diff --git a/Cargo.lock b/Cargo.lock
index 73c922daf..3ec6c91d0 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -6569,6 +6569,7 @@ dependencies = [
  "uv-static",
  "uv-trampoline-builder",
  "uv-warnings",
+ "walkdir",
  "which",
  "windows 0.59.0",
  "windows-registry",
diff --git a/crates/uv-python/Cargo.toml b/crates/uv-python/Cargo.toml
index 0e88362fc..37802babc 100644
--- a/crates/uv-python/Cargo.toml
+++ b/crates/uv-python/Cargo.toml
@@ -65,6 +65,7 @@ tokio = { workspace = true }
 tokio-util = { workspace = true, features = ["compat"] }
 tracing = { workspace = true }
 url = { workspace = true }
+walkdir = { workspace = true }
 which = { workspace = true }
 
 [target.'cfg(target_os = "windows")'.dependencies]
diff --git a/crates/uv-python/src/downloads.rs b/crates/uv-python/src/downloads.rs
index f500d3e1d..102074732 100644
--- a/crates/uv-python/src/downloads.rs
+++ b/crates/uv-python/src/downloads.rs
@@ -8,6 +8,8 @@ use std::task::{Context, Poll};
 use std::time::{Duration, SystemTime};
 use std::{env, io};
 
+use walkdir::WalkDir;
+
 use futures::TryStreamExt;
 use itertools::Itertools;
 use owo_colors::OwoColorize;
@@ -1072,6 +1074,141 @@ async fn fetch_bytes_from_url(client: &BaseClient, url: &DisplaySafeUrl) -> Resu
     Ok(buf)
 }
 
