diff --git a/packages/create-python-app-core/src/create_python_app_core/paths.py b/packages/create-python-app-core/src/create_python_app_core/paths.py
index dbba7bd..dd270c2 100644
--- a/packages/create-python-app-core/src/create_python_app_core/paths.py
+++ b/packages/create-python-app-core/src/create_python_app_core/paths.py
@@ -7,6 +7,7 @@
 from dataclasses import dataclass
 from pathlib import Path
 from urllib.parse import parse_qs, unquote, urlparse
+from urllib.request import url2pathname
 
 from create_python_app_core.errors import CpaError
 
@@ -54,10 +55,14 @@ def resolve_source(spec: str, *, cache_dir: Path | None = None) -> ResolvedSourc
     if spec.startswith("file://"):
         parsed = urlparse(spec)
         query = parse_qs(parsed.query)
-        path = Path(unquote(parsed.path))
+        raw_path = unquote(parsed.path or "/")
         if parsed.netloc and parsed.netloc != "localhost":
             # file://host/path — uncommon; treat netloc+path
-            path = Path(f"/{parsed.netloc}{unquote(parsed.path)}")
+            raw_path = f"//{parsed.netloc}{raw_path}"
+        path_text = url2pathname(raw_path)
+        if os.name == "nt" and re.match(r"^/[A-Za-z]:", path_text):
+            path_text = path_text[1:]
+        path = Path(path_text)
         subdir = (query.get("subdir") or [None])[0]
         return ResolvedSource(
             kind="file",
diff --git a/packages/create-python-app-core/tests/test_paths.py b/packages/create-python-app-core/tests/test_paths.py
index bd78228..102eeb1 100644
--- a/packages/create-python-app-core/tests/test_paths.py
+++ b/packages/create-python-app-core/tests/test_paths.py
@@ -1,3 +1,4 @@
+import os
 from pathlib import Path
 
 import pytest
@@ -18,6 +19,16 @@ def test_file_url(tmp_path: Path) -> None:
     assert src.subdir == "templates/foo"
 
 
+def test_windows_drive_letter_file_url() -> None:
+    if os.name != "nt":
+        pytest.skip("Windows path handling is only relevant on Windows")
+
+    src = resolve_source("file:///E:/create-python/cpa-templates?subdir=templates/foo")
+    assert src.kind == "file"
+    assert src.subdir == "templates/foo"
+    assert src.local_path == Path(r"E:\create-python\cpa-templates")
+
+
 def test_github_url_with_ref() -> None:
     src = resolve_source("https://github.com/org/repo?ref=main&subdir=templates/x")
     assert src.kind == "github"