diff --git a/internal/exec/vendor_component_utils.go b/internal/exec/vendor_component_utils.go
index 5ca0f4c38..94088bdf1 100644
--- a/internal/exec/vendor_component_utils.go
+++ b/internal/exec/vendor_component_utils.go
@@ -5,6 +5,7 @@ import (
 	"context"
 	"errors"
 	"fmt"
+	"net/url"
 	"os"
 	"path/filepath"
 	"strings"
@@ -248,6 +249,14 @@ func ExecuteComponentVendorInternal(
 				sourceIsLocalFile = true
 			}
 		}
+		u, err := url.Parse(uri)
+		if err == nil && u.Scheme != "" {
+			if u.Scheme == "file" {
+				trimmedPath := strings.TrimPrefix(filepath.ToSlash(u.Path), "/")
+				uri = filepath.Clean(trimmedPath)
+				useLocalFileSystem = true
+			}
+		}
 	}
 
 	var pType pkgType
diff --git a/internal/exec/vendor_model.go b/internal/exec/vendor_model.go
index 20e873f24..6ddf14e71 100644
--- a/internal/exec/vendor_model.go
+++ b/internal/exec/vendor_model.go
@@ -248,7 +248,7 @@ func downloadAndInstall(p *pkgAtmosVendor, dryRun bool, atmosConfig schema.Atmos
 			}
 		}
 		// Create temp directory
-		tempDir, err := os.MkdirTemp("", fmt.Sprintf("atmos-vendor-%d-*", time.Now().Unix()))
+		tempDir, err := os.MkdirTemp("", "atmos-vendor")
 		if err != nil {
 			return installedPkgMsg{
 				err:  fmt.Errorf("failed to create temp directory: %w", err),
diff --git a/internal/exec/vendor_utils.go b/internal/exec/vendor_utils.go
index ee6c6520b..aa6a80c26 100644
--- a/internal/exec/vendor_utils.go
+++ b/internal/exec/vendor_utils.go
@@ -2,6 +2,7 @@ package exec
 
 import (
 	"fmt"
+	"net/url"
 	"os"
 	"path/filepath"
 	"sort"
@@ -361,12 +362,20 @@ func ExecuteAtmosVendorInternal(
 		if err != nil {
 			return err
 		}
-		err = ValidateURI(uri)
+
+		useOciScheme, useLocalFileSystem, sourceIsLocalFile, err := determineSourceType(&uri, vendorConfigFilePath)
 		if err != nil {
 			return err
 		}
-
-		useOciScheme, useLocalFileSystem, sourceIsLocalFile := determineSourceType(&uri, vendorConfigFilePath)
+		if !useLocalFileSystem {
+			err = ValidateURI(uri)
+			if err != nil {
+				if strings.Contains(uri, "..") {
+					return fmt.Errorf("Invalid URI '%s': %w. Please ensure the source is a valid local path or a properly formatted URI.", uri, err)
+				}
+				return err
+			}
+		}
 
 		// Determine package type
 		var pType pkgType
@@ -384,7 +393,7 @@ func ExecuteAtmosVendorInternal(
 			if err != nil {
 				return err
 			}
-			targetPath := filepath.Join(vendorConfigFilePath, target)
+			targetPath := filepath.Join(filepath.ToSlash(vendorConfigFilePath), filepath.ToSlash(target))
 			pkgName := s.Component
 			if pkgName == "" {
 				pkgName = uri
@@ -504,7 +513,7 @@ func shouldSkipSource(s *schema.AtmosVendorSource, component string, tags []stri
 	return (component != "" && s.Component != component) || (len(tags) > 0 && len(lo.Intersect(tags, s.Tags)) == 0)
 }
 
