diff --git a/.changeset/current-directory-create.md b/.changeset/current-directory-create.md
new file mode 100644
index 00000000..cf4b2803
--- /dev/null
+++ b/.changeset/current-directory-create.md
@@ -0,0 +1,5 @@
+---
+"@tanstack/cli": minor
+---
+
+Support initializing a project in the current directory from the create prompt or by passing `.` as the project name.
diff --git a/packages/cli/src/cli.ts b/packages/cli/src/cli.ts
index 2a96e36c..797561d2 100644
--- a/packages/cli/src/cli.ts
+++ b/packages/cli/src/cli.ts
@@ -30,7 +30,7 @@ import {
   getTelemetryStatus,
   setTelemetryEnabled,
 } from './telemetry-config.js'
-import { TelemetryClient, createTelemetryClient } from './telemetry.js'
+import { createTelemetryClient } from './telemetry.js'
 
 import { promptForAddOns, promptForCreateOptions } from './options.js'
 import {
@@ -43,6 +43,7 @@ import { createUIEnvironment } from './ui-environment.js'
 import { DevWatchManager } from './dev-watch.js'
 
 import type { CliOptions } from './types.js'
+import type { TelemetryClient } from './telemetry.js'
 import type {
   FrameworkDefinition,
   Options,
@@ -500,8 +501,7 @@ export function cli({
       getResolvedCreateTelemetryProperties(normalizedOpts, options),
     )
 
-    normalizedOpts.targetDir =
-      options.targetDir || resolve(process.cwd(), projectName)
+    normalizedOpts.targetDir = resolve(normalizedOpts.targetDir)
 
     // Create the initial app with minimal output for dev watch mode
     console.log(chalk.bold('\ndev-watch'))
@@ -850,7 +850,11 @@ export function cli({
 
           let cameFromPrompts = false
           if (finalOptions) {
-            intro(`Creating a new ${appName} app in ${projectName}...`)
+            const createLocation =
+              resolve(finalOptions.targetDir) === resolve(process.cwd())
+                ? 'the current directory'
+                : finalOptions.projectName
+            intro(`Creating a new ${appName} app in ${createLocation}...`)
           } else {
             if (!wantsInteractiveMode) {
               throw new Error(
@@ -880,12 +884,10 @@ export function cli({
           ;(finalOptions as Options & { routerOnly?: boolean }).routerOnly =
             !!cliOptions.routerOnly
 
-          if (options.targetDir) {
-            finalOptions.targetDir = options.targetDir
-          } else if (finalOptions.targetDir) {
+          if (finalOptions.targetDir) {
             // Keep the normalized target dir.
-          } else if (projectName === '.') {
-            finalOptions.targetDir = resolve(process.cwd())
+          } else if (options.targetDir) {
+            finalOptions.targetDir = resolve(options.targetDir)
           } else {
             finalOptions.targetDir = resolve(process.cwd(), finalOptions.projectName)
           }
diff --git a/packages/cli/src/command-line.ts b/packages/cli/src/command-line.ts
index 08fd3dc7..c375e079 100644
--- a/packages/cli/src/command-line.ts
+++ b/packages/cli/src/command-line.ts
@@ -12,8 +12,7 @@ import {
 } from '@tanstack/create'
 
 import {
-  getCurrentDirectoryName,
-  sanitizePackageName,
+  resolveProjectLocation,
   validateProjectName,
 } from './utils.js'
 import type { Options } from '@tanstack/create'
@@ -406,21 +405,18 @@ export async function normalizeOptions(
     forcedDeployment?: string
   },
 ): Promise<Options | undefined> {
-  let projectName = (cliOptions.projectName ?? '').trim()
-  let targetDir: string
+  const projectLocation = resolveProjectLocation({
+    projectName: cliOptions.projectName,
+    targetDir: cliOptions.targetDir,
+  })
 
-  // Handle "." as project name - use current directory
-  if (projectName === '.') {
-    projectName = sanitizePackageName(getCurrentDirectoryName())
-    targetDir = resolve(process.cwd())
-  } else {
-    targetDir = resolve(process.cwd(), projectName)
-  }
-
-  if (!projectName && !opts?.disableNameCheck) {
+  if (!projectLocation && !opts?.disableNameCheck) {
     return undefined
   }
 
