diff --git a/crates/bashkit/src/builtins/archive.rs b/crates/bashkit/src/builtins/archive.rs
index 1606a98d..bc0b4ff3 100644
--- a/crates/bashkit/src/builtins/archive.rs
+++ b/crates/bashkit/src/builtins/archive.rs
@@ -165,7 +165,15 @@ impl Builtin for Tar {
                     2,
                 ));
             }
-            create_tar(&ctx, &archive_name, &files, verbose, gzip).await
+            create_tar(
+                &ctx,
+                &archive_name,
+                &files,
+                verbose,
+                gzip,
+                change_dir.as_deref(),
+            )
+            .await
         } else if extract {
             extract_tar(
                 &ctx,
@@ -192,12 +200,19 @@ async fn create_tar(
     files: &[String],
     verbose: bool,
     gzip: bool,
+    change_dir: Option<&str>,
 ) -> Result<ExecResult> {
     let mut output_data: Vec<u8> = Vec::new();
     let mut verbose_output = String::new();
 
+    let base_dir = if let Some(dir) = change_dir {
+        resolve_path(ctx.cwd, dir)
+    } else {
+        ctx.cwd.clone()
+    };
+
     for file in files {
-        let path = resolve_path(ctx.cwd, file);
+        let path = resolve_path(&base_dir, file);
 
         if !ctx.fs.exists(&path).await.unwrap_or(false) {
             return Ok(ExecResult::err(
diff --git a/crates/bashkit/tests/spec_cases/bash/tar_create.test.sh b/crates/bashkit/tests/spec_cases/bash/tar_create.test.sh
new file mode 100644
index 00000000..6793d067
--- /dev/null
+++ b/crates/bashkit/tests/spec_cases/bash/tar_create.test.sh
@@ -0,0 +1,29 @@
+# tar create tests
+# Tests tar -c with VFS files and -C flag (issue #1118)
+
+### tar_create_basic
+# tar -c creates an archive from VFS files
+echo "content" > /tmp/test.txt
+tar -c -f /tmp/test.tar /tmp/test.txt
+test -f /tmp/test.tar && echo "archive created"
+### expect
+archive created
+### end
+
+### tar_create_with_C_flag
+# tar -c -C resolves files relative to the given directory
+echo "hello" > /tmp/file.txt
+tar -c -f /tmp/out.tar -C /tmp file.txt
+test -f /tmp/out.tar && echo "archive created"
+### expect
+archive created
+### end
+
+### tar_create_gzip
+# tar -czf creates a gzip archive
+echo "data" > /tmp/gz.txt
+tar -c -z -f /tmp/gz.tar.gz -C /tmp gz.txt
+test -f /tmp/gz.tar.gz && echo "archive created"
+### expect
+archive created
+### end
diff --git a/crates/bashkit/tests/threat_model_tests.rs b/crates/bashkit/tests/threat_model_tests.rs
index 3f89c557..55ce8227 100644
--- a/crates/bashkit/tests/threat_model_tests.rs
+++ b/crates/bashkit/tests/threat_model_tests.rs
@@ -2404,7 +2404,7 @@ mod archive_security {
     /// TM-DOS-008: Tar with many files — FS file count limit blocks extraction
     #[tokio::test]
     async fn threat_tar_bomb_many_files_blocked() {
-        let limits = FsLimits::new().max_file_count(20);
+        let limits = FsLimits::new().max_file_count(30);
         let fs = Arc::new(InMemoryFs::with_limits(limits));
         let mut bash = Bash::builder().fs(fs).build();