diff --git a/lua/competitest/config.lua b/lua/competitest/config.lua
index b8755fb..aec8e74 100644
--- a/lua/competitest/config.lua
+++ b/lua/competitest/config.lua
@@ -279,6 +279,8 @@ function M.update_config_table(cfg_tbl, opts)
 			new_config.run_command[lang].args = cmd.args
 		end
 	end
+	-- Normalize path-related options for global setup configuration
+	new_config = M.normalize_path_config(new_config)
 	return new_config
 end
 
@@ -290,6 +292,43 @@ M.current_setup = nil
 ---@type table<integer, competitest.Config>
 M.buffer_configs = {}
 
+---Normalize path-related configuration options
+---Expands ~ to home directory in path configuration options
+---@param cfg competitest.Config configuration to normalize
+---@return competitest.Config # configuration with normalized paths
+function M.normalize_path_config(cfg)
+	local utils = require("competitest.utils")
+
+	-- These options can contain absolute or ~ paths that should be expanded
+	-- They are NOT relative to current file, so we normalize them during config loading
+	local absolute_path_options = {
+		"received_problems_path",
+		"received_contests_directory",
+		"received_contests_problems_path",
+	}
+
+	for _, opt in ipairs(absolute_path_options) do
+		if cfg[opt] and type(cfg[opt]) == "string" then
+			cfg[opt] = utils.normalize_path(cfg[opt])
+		end
+	end
+
+	-- Handle template_file which can be false, string, or table
+	if cfg.template_file then
+		if type(cfg.template_file) == "string" then
+			cfg.template_file = utils.normalize_path(cfg.template_file)
+		elseif type(cfg.template_file) == "table" then
+			for ext, path in pairs(cfg.template_file) do
+				if type(path) == "string" then
+					cfg.template_file[ext] = utils.normalize_path(path)
+				end
+			end
+		end
+	end
+
+	return cfg
+end
+
 ---Load local configuration for given directory
 ---@param directory string
 ---@return competitest.Config? # local configuration, or `nil` when it's absent or incorrect
@@ -305,6 +344,8 @@ function M.load_local_config(directory)
 				utils.notify("load_buffer_config: '" .. config_file .. "' doesn't return a table.")
 				return nil
 			end
+			-- Normalize path-related configuration options
+			local_config = M.normalize_path_config(local_config)
 			return local_config
 		end
 		directory = vim.fn.fnamemodify(directory, ":h")
diff --git a/lua/competitest/receive.lua b/lua/competitest/receive.lua
index 5662d16..ef4ba48 100644
--- a/lua/competitest/receive.lua
+++ b/lua/competitest/receive.lua
@@ -462,7 +462,7 @@ function storage_utils.store_received_task_config(filepath, confirm_overwriting,
 	end
 
 	local testcases = require("competitest.testcases")
-	local tcdir = file_directory .. "/" .. cfg.testcases_directory .. "/"
+	local tcdir = utils.resolve_config_path(cfg.testcases_directory, file_directory) .. "/"
 	if cfg.testcases_use_single_file then
 		local single_file_path = tcdir .. utils.eval_string(filepath, cfg.testcases_single_file_format)
 		testcases.single_file.write(single_file_path, tctbl)
diff --git a/lua/competitest/runner.lua b/lua/competitest/runner.lua
index df999ea..fc0f0ab 100644
--- a/lua/competitest/runner.lua
+++ b/lua/competitest/runner.lua
@@ -103,8 +103,8 @@ function TCRunner:new(bufnr)
 		bufnr = bufnr,
 		cc = compile_command,
 		rc = run_command,
-		compile_directory = filedir .. buf_cfg.compile_directory .. "/",
-		running_directory = filedir .. buf_cfg.running_directory .. "/",
+		compile_directory = utils.resolve_config_path(buf_cfg.compile_directory, filedir) .. "/",
+		running_directory = utils.resolve_config_path(buf_cfg.running_directory, filedir) .. "/",
 		tcdata = {},
 		compile = compile_command ~= nil,
 		next_tc = 1,
diff --git a/lua/competitest/testcases.lua b/lua/competitest/testcases.lua
index 26cb506..be48c91 100644
--- a/lua/competitest/testcases.lua
+++ b/lua/competitest/testcases.lua
@@ -207,7 +207,8 @@ end
 ---@return string # absolute path of testcases directory
 local function buf_get_testcases_path(bufnr)
 	return vim.api.nvim_buf_call(bufnr, function()
-		return vim.fn.expand("%:p:h") .. "/" .. gbc(bufnr).testcases_directory .. "/"
+		local base_dir = vim.fn.expand("%:p:h")
+		return utils.resolve_config_path(gbc(bufnr).testcases_directory, base_dir) .. "/"
 	end)
 end
 
diff --git a/lua/competitest/utils.lua b/lua/competitest/utils.lua
index 644f09e..13c84eb 100644
--- a/lua/competitest/utils.lua
+++ b/lua/competitest/utils.lua
@@ -113,6 +113,45 @@ function M.buf_eval_string(bufnr, str, tcnum)
 	return M.eval_string(vim.api.nvim_buf_get_name(bufnr), str)
 end
 
+---Expand and normalize a file path
+---Expands `~` to home directory and converts to absolute path
+---@param path string file path to expand and normalize
+---@return string # expanded and normalized absolute path
+function M.normalize_path(path)
+	-- Expand ~ to home directory
+	local expanded_path = path
+	if string.sub(path, 1, 1) == "~" then
+		expanded_path = luv.os_homedir() .. string.sub(path, 2)
+	end
+
+	-- Convert to absolute path
+	local absolute_path = vim.fn.fnamemodify(expanded_path, ":p")
+
+	-- Normalize path (resolve . and .., remove redundant separators)
+	local normalized = luv.fs_realpath(absolute_path)
+	return normalized or absolute_path
+end
+
+---Resolve a path configuration option that can be relative or absolute
+---If path starts with ~ or /, treat it as absolute and expand ~
+---Otherwise, return it as-is to be treated as relative to base directory
+---@param path string path from configuration
+---@param base_dir string base directory for relative paths
+---@return string # resolved path
+function M.resolve_config_path(path, base_dir)
+	if not path or path == "" then
+		return base_dir
+	end
+
+	-- If path starts with ~ or /, it's absolute
+	if string.sub(path, 1, 1) == "~" or string.sub(path, 1, 1) == "/" then
+		return M.normalize_path(path)
+	end
+
+	-- Otherwise, it's relative to base_dir
+	return base_dir .. "/" .. path
+end
+
 ---Returns `true` if the given file exists, `false` otherwise
 ---@param filepath string
 ---@return boolean