-func determineSourceType(uri *string, vendorConfigFilePath string) (bool, bool, bool) {
+func determineSourceType(uri *string, vendorConfigFilePath string) (bool, bool, bool, error) {
 	// Determine if the URI is an OCI scheme, a local file, or remote
 	useOciScheme := strings.HasPrefix(*uri, "oci://")
 	if useOciScheme {
@@ -514,13 +523,32 @@ func determineSourceType(uri *string, vendorConfigFilePath string) (bool, bool,
 	useLocalFileSystem := false
 	sourceIsLocalFile := false
 	if !useOciScheme {
-		if absPath, err := u.JoinAbsolutePathWithPath(vendorConfigFilePath, *uri); err == nil {
+		absPath, err := u.JoinAbsolutePathWithPath(filepath.ToSlash(vendorConfigFilePath), *uri)
+		// if URI contain path traversal is path should be resolved
+		if err != nil && strings.Contains(*uri, "..") {
+			return useOciScheme, useLocalFileSystem, sourceIsLocalFile, fmt.Errorf("invalid source path '%s': %w", *uri, err)
+		}
+		if err == nil {
 			uri = &absPath
 			useLocalFileSystem = true
 			sourceIsLocalFile = u.FileExists(*uri)
 		}
+
+		parsedURL, err := url.Parse(*uri)
+		if err != nil {
+			return useOciScheme, useLocalFileSystem, sourceIsLocalFile, err
+		}
+		if err == nil && parsedURL.Scheme != "" {
+			if parsedURL.Scheme == "file" {
+				trimmedPath := strings.TrimPrefix(filepath.ToSlash(parsedURL.Path), "/")
+				*uri = filepath.Clean(trimmedPath)
+				useLocalFileSystem = true
+			}
+		}
+
 	}
-	return useOciScheme, useLocalFileSystem, sourceIsLocalFile
+
+	return useOciScheme, useLocalFileSystem, sourceIsLocalFile, nil
 }
 
 func copyToTarget(atmosConfig schema.AtmosConfiguration, tempDir, targetPath string, s *schema.AtmosVendorSource, sourceIsLocalFile bool, uri string) error {
@@ -556,6 +584,8 @@ func generateSkipFunction(atmosConfig schema.AtmosConfiguration, tempDir string,
 		if filepath.Base(src) == ".git" {
 			return true, nil
 		}
+		tempDir = filepath.ToSlash(tempDir)
+		src = filepath.ToSlash(src)
 
 		trimmedSrc := u.TrimBasePathFromPath(tempDir+"/", src)
 