+  const projectName = projectLocation?.projectName ?? ''
+  const targetDir = projectLocation?.targetDir ?? resolve(process.cwd())
+
   if (projectName) {
     const { valid, error } = validateProjectName(projectName)
     if (!valid) {
diff --git a/packages/cli/src/options.ts b/packages/cli/src/options.ts
index 4b4d7d35..26cd8a3d 100644
--- a/packages/cli/src/options.ts
+++ b/packages/cli/src/options.ts
@@ -30,8 +30,7 @@ import {
 } from './command-line.js'
 
 import {
-  getCurrentDirectoryName,
-  sanitizePackageName,
+  resolveProjectLocation,
   validateProjectName,
 } from './utils.js'
 import type { Options } from '@tanstack/create'
@@ -68,21 +67,23 @@ export async function promptForCreateOptions(
     }
   }
 
-  // Validate project name
-  if (cliOptions.projectName) {
-    // Handle "." as project name - use sanitized current directory name
-    if (cliOptions.projectName === '.') {
-      options.projectName = sanitizePackageName(getCurrentDirectoryName())
-    } else {
-      options.projectName = cliOptions.projectName
-    }
-    const { valid, error } = validateProjectName(options.projectName)
-    if (!valid) {
-      console.error(error)
-      process.exit(1)
-    }
-  } else {
-    options.projectName = await getProjectName()
+  const projectLocation = resolveProjectLocation({
+    projectName: cliOptions.projectName ?? (await getProjectName()),
+    targetDir: cliOptions.targetDir,
+    emptyProjectNameIsCurrentDirectory: true,
+  })
+
+  if (!projectLocation) {
+    throw new Error('Project name or target directory is required')
+  }
+
+  options.projectName = projectLocation.projectName
+  options.targetDir = projectLocation.targetDir
+
+  const { valid, error } = validateProjectName(options.projectName)
+  if (!valid) {
+    console.error(error)
+    process.exit(1)
   }
 
   // Mode is always file-router (TanStack Start)
diff --git a/packages/cli/src/telemetry.ts b/packages/cli/src/telemetry.ts
index 29c202d2..ee7462f8 100644
--- a/packages/cli/src/telemetry.ts
+++ b/packages/cli/src/telemetry.ts
@@ -1,9 +1,9 @@
 import { version as nodeVersion } from 'node:process'
 
 import {
+  TELEMETRY_NOTICE_VERSION,
   getTelemetryStatus,
   markTelemetryNoticeSeen,
-  TELEMETRY_NOTICE_VERSION,
 } from './telemetry-config.js'
 
 import type { StatusEvent, StatusStepType } from '@tanstack/create'
diff --git a/packages/cli/src/ui-environment.ts b/packages/cli/src/ui-environment.ts
index b6489412..6b4456b5 100644
--- a/packages/cli/src/ui-environment.ts
+++ b/packages/cli/src/ui-environment.ts
@@ -10,9 +10,7 @@ import {
 import chalk from 'chalk'
 
 import { createDefaultEnvironment } from '@tanstack/create'
-import type { StatusEvent } from '@tanstack/create'
-
-import type { Environment } from '@tanstack/create'
+import type { Environment, StatusEvent } from '@tanstack/create'
 import type { TelemetryClient } from './telemetry.js'
 
 export function createUIEnvironment(
diff --git a/packages/cli/src/ui-prompts.ts b/packages/cli/src/ui-prompts.ts
index 65504ad3..5cf162c7 100644
--- a/packages/cli/src/ui-prompts.ts
+++ b/packages/cli/src/ui-prompts.ts
@@ -15,7 +15,10 @@ import {
   getAllAddOns,
 } from '@tanstack/create'
 
-import { validateProjectName } from './utils.js'
+import {
+  isCurrentDirectoryProjectNameInput,
+  validateProjectName,
+} from './utils.js'
 import type { AddOn, PackageManager } from '@tanstack/create'
 
 import type { Framework } from '@tanstack/create/dist/types/types.js'
@@ -29,7 +32,7 @@ export async function selectFramework(
       frameworks.find(
         (f) => f.id.toLowerCase() === defaultFrameworkId.toLowerCase(),
       )?.id) ||
-    frameworks[0]!.id
+    frameworks[0].id
 
   const selected = await select({
     message: 'Select framework:',
@@ -64,10 +67,10 @@ export async function selectInstall(): Promise<boolean> {
 export async function getProjectName(): Promise<string> {
   const value = await text({
     message: 'What would you like to name your project?',
-    defaultValue: 'my-app',
+    placeholder: 'Leave empty to initialize in the current directory',
     validate(value) {
-      if (!value) {
-        return 'Please enter a name'
+      if (isCurrentDirectoryProjectNameInput(value)) {
+        return
       }
 
       const { valid, error } = validateProjectName(value)
@@ -82,7 +85,7 @@ export async function getProjectName(): Promise<string> {
     process.exit(0)
   }
 