+/// Tracks the state of hard link/copy fallback attempts.
+///
+/// Hard linking might not be supported, but we can't detect this ahead of time,
+/// so we'll try hard linking the first file - if this succeeds we'll know later
+/// errors are not due to lack of OS/filesystem support. If it fails, we'll switch
+/// to copying for the rest of the operation.
+#[derive(Debug, Default, Clone, Copy, PartialEq, Eq)]
+enum Attempt {
+    #[default]
+    Initial,
+    Subsequent,
+    UseCopyFallback,
+}
+
+/// Check if a file should be copied instead of hard-linked.
+///
+/// These files are modified after installation and must be copied to avoid
+/// corrupting the cache:
+/// - `_sysconfigdata_*.py` - patched by `ensure_sysconfig_patched()`
+/// - `*.pc` files in `pkgconfig/` directories - patched by sysconfig
+/// - `libpython*.dylib` on macOS - patched by `ensure_dylib_patched()`
+fn should_copy_python_distribution_file(path: &Path) -> bool {
+    let Some(file_name) = path.file_name().and_then(|n| n.to_str()) else {
+        return false;
+    };
+
+    let extension = path.extension().and_then(|e| e.to_str());
+
+    // _sysconfigdata_*.py files
+    if file_name.starts_with("_sysconfigdata_")
+        && extension.is_some_and(|ext| ext.eq_ignore_ascii_case("py"))
+    {
+        return true;
+    }
+
+    // *.pc files in pkgconfig directories
+    if extension.is_some_and(|ext| ext.eq_ignore_ascii_case("pc")) {
+        if let Some(parent) = path.parent() {
+            if parent.file_name().and_then(|n| n.to_str()) == Some("pkgconfig") {
+                return true;
+            }
+        }
+        return true;
+    }
+
+    // libpython*.dylib on macOS
+    #[cfg(target_os = "macos")]
+    if file_name.starts_with("libpython")
+        && extension.is_some_and(|ext| ext.eq_ignore_ascii_case("dylib"))
+    {
+        return true;
+    }
+
+    false
+}
+
+/// Recursively hard link or copy a directory tree from `src` to `dst`.
+///
+/// Tries hard linking first for efficiency, falling back to copying if hard links
+/// are not supported (e.g., cross-filesystem operations).
+///
+/// Files that will be patched after installation (sysconfig, pkgconfig, dylib) are
+/// always copied to avoid modifying the cached source.
+fn hardlink_or_copy_dir(src: &Path, dst: &Path) -> Result<(), Error> {
+    let mut attempt = Attempt::Initial;
+
+    for entry in WalkDir::new(src) {
+        let entry = entry.map_err(|e| Error::ReadError {
+            dir: src.to_path_buf(),
+            err: io::Error::other(e),
+        })?;
+
+        let path = entry.path();
+        let relative = path.strip_prefix(src).expect("walkdir starts with root");
+        let target = dst.join(relative);
+
+        if entry.file_type().is_dir() {
+            fs_err::create_dir_all(&target)?;
+            continue;
+        }
+
+        // Always copy files that will be patched to avoid modifying the cache
+        if should_copy_python_distribution_file(path) {
+            fs_err::copy(path, &target).map_err(|err| Error::CopyError {
+                to: target.clone(),
+                err,
+            })?;
+            continue;
+        }
+
+        match attempt {
+            Attempt::Initial => {
+                if let Err(err) = fs_err::hard_link(path, &target) {
+                    debug!(
+                        "Failed to hard link `{}` to `{}`: {}; falling back to copy",
+                        path.display(),
+                        target.display(),
+                        err
+                    );
+                    attempt = Attempt::UseCopyFallback;
+                    fs_err::copy(path, &target).map_err(|err| Error::CopyError {
+                        to: target.clone(),
+                        err,
+                    })?;
+                } else {
+                    attempt = Attempt::Subsequent;
+                }
+            }
+            Attempt::Subsequent => {
+                if let Err(err) = fs_err::hard_link(path, &target) {
+                    // Unexpected failure after initial success - still fall back to copy
+                    debug!(
+                        "Unexpected hard link failure for `{}`: {}; falling back to copy",
+                        path.display(),
+                        err
+                    );
+                    attempt = Attempt::UseCopyFallback;
+                    fs_err::copy(path, &target).map_err(|err| Error::CopyError {
+                        to: target.clone(),
+                        err,
+                    })?;
+                }
+            }
+            Attempt::UseCopyFallback => {
+                fs_err::copy(path, &target).map_err(|err| Error::CopyError {
+                    to: target.clone(),
+                    err,
+                })?;
+            }
+        }
+    }
+
+    Ok(())
+}
+
 impl ManagedPythonDownload {
     /// Return a display type that includes the build information.
     pub fn to_display_with_build(&self) -> ManagedPythonDownloadWithBuild<'_> {
@@ -1203,13 +1340,13 @@ impl ManagedPythonDownload {
         let ext = SourceDistExtension::from_path(&filename)
             .map_err(|err| Error::MissingExtension(url.to_string(), err))?;
 
-        let temp_dir = tempfile::tempdir_in(scratch_dir).map_err(Error::DownloadDirError)?;
-
-        if let Some(python_builds_dir) =
+        // Track the unpacked cache path if caching is enabled
+        let (target_unpacked, temp_dir) = if let Some(python_builds_dir) =
             env::var_os(EnvVars::UV_PYTHON_CACHE_DIR).filter(|s| !s.is_empty())
         {
             let python_builds_dir = PathBuf::from(python_builds_dir);
             fs_err::create_dir_all(&python_builds_dir)?;
+
             let hash_prefix = match self.sha256.as_deref() {
                 Some(sha) => {
                     // Shorten the hash to avoid too-long-filename errors
@@ -1218,7 +1355,36 @@ impl ManagedPythonDownload {
                 None => "none",
             };
             let target_cache_file = python_builds_dir.join(format!("{hash_prefix}-{filename}"));
+            // Strip the archive extension for the unpacked directory name
+            let basename = filename
+                .strip_suffix(&format!(".{}", ext.name()))
+                .expect("filename was parsed with this extension");
+            let target_unpacked = python_builds_dir.join(format!("{hash_prefix}-{basename}"));
 
