diff --git a/.gitignore b/.gitignore
index bc05c9305..80489aaf3 100644
--- a/.gitignore
+++ b/.gitignore
@@ -9,4 +9,5 @@ hash2
 .metals
 .vscode
 unformatted-*.backup.scala
-.scala-build
\ No newline at end of file
+.scala-build
+test/semanticdb/tempsrc
\ No newline at end of file
diff --git a/src/java/io/bazel/rulesscala/scalac/ScalacWorker.java b/src/java/io/bazel/rulesscala/scalac/ScalacWorker.java
index 57bc9fb55..6cca6e6b3 100644
--- a/src/java/io/bazel/rulesscala/scalac/ScalacWorker.java
+++ b/src/java/io/bazel/rulesscala/scalac/ScalacWorker.java
@@ -37,10 +37,14 @@ public static void main(String[] args) throws Exception {
   public void work(String[] args) throws Exception {
     CompileOptions ops = new CompileOptions(args);
 
-    Path outputJar = Paths.get(ops.outputName);
-    Path workdir = ensureEmptyWorkDirectory(outputJar, ops.currentTarget);
-    Path classes = Files.createDirectories(workdir.resolve("classes"));
-    Path sources = Files.createDirectories(workdir.resolve("sources"));
+    Path outputJarPath = Paths.get(ops.outputName);
+
+    Path scalacOutPath = clearWorkDirectory(outputJarPath, ops.currentTarget, "_scalac");
+    clearWorkDirectory(outputJarPath, ops.currentTarget, "_semanticdb");
+
+    Files.createDirectories(scalacOutPath);
+    Path classes = Files.createDirectories(scalacOutPath.resolve("classes"));
+    Path sources = Files.createDirectories(scalacOutPath.resolve("sources"));
 
     List<File> jarFiles = extractSourceJars(ops, sources);
     List<File> scalaJarFiles = filterFilesByExtension(jarFiles, ".scala");
@@ -80,20 +84,20 @@ public void work(String[] args) throws Exception {
 
     /** Now build the output jar */
     String[] jarCreatorArgs = {
-        "-m", ops.manifestPath, "-t", ops.stampLabel, outputJar.toString(), classes.toString()
+        "-m", ops.manifestPath, "-t", ops.stampLabel, outputJarPath.toString(), classes.toString()
     };
     JarCreator.main(jarCreatorArgs);
   }
 
-  private static Path ensureEmptyWorkDirectory(Path output, String label) throws IOException {
+  private static Path clearWorkDirectory(Path output, String label, String folderName) throws IOException {
     String base = label.substring(label.lastIndexOf(':') + 1);
-    Path dir = output.resolveSibling("_scalac").resolve(base);
+    Path dir = output.resolveSibling(folderName).resolve(base);
 
     if (Files.exists(dir)) {
       deleteRecursively(dir);
     }
 
-    return Files.createDirectories(dir);
+    return dir;
   }
 
   private static String[] collectSrcJarSources(
diff --git a/test/semanticdb/BUILD b/test/semanticdb/BUILD
index 5cec87149..b8db06e57 100644
--- a/test/semanticdb/BUILD
+++ b/test/semanticdb/BUILD
@@ -32,7 +32,7 @@ toolchain(
 
 scala_library(
     name = "all_lib",
-    srcs = glob(["**/*.scala"]),
+    srcs = glob(["*.scala"]),
 )
 
 semanticdb_vars_script(
@@ -49,3 +49,13 @@ semanticdb_vars_script(
     name = "semantic_provider_vars_empty",
     dep = "empty_lib",
 )
+
+scala_library(
+    name = "lib_with_tempsrc",
+    srcs = glob(
+        [
+            "*.scala",
+            "tempsrc/*.scala",  #Include src files that are dynamically generated by the test_semanticdb.sh (tmpsrc should be in .gitignore so its contents don't get checked in)
+        ],
+    ),
+)
diff --git a/test/shell/test_semanticdb.sh b/test/shell/test_semanticdb.sh
index 359c825a8..351162f09 100755
--- a/test/shell/test_semanticdb.sh
+++ b/test/shell/test_semanticdb.sh
@@ -134,10 +134,51 @@ test_no_semanticdb() {
   fi
 }
 
+
+test_semanticdb_handles_removed_sourcefiles() {
+  #Ensure absense of bug where bazel failed with 'access denied' on Windows when a source file was removed.
+  
+  #First add the new scala file, build it, then remove the new scala file, and ensure it builds.
+  set -e
+
+  local toolchainArg=--extra_toolchains=//test/semanticdb:semanticdb_nobundle_toolchain
+  local newfile_dir=test/semanticdb/tempsrc
+  local newfilename=D.scala
+  local newfilepath=$newfile_dir/$newfilename
+  local rule_label=//test/semanticdb:lib_with_tempsrc
+
+  #add new source file and build it
+  mkdir -p $newfile_dir && echo "class D{ val a = 1; }" > $newfilepath
+
+
+  #make sure D.scala was added to the target (sanity check)      
+  local query_result1=$(bazel query "labels(srcs, $rule_label)")
+  if [[ $query_result1 != *"$newfilename"* ]] ; then
+    echo "$newfilename was not properly added as src for target $rule_label"
+    exit 1
+  fi
+
+  bazel build $rule_label $toolchainArg
+
+  #remove the new source file and build it
+  rm $newfilepath
+  
+  #make sure D.scala was properly removed from the target(sanity check)
+  local query_result2=$(bazel query "labels(srcs, $rule_label)")
+  if  [[ $query_result2 == *"$newfilename"* ]] ; then    
+    echo "$newfilename was not properly removed as src for target $rule_label"
+    exit 1
+  fi
+  
+  bazel build $rule_label $toolchainArg
+
+  
+}
+
 run_semanticdb_tests() {
   local bundle=1;   local nobundle=0
   local scala3=3;    local scala2=2
-
+  
   $runner test_produces_semanticdb $scala2 $bundle 
   $runner test_produces_semanticdb $scala2 $nobundle 
   
@@ -147,7 +188,7 @@ run_semanticdb_tests() {
   $runner test_produces_semanticdb $scala3 $nobundle 
 
   $runner test_no_semanticdb
-
+  $runner test_semanticdb_handles_removed_sourcefiles
 }
 
 run_semanticdb_tests