessors.preprocessCss(nestedInput, '/app/styles', '/assets', options);
 
     return new AddToTree(styles, outputPath => {
       let addonMeta: AddonMeta = {
diff --git a/tests/fixtures/preprocess-addon/index.js b/tests/fixtures/preprocess-addon/index.js
new file mode 100644
index 000000000..a23cc849a
--- /dev/null
+++ b/tests/fixtures/preprocess-addon/index.js
@@ -0,0 +1,46 @@
+'use strict';
+
+const Filter = require('broccoli-persistent-filter');
+const funnel = require('broccoli-funnel');
+const { join } = require('path').posix;
+
+class Awk extends Filter {
+  constructor(inputNode, searchReplaceObj) {
+    super(inputNode, {});
+    this.searchReplaceObj = searchReplaceObj;
+  }
+
+  processString(content) {
+    let modifiedContent = content;
+
+    Object.entries(this.searchReplaceObj).forEach(([search, replace]) => {
+      modifiedContent = modifiedContent.replace(search, replace);
+    });
+
+    return modifiedContent;
+  }
+}
+
+module.exports = {
+  name: require('./package').name,
+
+  setupPreprocessorRegistry(type, registry) {
+    registry.add('css', {
+      name: this.name,
+      ext: 'css',
+      toTree: (tree, inputPath, outputPath) => {
+        return funnel(new Awk(tree, { '%%%': inputPath === '/app/styles' ? 'red' : 'blue' }), {
+          getDestinationPath(relativePath) {
+            let relativePathWithPrefix = `/${relativePath}`;
+
+            if (relativePathWithPrefix === `${inputPath}/app.css`) {
+              return join(outputPath, 'app-template.css');
+            }
+
+            return join(outputPath, relativePathWithPrefix.replace(inputPath, ''));
+          },
+        });
+      },
+    });
+  },
+};
diff --git a/tests/scenarios/package.json b/tests/scenarios/package.json
index 0277b47ae..3a67a0bb5 100644
--- a/tests/scenarios/package.json
+++ b/tests/scenarios/package.json
@@ -23,27 +23,30 @@
     "bootstrap": "^4.3.1",
     "broccoli-funnel": "^3.0.5",
     "broccoli-merge-trees": "^3.0.2",
+    "broccoli-persistent-filter": "^3.1.2",
     "ember-bootstrap": "^4.6.3",
-    "ember-cli-latest": "npm:ember-cli@latest",
-    "ember-cli-beta": "npm:ember-cli@beta",
     "ember-cli-3.16": "npm:ember-cli@~3.16.0",
     "ember-cli-3.20": "npm:ember-cli@~3.20.0",
     "ember-cli-3.24": "npm:ember-cli@~3.24.0",
+    "ember-cli-beta": "npm:ember-cli@beta",
+    "ember-cli-latest": "npm:ember-cli@latest",
     "ember-cli-fastboot": "^2.2.3",
+    "ember-composable-helpers": "^4.4.1",
     "ember-data-3.16": "npm:ember-data@~3.16.0",
     "ember-data-3.20": "npm:ember-data@~3.20.0",
     "ember-data-3.24": "npm:ember-data@~3.24.0",
     "ember-data-latest": "npm:ember-data@latest",
+    "ember-engines": "^0.8.16",
+    "ember-inline-svg": "^0.2.1",
     "ember-source-latest": "npm:ember-source@latest",
     "ember-source-beta": "npm:ember-source@beta",
     "ember-source-3.16": "npm:ember-source@~3.16.0",
     "ember-source-3.20": "npm:ember-source@~3.20.0",
     "ember-source-3.24": "npm:ember-source@~3.24.0",
-    "fastboot-addon": "link:../../test-packages/fastboot-addon",
-    "ember-engines": "^0.8.16",
-    "ember-inline-svg": "^0.2.1",
-    "ember-composable-helpers": "^4.4.1",
-    "ember-truth-helpers": "^3.0.0"
+    "ember-source-beta": "npm:ember-source@beta",
+    "ember-source-latest": "npm:ember-source@latest",
+    "ember-truth-helpers": "^3.0.0",
+    "fastboot-addon": "link:../../test-packages/fastboot-addon"
   },
   "volta": {
     "node": "14.16.1",
diff --git a/tests/scenarios/preprocess-test.ts b/tests/scenarios/preprocess-test.ts
new file mode 100644
index 000000000..824f498bb
--- /dev/null
+++ b/tests/scenarios/preprocess-test.ts
@@ -0,0 +1,40 @@
+import { appScenarios } from './scenarios';
+import { PreparedApp, Project } from 'scenario-tester';
+import QUnit from 'qunit';
+import merge from 'lodash/merge';
+import { loadFromFixtureData } from './helpers';
+import { dirname, join } from 'path';
+import fs from 'fs';
+const { module: Qmodule, test } = QUnit;
+
+appScenarios
+  .map('preprocess', project => {
+    let preprocessAddon = Project.fromDir(dirname(require.resolve('../addon-template/package.json')), {
+      linkDeps: true,
+    });
+
+    merge(preprocessAddon.files, loadFromFixtureData('preprocess-addon'));
+    preprocessAddon.linkDependency('broccoli-funnel', { baseDir: __dirname });
+    preprocessAddon.linkDependency('broccoli-persistent-filter', { baseDir: __dirname });
+    preprocessAddon.pkg.name = 'preprocess-addon';
+
+    project.addDevDependency(preprocessAddon);
+    merge(project.files, {
+      app: {
+        styles: {
+          'app.css': `body { background: %%%; }`,
+        },
+      },
+    });
+  })
+  .forEachScenario(scenario => {
+    Qmodule(scenario.name, function () {
+      test(`yarn test`, async function (assert) {
+        let app: PreparedApp = await scenario.prepare();
+        await app.execute('node ./node_modules/ember-cli/bin/ember b');
+
+        const data = fs.readFileSync(join(app.dir, 'dist', 'assets', 'app-template.css'), 'utf8');
+        assert.equal(data, 'body { background: red; }');
+      });
+    });
+  });