+            // Check if unpacked cache exists first - if so, hard link from it directly
+            if target_unpacked.is_dir() {
+                debug!(
+                    "Using unpacked cache at `{}`",
+                    target_unpacked.simplified_display()
+                );
+
+                // Remove the target if it already exists.
+                if path.is_dir() {
+                    debug!("Removing existing directory: {}", path.user_display());
+                    fs_err::tokio::remove_dir_all(&path).await?;
+                }
+
+                // Hard link (or copy) from unpacked cache to installation directory
+                hardlink_or_copy_dir(&target_unpacked, &path)?;
+
+                return Ok(DownloadResult::Fetched(path));
+            }
+
+            // Create temp dir in the cache directory to ensure same-filesystem renames
+            let temp_dir =
+                tempfile::tempdir_in(&python_builds_dir).map_err(Error::DownloadDirError)?;
+
+            // No unpacked cache - download and extract the archive
             // Download the archive to the cache, or return a reader if we have it in cache.
             // TODO(konsti): We should "tee" the write so we can do the download-to-cache and unpacking
             // in one step.
@@ -1272,7 +1438,11 @@ impl ManagedPythonDownload {
                 Direction::Extract,
             )
             .await?;
+
+            (Some(target_unpacked), temp_dir)
         } else {
+            let temp_dir = tempfile::tempdir_in(scratch_dir).map_err(Error::DownloadDirError)?;
+
             // Avoid overlong log lines
             debug!("Downloading {url}");
             debug!(
@@ -1291,7 +1461,9 @@ impl ManagedPythonDownload {
                 Direction::Download,
             )
             .await?;
-        }
+
+            (None, temp_dir)
+        };
 
         // Extract the top-level directory.
         let mut extracted = match uv_extract::strip_component(temp_dir.path()) {
@@ -1345,14 +1517,65 @@ impl ManagedPythonDownload {
             fs_err::tokio::remove_dir_all(&path).await?;
         }
 
-        // Persist it to the target.
-        debug!("Moving {} to {}", extracted.display(), path.user_display());
-        rename_with_retry(extracted, &path)
-            .await
-            .map_err(|err| Error::CopyError {
-                to: path.clone(),
-                err,
-            })?;
+        // If caching is enabled, save to unpacked cache and hard link to target
+        if let Some(target_unpacked) = target_unpacked {
+            // Move extracted files to unpacked cache using atomic rename
+            debug!(
+                "Saving to unpacked cache at `{}`",
+                target_unpacked.simplified_display()
+            );
+
+            // Use a temporary name for atomic creation
+            // Note: Don't use `with_extension` as the path contains version dots (e.g., "3.10.19")
+            let temp_unpacked = PathBuf::from(format!(
+                "{}.tmp.{}",
+                target_unpacked.display(),
+                std::process::id()
+            ));
+
+            // Move extracted to temp cache location
+            rename_with_retry(&extracted, &temp_unpacked)
+                .await
+                .map_err(|err| Error::CopyError {
+                    to: temp_unpacked.clone(),
+                    err,
+                })?;
+
+            // Atomic rename to final cache location
+            match fs_err::rename(&temp_unpacked, &target_unpacked) {
+                Ok(()) => {
+                    debug!(
+                        "Created unpacked cache at `{}`",
+                        target_unpacked.simplified_display()
+                    );
+                }
+                Err(err)
+                    if err.kind() == io::ErrorKind::AlreadyExists
+                        || err.kind() == io::ErrorKind::DirectoryNotEmpty =>
+                {
+                    // Another process won the race - use theirs and clean up ours
+                    debug!("Unpacked cache already exists (concurrent creation)");
+                    let _ = fs_err::remove_dir_all(&temp_unpacked);
+                }
+                Err(err) => {
+                    // Clean up temp directory on error
+                    let _ = fs_err::remove_dir_all(&temp_unpacked);
+                    return Err(err.into());
+                }
+            }
+
+            // Hard link (or copy) from unpacked cache to installation directory
+            hardlink_or_copy_dir(&target_unpacked, &path)?;
+        } else {
+            // No caching - just move to target
+            debug!("Moving {} to {}", extracted.display(), path.user_display());
+            rename_with_retry(extracted, &path)
+                .await
+                .map_err(|err| Error::CopyError {
+                    to: path.clone(),
+                    err,
+                })?;
+        }
 
         Ok(DownloadResult::Fetched(path))
     }