-  return value
+  return value.trim()
 }
 
 export async function selectPackageManager(): Promise<PackageManager> {
@@ -284,34 +287,21 @@ export async function promptForAddOnOptions(
     addOnOptions[addOnId] = {}
 
     for (const [optionName, option] of Object.entries(addOn.options)) {
-      if (option && typeof option === 'object' && 'type' in option) {
-        if (option.type === 'select') {
-          const selectOption = option as {
-            type: 'select'
-            label: string
-            description?: string
-            default: string
-            options: Array<{ value: string; label: string }>
-          }
-
-          const value = await select({
-            message: `${addOn.name}: ${selectOption.label}`,
-            options: selectOption.options.map((opt) => ({
-              value: opt.value,
-              label: opt.label,
-            })),
-            initialValue: selectOption.default,
-          })
-
-          if (isCancel(value)) {
-            cancel('Operation cancelled.')
-            process.exit(0)
-          }
-
-          addOnOptions[addOnId][optionName] = value
-        }
-        // Future option types can be added here
+      const value = await select({
+        message: `${addOn.name}: ${option.label}`,
+        options: option.options.map((opt) => ({
+          value: opt.value,
+          label: opt.label,
+        })),
+        initialValue: option.default,
+      })
+
+      if (isCancel(value)) {
+        cancel('Operation cancelled.')
+        process.exit(0)
       }
+
+      addOnOptions[addOnId][optionName] = value
     }
   }
 
diff --git a/packages/cli/src/utils.ts b/packages/cli/src/utils.ts
index 29e031ca..ab36e87d 100644
--- a/packages/cli/src/utils.ts
+++ b/packages/cli/src/utils.ts
@@ -1,6 +1,8 @@
-import { basename } from 'node:path'
+import { basename, resolve } from 'node:path'
 import validatePackageName from 'validate-npm-package-name'
 
+const FALLBACK_PACKAGE_NAME = 'tanstack-app'
+
 export function sanitizePackageName(name: string): string {
   return name
     .toLowerCase()
@@ -16,6 +18,64 @@ export function getCurrentDirectoryName(): string {
   return basename(process.cwd())
 }
 
+export function getDirectoryPackageName(directory: string): string {
+  return sanitizePackageName(basename(resolve(directory))) || FALLBACK_PACKAGE_NAME
+}
+
+export function getCurrentDirectoryPackageName(): string {
+  return getDirectoryPackageName(process.cwd())
+}
+
+export function isCurrentDirectoryProjectNameInput(name: string): boolean {
+  const normalized = name.trim()
+  return normalized === '' || normalized === '.'
+}
+
+export function resolveProjectLocation({
+  projectName,
+  targetDir,
+  emptyProjectNameIsCurrentDirectory = false,
+}: {
+  projectName?: string
+  targetDir?: string
+  emptyProjectNameIsCurrentDirectory?: boolean
+}): { projectName: string; targetDir: string } | undefined {
+  const normalizedProjectName = projectName?.trim() ?? ''
+
+  if (normalizedProjectName === '.') {
+    return {
+      projectName: getCurrentDirectoryPackageName(),
+      targetDir: resolve(process.cwd()),
+    }
+  }
+
+  if (normalizedProjectName) {
+    return {
+      projectName: normalizedProjectName,
+      targetDir: targetDir
+        ? resolve(targetDir)
+        : resolve(process.cwd(), normalizedProjectName),
+    }
+  }
+
+  if (targetDir) {
+    const resolvedTargetDir = resolve(targetDir)
+    return {
+      projectName: getDirectoryPackageName(resolvedTargetDir),
+      targetDir: resolvedTargetDir,
+    }
+  }
+
+  if (emptyProjectNameIsCurrentDirectory) {
+    return {
+      projectName: getCurrentDirectoryPackageName(),
+      targetDir: resolve(process.cwd()),
+    }
+  }
+
+  return undefined
+}
+
 export function validateProjectName(name: string) {
   const { validForNewPackages, validForOldPackages, errors, warnings } =
     validatePackageName(name)
diff --git a/packages/cli/tests/command-line.test.ts b/packages/cli/tests/command-line.test.ts
index b1187cf9..4842b7f3 100644
--- a/packages/cli/tests/command-line.test.ts
+++ b/packages/cli/tests/command-line.test.ts
@@ -70,6 +70,15 @@ describe('normalizeOptions', () => {
     expect(options?.targetDir).toBe(resolve(process.cwd()))
   })
 
