diff --git a/.github/workflows/Action-Test.yml b/.github/workflows/Action-Test.yml
index 4e9b548..d742253 100644
--- a/.github/workflows/Action-Test.yml
+++ b/.github/workflows/Action-Test.yml
@@ -38,3 +38,7 @@ jobs:
           } else {
             throw "Helpers module not found!"
           }
+
+      - name: Run Install-PSModule regression tests
+        shell: pwsh
+        run: ./tests/Install-PSModule.Tests.ps1
diff --git a/src/Helpers/Helpers.psm1 b/src/Helpers/Helpers.psm1
index 5ddc159..a4bda63 100644
--- a/src/Helpers/Helpers.psm1
+++ b/src/Helpers/Helpers.psm1
@@ -313,11 +313,33 @@ function Install-PSModule {
     Write-Host '::group::Resolving dependencies'
     Resolve-PSModuleDependency -ManifestFilePath $manifestFilePath
     Write-Host '::endgroup::'
+    # Install into a version folder that matches the manifest's ModuleVersion so PowerShell
+    # accepts the module. Fall back to the 999.0.0 placeholder only when the manifest is
+    # unstamped (e.g. a build that opted out of version resolution). Validate the version as a
+    # real [version] so a malformed manifest cannot inject path separators/traversal into the
+    # install path.
+    $manifestVersion = (Import-PowerShellDataFile -Path $manifestFilePath).ModuleVersion
+    if ([string]::IsNullOrWhiteSpace($manifestVersion)) {
+        $moduleVersion = '999.0.0'
+    } else {
+        $parsedVersion = $null
+        if (-not [version]::TryParse($manifestVersion, [ref] $parsedVersion)) {
+            throw "ModuleVersion '$manifestVersion' in [$manifestFilePath] is not a valid version."
+        }
+        $moduleVersion = $parsedVersion.ToString()
+    }
     $PSModulePath = $env:PSModulePath -split [System.IO.Path]::PathSeparator | Select-Object -First 1
-    $codePath = New-Item -Path "$PSModulePath/$moduleName/999.0.0" -ItemType Directory -Force | Select-Object -ExpandProperty FullName
+    $moduleInstallRoot = Join-Path -Path $PSModulePath -ChildPath $moduleName
+    $moduleInstallPath = Join-Path -Path $moduleInstallRoot -ChildPath $moduleVersion
+    $codePath = New-Item -Path $moduleInstallPath -ItemType Directory -Force |
+        Select-Object -ExpandProperty FullName
     Copy-Item -Path "$Path/*" -Destination $codePath -Recurse -Force
     Write-Host '::group::Importing module'
-    Import-Module -Name $moduleName -Verbose
+    # Import the freshly-installed copy explicitly by its manifest path (with -Force) so it is
+    # not shadowed by another version of the same module that may already be loaded or present
+    # on $env:PSModulePath.
+    $installedManifestPath = Join-Path -Path $codePath -ChildPath "$moduleName.psd1"
+    Import-Module -Name $installedManifestPath -Force -Global -Verbose
     Write-Host '::endgroup::'
     if ($PassThru) {
         return $codePath
diff --git a/tests/Install-PSModule.Tests.ps1 b/tests/Install-PSModule.Tests.ps1
new file mode 100644
index 0000000..0de1255
--- /dev/null
+++ b/tests/Install-PSModule.Tests.ps1
@@ -0,0 +1,132 @@
+[CmdletBinding()]
+param()
+
+$ErrorActionPreference = 'Stop'
+
+$repoRoot = Split-Path -Path $PSScriptRoot -Parent
+$helpersManifestPath = Join-Path -Path $repoRoot -ChildPath 'src/Helpers/Helpers.psd1'
+$originalPSModulePath = $env:PSModulePath
+$testRoot = Join-Path -Path ([System.IO.Path]::GetTempPath()) -ChildPath "Install-PSModule-$([guid]::NewGuid())"
+
+$assert = {
+    param(
+        [bool] $Condition,
+        [string] $Message
+    )
+
+    if (-not $Condition) {
+        throw $Message
+    }
+}
+
+try {
+    $testPSModulePath = Join-Path -Path $testRoot -ChildPath 'PSModules'
+    New-Item -Path $testPSModulePath -ItemType Directory -Force | Out-Null
+    $env:PSModulePath = $testPSModulePath + [System.IO.Path]::PathSeparator + $originalPSModulePath
+
+    Remove-Module -Name Helpers -Force -ErrorAction SilentlyContinue
+    Import-Module -Name $helpersManifestPath -Force
+
+    $realVersionSourcePath = Join-Path -Path $testRoot -ChildPath 'RealVersionModule'
+    New-Item -Path $realVersionSourcePath -ItemType Directory -Force | Out-Null
+    "function Get-RealVersionValue { 'real-1.2.3' }" |
+        Set-Content -Path (Join-Path -Path $realVersionSourcePath -ChildPath 'RealVersionModule.psm1')
+    @'
+@{
+    RootModule = 'RealVersionModule.psm1'
+    ModuleVersion = '1.2.3'
+    GUID = '11111111-1111-1111-1111-111111111111'
+    Author = 'Test'
+    FunctionsToExport = @('Get-RealVersionValue')
+}
+'@ | Set-Content -Path (Join-Path -Path $realVersionSourcePath -ChildPath 'RealVersionModule.psd1')
+
+    $realVersionInstalledPath = Install-PSModule -Path $realVersionSourcePath -PassThru
+    $realVersionInstallRoot = Join-Path -Path $testPSModulePath -ChildPath 'RealVersionModule'
+    $expectedRealVersionPath = Join-Path -Path $realVersionInstallRoot -ChildPath '1.2.3'
+    $unexpectedPlaceholderPath = Join-Path -Path $realVersionInstallRoot -ChildPath '999.0.0'
+    $realVersionManifestPath = Join-Path -Path $expectedRealVersionPath -ChildPath 'RealVersionModule.psd1'
+    $returnedRealVersionPath = [System.IO.Path]::GetFullPath($realVersionInstalledPath)
+    $expectedRealVersionFullPath = [System.IO.Path]::GetFullPath($expectedRealVersionPath)
+
+    & $assert ($returnedRealVersionPath -eq $expectedRealVersionFullPath) 'Expected Install-PSModule to return the real version path.'