diff --git a/tests/fixtures/scenarios/complete/vendor.yaml b/tests/fixtures/scenarios/complete/vendor.yaml
index 17bba24fc..ab64e00df 100644
--- a/tests/fixtures/scenarios/complete/vendor.yaml
+++ b/tests/fixtures/scenarios/complete/vendor.yaml
@@ -45,7 +45,7 @@ spec:
         - test
         - networking
     - component: "vpc-flow-logs-bucket"
-      source: "github.com/cloudposse/terraform-aws-components.git//modules/vpc-flow-logs-bucket?ref={{.Version}}"
+      source: "git::https://github.com/cloudposse/terraform-aws-components.git//modules/vpc-flow-logs-bucket?ref={{.Version}}"
       version: "1.323.0"
       targets:
         - "components/terraform/infra/vpc-flow-logs-bucket/{{.Version}}"
diff --git a/tests/fixtures/scenarios/vendor/atmos.yaml b/tests/fixtures/scenarios/vendor/atmos.yaml
new file mode 100644
index 000000000..0f0506e81
--- /dev/null
+++ b/tests/fixtures/scenarios/vendor/atmos.yaml
@@ -0,0 +1,40 @@
+base_path: "./"
+
+components:
+  terraform:
+    base_path: "components/terraform"
+    apply_auto_approve: false
+    deploy_run_init: true
+    init_run_reconfigure: true
+    auto_generate_backend_file: false
+
+stacks:
+  base_path: "stacks"
+  included_paths:
+    - "deploy/**/*"
+  excluded_paths:
+    - "**/_defaults.yaml"
+  name_pattern: "{stage}"
+
+vendor:  
+  # Single file
+  base_path: "./vendor.yaml"
+  
+  # Directory with multiple files
+  #base_path: "./vendor"
+  
+  # Absolute path
+  #base_path: "vendor.d/vendor1.yaml"
+
+logs:
+  file: "/dev/stderr"
+  level: Info
+
+# Custom CLI commands
+
+# No arguments or flags are required
+commands:
+- name: "test"
+  description: "Run all tests"
+  steps:
+  - atmos vendor pull --everything
diff --git a/tests/fixtures/scenarios/vendor/test-components/README.md b/tests/fixtures/scenarios/vendor/test-components/README.md
new file mode 100644
index 000000000..a1b28ebfd
--- /dev/null
+++ b/tests/fixtures/scenarios/vendor/test-components/README.md
@@ -0,0 +1,13 @@
+# Example Terraform IPinfo Component
+
+This Terraform module retrieves data from the IPinfo API for a specified IP address. If no IP address is specified, it retrieves data for the requester's IP address.
+
+## Usage
+
+### Inputs
+
+- `ip_address` (optional): The IP address to retrieve information for. If not specified, the requester's IP address will be used. The default value is an empty string.
+
+### Outputs
+
+- `metadata`: The data retrieved from IPinfo for the specified IP address, in JSON format.
diff --git a/tests/fixtures/scenarios/vendor/test-components/main.tf b/tests/fixtures/scenarios/vendor/test-components/main.tf
new file mode 100644
index 000000000..0e3e9d0b0
--- /dev/null
+++ b/tests/fixtures/scenarios/vendor/test-components/main.tf
@@ -0,0 +1,7 @@
+data "http" "ipinfo" {
+  url = var.ip_address != "" ? "https://ipinfo.io/${var.ip_address}" : "https://ipinfo.io"
+
+  request_headers = {
+    Accept = "application/json"
+  }
+}
diff --git a/tests/fixtures/scenarios/vendor/test-components/outputs.tf b/tests/fixtures/scenarios/vendor/test-components/outputs.tf
new file mode 100644
index 000000000..12bb2bb8d
--- /dev/null
+++ b/tests/fixtures/scenarios/vendor/test-components/outputs.tf
@@ -0,0 +1,4 @@
+output "metadata" {
+  description = "The data retrieved from IPinfo for the specified IP address"
+  value       = jsondecode(data.http.ipinfo.response_body)
+}
diff --git a/tests/fixtures/scenarios/vendor/test-components/providers.tf b/tests/fixtures/scenarios/vendor/test-components/providers.tf
new file mode 100644
index 000000000..0b91fe2aa
--- /dev/null
+++ b/tests/fixtures/scenarios/vendor/test-components/providers.tf
@@ -0,0 +1 @@
+provider "http" {}
diff --git a/tests/fixtures/scenarios/vendor/test-components/variables.tf b/tests/fixtures/scenarios/vendor/test-components/variables.tf
new file mode 100644
index 000000000..85f32544d
--- /dev/null
+++ b/tests/fixtures/scenarios/vendor/test-components/variables.tf
@@ -0,0 +1,5 @@
+variable "ip_address" {
+  description = "The IP address to retrieve information for (optional)"
+  type        = string
+  default     = ""
+}
diff --git a/tests/fixtures/scenarios/vendor/test-components/versions.tf b/tests/fixtures/scenarios/vendor/test-components/versions.tf
new file mode 100644
index 000000000..e2a3d732d
--- /dev/null
+++ b/tests/fixtures/scenarios/vendor/test-components/versions.tf
@@ -0,0 +1,5 @@
+terraform {
+  required_version = ">= 1.0.0"
+
+  required_providers {}
+}
diff --git a/tests/fixtures/scenarios/vendor/vendor.yaml b/tests/fixtures/scenarios/vendor/vendor.yaml
new file mode 100644
