diff --git a/tests/playwright-test/list-mode.spec.ts b/tests/playwright-test/list-mode.spec.ts
index 4244993b01..fbc90bcecb 100644
--- a/tests/playwright-test/list-mode.spec.ts
+++ b/tests/playwright-test/list-mode.spec.ts
@@ -122,7 +122,7 @@ test('outputDir should not be removed', async ({ runInlineTest }, testInfo) => {
         require('fs').writeFileSync(testInfo.outputPath('myfile.txt'), 'hello');
       });
     `,
-  }, {}, {}, { usesCustomOutputDir: true });
+  });
   expect(result1.exitCode).toBe(0);
   expect(fs.existsSync(path.join(outputDir, 'a-my-test', 'myfile.txt'))).toBe(true);
 
@@ -136,7 +136,7 @@ test('outputDir should not be removed', async ({ runInlineTest }, testInfo) => {
         console.log(testInfo.outputDir);
       });
     `,
-  }, { list: true }, {}, { usesCustomOutputDir: true });
+  }, { list: true });
   expect(result2.exitCode).toBe(0);
   expect(fs.existsSync(path.join(outputDir, 'a-my-test', 'myfile.txt'))).toBe(true);
 });
diff --git a/tests/playwright-test/playwright-test-fixtures.ts b/tests/playwright-test/playwright-test-fixtures.ts
index 507e707667..7aab126272 100644
--- a/tests/playwright-test/playwright-test-fixtures.ts
+++ b/tests/playwright-test/playwright-test-fixtures.ts
@@ -89,8 +89,6 @@ async function runPlaywrightTest(childProcess: CommonFixtures['childProcess'], b
   const outputDir = path.join(baseDir, 'test-results');
   const reportFile = path.join(outputDir, 'report.json');
   const args = ['test'];
-  if (!options.usesCustomOutputDir)
-    args.push('--output=' + outputDir);
   if (!options.usesCustomReporters)
     args.push('--reporter=dot,json');
   args.push(
@@ -226,7 +224,6 @@ function cleanEnv(env: NodeJS.ProcessEnv): NodeJS.ProcessEnv {
 