+  it('should derive the project name from target-dir when no name is provided', async () => {
+    const options = await normalizeOptions({
+      targetDir: 'my-target-app',
+    })
+
+    expect(options?.projectName).toBe('my-target-app')
+    expect(options?.targetDir).toBe(resolve(process.cwd(), 'my-target-app'))
+  })
+
   it('should always enable typescript (file-router/TanStack Start requires it)', async () => {
     const options = await normalizeOptions({
       projectName: 'test',
diff --git a/packages/cli/tests/options.test.ts b/packages/cli/tests/options.test.ts
index a4b170cd..f6fb8fa0 100644
--- a/packages/cli/tests/options.test.ts
+++ b/packages/cli/tests/options.test.ts
@@ -1,4 +1,5 @@
 import { beforeEach, describe, it, expect, vi } from 'vitest'
+import { resolve } from 'node:path'
 
 import { promptForCreateOptions } from '../src/options'
 import {
@@ -9,6 +10,10 @@ import * as create from '@tanstack/create'
 
 import * as prompts from '../src/ui-prompts'
 import * as commandLine from '../src/command-line'
+import {
+  getCurrentDirectoryName,
+  sanitizePackageName,
+} from '../src/utils'
 
 import type { Framework } from '@tanstack/create'
 
@@ -107,6 +112,30 @@ describe('promptForCreateOptions', () => {
     expect(options?.projectName).toBe('hello')
   })
 
+  it('uses the current directory when the prompted project name is empty', async () => {
+    setBasicSpies()
+    vi.spyOn(prompts, 'getProjectName').mockImplementation(async () => '')
+
+    const options = await promptForCreateOptions(baseCliOptions, {})
+
+    expect(options?.projectName).toBe(
+      sanitizePackageName(getCurrentDirectoryName()),
+    )
+    expect(options?.targetDir).toBe(resolve(process.cwd()))
+  })
+
+  it('uses the current directory when the prompted project name is "."', async () => {
+    setBasicSpies()
+    vi.spyOn(prompts, 'getProjectName').mockImplementation(async () => '.')
+
+    const options = await promptForCreateOptions(baseCliOptions, {})
+
+    expect(options?.projectName).toBe(
+      sanitizePackageName(getCurrentDirectoryName()),
+    )
+    expect(options?.targetDir).toBe(resolve(process.cwd()))
+  })
+
   it('accept incoming project name', async () => {
     setBasicSpies()
 
diff --git a/packages/cli/tests/ui-prompts.test.ts b/packages/cli/tests/ui-prompts.test.ts
index e42ded69..2957d844 100644
--- a/packages/cli/tests/ui-prompts.test.ts
+++ b/packages/cli/tests/ui-prompts.test.ts
@@ -28,6 +28,24 @@ describe('getProjectName', () => {
     expect(projectName).toBe('my-app')
   })
 
+  it('should allow blank and "." project names for current directory creation', async () => {
+    const textSpy = vi.spyOn(clack, 'text').mockImplementation(async () => '')
+    vi.spyOn(clack, 'isCancel').mockImplementation(() => false)
+
+    const projectName = await getProjectName()
+    const textOptions = textSpy.mock.calls[0]![0] as {
+      placeholder?: string
+      validate?: (value: string) => string | undefined
+    }
+
+    expect(projectName).toBe('')
+    expect(textOptions.placeholder).toBe(
+      'Leave empty to initialize in the current directory',
+    )
+    expect(textOptions.validate?.('')).toBeUndefined()
+    expect(textOptions.validate?.('.')).toBeUndefined()
+  })
+
   it('should exit on cancel', async () => {
     vi.spyOn(clack, 'text').mockImplementation(async () => 'Cancelled')
     vi.spyOn(clack, 'isCancel').mockImplementation(() => true)