index 000000000..82cf62016
--- /dev/null
+++ b/tests/fixtures/scenarios/vendor/vendor.yaml
@@ -0,0 +1,53 @@
+apiVersion: atmos/v1
+kind: AtmosVendorConfig
+metadata:
+  name: demo-vendoring
+  description: Atmos vendoring manifest for Atmos demo component library
+spec:
+  # Import other vendor manifests, if necessary
+  imports: []
+
+  sources:
+    - component: "github/stargazers"
+      source: "github.com/cloudposse/atmos.git//examples/demo-library/{{ .Component }}?ref={{.Version}}"
+      version: "main"
+      targets:
+        - "components/terraform/{{ .Component }}/{{.Version}}"
+      included_paths:
+        - "**/*.tf"
+        - "**/*.tfvars"
+        - "**/*.md"
+      tags:
+        - demo
+        - github
+
+    - component: "test-components"
+      source: "file:///./test-components"
+      version: "main"
+      targets:
+        - "components/terraform/{{ .Component }}/{{.Version}}"
+      tags:
+        - demo
+
+    - component: "weather"
+      source: "git::https://github.com/cloudposse/atmos.git//examples/demo-library/{{ .Component }}?ref={{.Version}}"
+      version: "main"
+      targets:
+        - "components/terraform/{{ .Component }}/{{.Version}}"
+      tags:
+        - demo
+    - component: "my-vpc1"
+      source: "oci://public.ecr.aws/cloudposse/components/terraform/stable/aws/vpc:{{.Version}}"
+      version: "latest"
+      targets:
+        - "components/terraform/infra/my-vpc1"
+    - component: "vpc-src"
+      source: "../../../fixtures/components/terraform/myapp" # required for test URI contain path traversal
+      targets:
+        - "components/terraform/vpc-src"
+      included_paths:
+        - "**/*.tf"
+        - "**/*.md"
+        - "**/*.tftmpl"
+        - "**/modules/**"
+      excluded_paths: []
diff --git a/tests/test-cases/demo-stacks.yaml b/tests/test-cases/demo-stacks.yaml
index f2c7867cc..80923b7be 100644
--- a/tests/test-cases/demo-stacks.yaml
+++ b/tests/test-cases/demo-stacks.yaml
@@ -130,3 +130,67 @@ tests:
       stderr:
         - "^$"
       exit_code: 0
+
+  - name: atmos greet with args
+    enabled: true
+    description: "Validate atmos custom command greet runs with argument provided."
+    workdir: "../examples/demo-custom-command/"
+    command: "atmos"
+    args:
+      - "greet"
+      - "Andrey"
+    expect:
+      stdout:
+        - "Hello, Andrey\n"
+      stderr:
+        - "^$"
+      exit_code: 0
+
+  - name: atmos greet without args
+    enabled: true
+    description: "Validate atmos custom command greet runs without argument provided."
+    workdir: "../examples/demo-custom-command/"
+    command: "atmos"
+    args:
+      - "greet"
+    expect:
+      stdout:
+        - "Hello, John Doe\n"
+      stderr:
+        - "^$"
+      exit_code: 0
+  - name: atmos_vendor_pull
+    enabled: true
+    description: "Ensure atmos vendor pull command executes without errors and files are present."
+    workdir: "fixtures/scenarios/vendor"
+    command: "atmos"
+    args:
+      - "vendor"
+      - "pull"
+    expect:
+      file_exists:
+        - "./components/terraform/github/stargazers/main/main.tf"
+        - "./components/terraform/github/stargazers/main/outputs.tf"
+        - "./components/terraform/github/stargazers/main/providers.tf"
+        - "./components/terraform/github/stargazers/main/variables.tf"
+        - "./components/terraform/github/stargazers/main/versions.tf"
+        - "./components/terraform/infra/my-vpc1/main.tf"
+        - "./components/terraform/infra/my-vpc1/outputs.tf"
+        - "./components/terraform/infra/my-vpc1/providers.tf"
+        - "./components/terraform/infra/my-vpc1/variables.tf"
+        - "./components/terraform/infra/my-vpc1/versions.tf"
+        - "./components/terraform/test-components/main/main.tf"
+        - "./components/terraform/test-components/main/outputs.tf"
+        - "./components/terraform/test-components/main/providers.tf"
+        - "./components/terraform/test-components/main/variables.tf"
+        - "./components/terraform/test-components/main/versions.tf"
+        - "./components/terraform/weather/main/main.tf"
+        - "./components/terraform/weather/main/outputs.tf"
+        - "./components/terraform/weather/main/providers.tf"
+        - "./components/terraform/weather/main/variables.tf"
+        - "./components/terraform/weather/main/versions.tf"
+        - "./components/terraform/vpc-src/main.tf"
+        - "./components/terraform/vpc-src/outputs.tf"
+        - "./components/terraform/vpc-src/variables.tf"
+        - "./components/terraform/vpc-src/versions.tf"
+      exit_code: 0