 type RunOptions = {
   sendSIGINTAfter?: number;
-  usesCustomOutputDir?: boolean;
   usesCustomReporters?: boolean;
   additionalArgs?: string[];
   cwd?: string,
diff --git a/tests/playwright-test/reporter-html.spec.ts b/tests/playwright-test/reporter-html.spec.ts
index 564c28c76e..5335e2588b 100644
--- a/tests/playwright-test/reporter-html.spec.ts
+++ b/tests/playwright-test/reporter-html.spec.ts
@@ -953,7 +953,6 @@ test.describe('report location', () => {
       `
     }, { 'reporter': 'html' }, { PW_TEST_HTML_REPORT_OPEN: 'never' }, {
       cwd: 'foo/bar/baz/tests',
-      usesCustomOutputDir: true
     });
     expect(result.exitCode).toBe(0);
     expect(result.passed).toBe(1);
@@ -978,7 +977,6 @@ test.describe('report location', () => {
       `
     }, { 'reporter': 'html' }, { 'PW_TEST_HTML_REPORT_OPEN': 'never', 'PLAYWRIGHT_HTML_REPORT': '../my-report' }, {
       cwd: 'foo/bar/baz/tests',
-      usesCustomOutputDir: true
     });
     expect(result.exitCode).toBe(0);
     expect(result.passed).toBe(1);
diff --git a/tests/playwright-test/reporter-json.spec.ts b/tests/playwright-test/reporter-json.spec.ts
index 9494017b95..b8775cf669 100644
--- a/tests/playwright-test/reporter-json.spec.ts
+++ b/tests/playwright-test/reporter-json.spec.ts
@@ -287,7 +287,6 @@ test.describe('report location', () => {
       `
     }, { 'reporter': 'json' }, { 'PW_TEST_HTML_REPORT_OPEN': 'never', 'PLAYWRIGHT_JSON_OUTPUT_NAME': '../my-report.json' }, {
       cwd: 'foo/bar/baz/tests',
-      usesCustomOutputDir: true
     });
     expect(result.exitCode).toBe(0);
     expect(result.passed).toBe(1);
diff --git a/tests/playwright-test/reporter-junit.spec.ts b/tests/playwright-test/reporter-junit.spec.ts
index 479a2bfd64..b7e227bf8b 100644
--- a/tests/playwright-test/reporter-junit.spec.ts
+++ b/tests/playwright-test/reporter-junit.spec.ts
@@ -480,7 +480,6 @@ test.describe('report location', () => {
       `
     }, { 'reporter': 'junit' }, { 'PLAYWRIGHT_JUNIT_OUTPUT_NAME': '../my-report.xml' }, {
       cwd: 'foo/bar/baz/tests',
-      usesCustomOutputDir: true
     });
     expect(result.exitCode).toBe(0);
     expect(result.passed).toBe(1);
diff --git a/tests/playwright-test/reporter-raw.spec.ts b/tests/playwright-test/reporter-raw.spec.ts
index 8bd6100d8b..9b38d96db7 100644
--- a/tests/playwright-test/reporter-raw.spec.ts
+++ b/tests/playwright-test/reporter-raw.spec.ts
@@ -26,7 +26,7 @@ test('should generate raw report', async ({ runInlineTest }, testInfo) => {
       import { test, expect } from '@playwright/test';
       test('passes', async ({ page }, testInfo) => {});
     `,
-  }, { reporter: 'dot,' + kRawReporterPath }, {}, { usesCustomOutputDir: true });
+  }, { reporter: 'dot,' + kRawReporterPath });
   const json = JSON.parse(fs.readFileSync(testInfo.outputPath('test-results', 'report', 'project.report'), 'utf-8'));
   expect(json.config).toBeTruthy();
   expect(json.project).toBeTruthy();
@@ -47,7 +47,7 @@ test('should use project name', async ({ runInlineTest }, testInfo) => {
       import { test, expect } from '@playwright/test';
       test('passes', async ({ page }, testInfo) => {});
     `,
-  }, { reporter: 'dot,' + kRawReporterPath }, {}, { usesCustomOutputDir: true });
+  }, { reporter: 'dot,' + kRawReporterPath });
   const json = JSON.parse(fs.readFileSync(testInfo.outputPath('output', 'report', 'project-name.report'), 'utf-8'));
   expect(json.project.name).toBe('project-name');
   expect(result.exitCode).toBe(0);
@@ -64,7 +64,7 @@ test('should save stdio', async ({ runInlineTest }, testInfo) => {
         process.stderr.write(Buffer.from([4, 5, 6]));
       });
     `,
-  }, { reporter: 'dot,' + kRawReporterPath }, {}, { usesCustomOutputDir: true });
+  }, { reporter: 'dot,' + kRawReporterPath });
   const json = JSON.parse(fs.readFileSync(testInfo.outputPath('test-results', 'report', 'project.report'), 'utf-8'));
   const result = json.suites[0].tests[0].results[0];
   expect(result.attachments).toEqual([
@@ -100,7 +100,7 @@ test('should save attachments', async ({ runInlineTest }, testInfo) => {
         });
       });
     `,
-  }, { reporter: 'dot,' + kRawReporterPath }, {}, { usesCustomOutputDir: true });
+  }, { reporter: 'dot,' + kRawReporterPath });
   const json = JSON.parse(fs.readFileSync(testInfo.outputPath('test-results', 'report', 'project.report'), 'utf-8'));
   const result = json.suites[0].tests[0].results[0];
   expect(result.attachments[0].name).toBe('binary');
@@ -148,7 +148,7 @@ test(`testInfo.attach should save attachments via path`, async ({ runInlineTest
         await fs.promises.unlink(tmpPath);
       });
     `,
-  }, { reporter: 'dot,' + kRawReporterPath, workers: 1 }, {}, { usesCustomOutputDir: true });
+  }, { reporter: 'dot,' + kRawReporterPath, workers: 1 });
   const json = JSON.parse(fs.readFileSync(testInfo.outputPath('test-results', 'report', 'project.report'), 'utf-8'));
   {
     const result = json.suites[0].tests[0].results[0];
@@ -210,7 +210,7 @@ test(`testInfo.attach should save attachments via inline attachment`, async ({ r
         await testInfo.attach('example.json', { body: Buffer.from('We <3 Playwright!'), contentType: 'x-playwright/custom' });
       });
   `,
-  }, { reporter: 'dot,' + kRawReporterPath, workers: 1 }, {}, { usesCustomOutputDir: true });
+  }, { reporter: 'dot,' + kRawReporterPath, workers: 1 });
   const json = JSON.parse(fs.readFileSync(testInfo.outputPath('test-results', 'report', 'project.report'), 'utf-8'));
   {
     const result = json.suites[0].tests[0].results[0];
@@ -253,7 +253,7 @@ test('dupe project names', async ({ runInlineTest }, testInfo) => {
       import { test, expect } from '@playwright/test';
       test('passes', async ({ page }, testInfo) => {});
     `,
-  }, { reporter: 'dot,' + kRawReporterPath }, {}, { usesCustomOutputDir: true });
+  }, { reporter: 'dot,' + kRawReporterPath });
   const files = fs.readdirSync(testInfo.outputPath('test-results', 'report'));
   expect(new Set(files)).toEqual(new Set(['project-name.report', 'project-name-1.report', 'project-name-2.report']));
 });
diff --git a/tests/playwright-test/test-output-dir.spec.ts b/tests/playwright-test/test-output-dir.spec.ts
index 8b69dca269..fe59deadc4 100644
--- a/tests/playwright-test/test-output-dir.spec.ts
+++ b/tests/playwright-test/test-output-dir.spec.ts
@@ -99,7 +99,6 @@ test('should default to package.json directory', async ({ runInlineTest }, testI
     `
   }, { 'reporter': '' }, {}, {
     cwd: 'foo/bar/baz/tests',
-    usesCustomOutputDir: true
   });
   expect(result.exitCode).toBe(0);
   expect(result.passed).toBe(1);
@@ -364,7 +363,7 @@ test('should accept a relative path for outputDir', async ({ runInlineTest }, te
       { outputDir: './my-output-dir' },
     ] };
     `,
-  }, {}, {}, { usesCustomOutputDir: true });
+  });
   expect(result.exitCode).toBe(0);
 });
 
@@ -383,7 +382,7 @@ test('should have output dir based on rootDir (cwd)', async ({ runInlineTest },
         fs.writeFileSync(testInfo.outputPath('foo.txt'), 'hello');
       });
     `,
-  }, {}, {}, { usesCustomOutputDir: true });
+  });
   expect(result.exitCode).toBe(0);
   expect(fs.existsSync(testInfo.outputPath('test-results', 'example-hello-world', 'foo.txt'))).toBe(true);
 });