diff --git a/src/Microsoft.PowerShell.Commands.Utility/commands/utility/AddType.cs b/src/Microsoft.PowerShell.Commands.Utility/commands/utility/AddType.cs
index 4e6fc676432..0f795cb2a23 100644
--- a/src/Microsoft.PowerShell.Commands.Utility/commands/utility/AddType.cs
+++ b/src/Microsoft.PowerShell.Commands.Utility/commands/utility/AddType.cs
@@ -596,10 +596,24 @@ protected override void EndProcessing()
 
         #region LoadAssembly
 
-        // We now ship .Net Core's reference assemblies with PowerShell, so that Add-Type can work
+        // We now ship .NET Core's reference assemblies with PowerShell, so that Add-Type can work
         // in a predictable way and won't be broken when we move to newer version of .NET Core.
-        // The reference assemblies are located at '$PSHOME\ref'.
-        private static readonly string s_netcoreAppRefFolder = PathType.Combine(PathType.GetDirectoryName(typeof(PSObject).Assembly.Location), "ref");
+        // The reference assemblies are located at '$PSHOME\ref' for pwsh.
+        //
+        // For applications that host PowerShell, the 'ref' folder will be deployed to the 'publish'
+        // folder, not where 'System.Management.Automation.dll' is located. So here we should use
+        // the entry assembly's location to construct the path to the 'ref' folder.
+        // For pwsh, the entry assembly is 'pwsh.dll', so the entry assembly's location is still
+        // $PSHOME.
+        // However, 'Assembly.GetEntryAssembly()' returns null when the managed code is called from
+        // unmanaged code (PowerShell WSMan remoting scenario), so in that case, we continue to use
+        // the location of 'System.Management.Automation.dll'.
+        private static readonly string s_netcoreAppRefFolder = PathType.Combine(
+            PathType.GetDirectoryName(
+                (Assembly.GetEntryAssembly() ?? typeof(PSObject).Assembly).Location),
+            "ref");
+
+        // Path to the folder where .NET Core runtime assemblies are located.
         private static readonly string s_frameworkFolder = PathType.GetDirectoryName(typeof(object).Assembly.Location);
 
         // These assemblies are always automatically added to ReferencedAssemblies.
diff --git a/test/hosting/test_HostingBasic.cs b/test/hosting/test_HostingBasic.cs
index 164f1f02aae..b16cd5ba0ec 100644
--- a/test/hosting/test_HostingBasic.cs
+++ b/test/hosting/test_HostingBasic.cs
@@ -139,5 +139,40 @@ public static void TestCommandFromNative()
                 File.Delete(target);
             }
         }
+
+        /// <summary>
+        /// Reference assemblies should be handled correctly so that Add-Type works in the hosting scenario.
+        /// </summary>
+        [Fact]
+        public static void TestAddTypeCmdletInHostScenario()
+        {
+            string code = @"
+                using System;
+                public class Foo
+                {
+                    public Foo(string name, string path)
+                    {
+                        this.Name = name;
+                        this.Path = path;
+                    }
+
+                    public string Name;
+                    public string Path;
+                }
+            ";
+
+            using (System.Management.Automation.PowerShell ps = System.Management.Automation.PowerShell.Create())
+            {
+                ps.AddCommand("Add-Type").AddParameter("TypeDefinition", code).Invoke();
+                ps.Commands.Clear();
+
+                var results = ps.AddScript("[Foo]::new('Joe', 'Unknown')").Invoke();
+                Assert.Single(results);
+
+                dynamic foo = results[0];
+                Assert.Equal("Joe", foo.Name);
+                Assert.Equal("Unknown", foo.Path);
+            }
+        }
     }
 }
diff --git a/tools/packaging/packaging.psm1 b/tools/packaging/packaging.psm1
index f574fa2ce9c..9d644a797d9 100644
--- a/tools/packaging/packaging.psm1
+++ b/tools/packaging/packaging.psm1
@@ -1561,6 +1561,16 @@ function New-ILNugetPackage
                 CreateNugetPlatformFolder -Platform 'unix' -PackageRuntimesFolder $packageRuntimesFolderPath -PlatformBinPath $LinuxFxdBinPath
             }
 
+            if ($file -eq "Microsoft.PowerShell.SDK.dll")
+            {
+                # Copy the '$PSHome\ref' folder to the NuGet package, so 'dotnet publish' can deploy the 'ref' folder to the publish folder.
+                # This is to make 'Add-Type' work in application that hosts PowerShell.
+
+                $contentFolder = New-Item (Join-Path $filePackageFolder "contentFiles\any\any") -ItemType Directory -Force
+                $dotnetRefAsmFolder = Join-Path -Path $WinFxdBinPath -ChildPath "ref"
+                Copy-Item -Path $dotnetRefAsmFolder -Destination $contentFolder -Recurse -Force
+            }
+
             #region nuspec
             # filed a tracking bug for automating generation of dependecy list: https://github.com/PowerShell/PowerShell/issues/6247
             $deps = [System.Collections.ArrayList]::new()