+    & $assert (Test-Path -Path $realVersionManifestPath) 'Expected the module to be installed under version 1.2.3.'
+    & $assert (-not (Test-Path -Path $unexpectedPlaceholderPath)) 'Did not expect stamped modules to be installed under 999.0.0.'
+    & $assert ((Get-RealVersionValue) -eq 'real-1.2.3') 'Expected the real-version module command to be imported.'
+
+    Remove-Module -Name RealVersionModule -Force -ErrorAction SilentlyContinue
+
+    $shadowInstallRoot = Join-Path -Path $testPSModulePath -ChildPath 'ShadowModule'
+    $oldShadowInstallPath = Join-Path -Path $shadowInstallRoot -ChildPath '999.0.0'
+    New-Item -Path $oldShadowInstallPath -ItemType Directory -Force | Out-Null
+    "function Get-ShadowValue { 'old-999' }" |
+        Set-Content -Path (Join-Path -Path $oldShadowInstallPath -ChildPath 'ShadowModule.psm1')
+    @'
+@{
+    RootModule = 'ShadowModule.psm1'
+    ModuleVersion = '999.0.0'
+    GUID = '22222222-2222-2222-2222-222222222222'
+    Author = 'Test'
+    FunctionsToExport = @('Get-ShadowValue')
+}
+'@ | Set-Content -Path (Join-Path -Path $oldShadowInstallPath -ChildPath 'ShadowModule.psd1')
+
+    $shadowSourcePath = Join-Path -Path $testRoot -ChildPath 'ShadowModule'
+    New-Item -Path $shadowSourcePath -ItemType Directory -Force | Out-Null
+    "function Get-ShadowValue { 'new-2.0.0' }" |
+        Set-Content -Path (Join-Path -Path $shadowSourcePath -ChildPath 'ShadowModule.psm1')
+    @'
+@{
+    RootModule = 'ShadowModule.psm1'
+    ModuleVersion = '2.0.0'
+    GUID = '33333333-3333-3333-3333-333333333333'
+    Author = 'Test'
+    FunctionsToExport = @('Get-ShadowValue')
+}
+'@ | Set-Content -Path (Join-Path -Path $shadowSourcePath -ChildPath 'ShadowModule.psd1')
+
+    $oldShadowManifestPath = Join-Path -Path $oldShadowInstallPath -ChildPath 'ShadowModule.psd1'
+    Import-Module -Name $oldShadowManifestPath -Force
+    & $assert ((Get-ShadowValue) -eq 'old-999') 'Expected the fixture to preload the placeholder module.'
+
+    $shadowInstalledPath = Install-PSModule -Path $shadowSourcePath -PassThru
+    $expectedShadowPath = Join-Path -Path $shadowInstallRoot -ChildPath '2.0.0'
+    $shadowCommand = Get-Command -Name Get-ShadowValue
+    $returnedShadowPath = [System.IO.Path]::GetFullPath($shadowInstalledPath)
+    $expectedShadowFullPath = [System.IO.Path]::GetFullPath($expectedShadowPath)
+
+    & $assert ($returnedShadowPath -eq $expectedShadowFullPath) 'Expected the shadowed module under version 2.0.0.'
+    & $assert ((Get-ShadowValue) -eq 'new-2.0.0') 'Expected the real-version command to replace the preloaded 999.0.0 command.'
+    & $assert ($shadowCommand.Version.ToString() -eq '2.0.0') 'Expected command resolution to point at version 2.0.0.'
+
+    Remove-Module -Name ShadowModule -Force -ErrorAction SilentlyContinue
+
+    $badSourcePath = Join-Path -Path $testRoot -ChildPath 'BadModule'
+    New-Item -Path $badSourcePath -ItemType Directory -Force | Out-Null
+    "function Get-BadValue { 'bad' }" |
+        Set-Content -Path (Join-Path -Path $badSourcePath -ChildPath 'BadModule.psm1')
+    @'
+@{
+    RootModule = 'BadModule.psm1'
+    ModuleVersion = '1.0/bad'
+    GUID = '44444444-4444-4444-4444-444444444444'
+    Author = 'Test'
+    FunctionsToExport = @('Get-BadValue')
+}
+'@ | Set-Content -Path (Join-Path -Path $badSourcePath -ChildPath 'BadModule.psd1')
+
+    $invalidVersionRejected = $false
+    try {
+        Install-PSModule -Path $badSourcePath
+    } catch {
+        $invalidVersionRejected = $_.Exception.Message -like '*is not a valid version*'
+    }
+
+    & $assert $invalidVersionRejected 'Expected malformed ModuleVersion values to be rejected.'
+} finally {
+    $env:PSModulePath = $originalPSModulePath
+    Remove-Module -Name Helpers, RealVersionModule, ShadowModule, BadModule -Force -ErrorAction SilentlyContinue
+    if (Test-Path -Path $testRoot) {
+        Remove-Item -Path $testRoot -Recurse -Force
+    }
+}