diff --git a/CHANGELOG.md b/CHANGELOG.md
index abe7546a7..1bf3e0fa4 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -30,6 +30,9 @@
   - Added a new helper function `Get-InstalledSharedFeatures` to move out
     some of the code from the `Get-TargetResource` to make unit testing
     easier and faster.
+  - Changed the logic of 'Build the argument string to be passed to setup' to
+    not quote the value if root directory is specified
+    ([issue #1254](https://github.com/PowerShell/SqlServerDsc/issues/1254)).
 
 ## 12.3.0.0
 
diff --git a/DSCResources/MSFT_SqlSetup/MSFT_SqlSetup.psm1 b/DSCResources/MSFT_SqlSetup/MSFT_SqlSetup.psm1
index 6f59e3715..e26c91724 100644
--- a/DSCResources/MSFT_SqlSetup/MSFT_SqlSetup.psm1
+++ b/DSCResources/MSFT_SqlSetup/MSFT_SqlSetup.psm1
@@ -1574,7 +1574,16 @@ function Set-TargetResource
                 }
                 else
                 {
-                    $setupArgumentValue = '"{0}"' -f $currentSetupArgument.Value
+                    # Logic added as a fix for Issue#1254 SqlSetup:Fails when a root directory is specified
+                    if($currentSetupArgument.Value -match '^[a-zA-Z]:\\$')
+                    {
+                        $setupArgumentValue = $currentSetupArgument.Value   
+                    }
+                    else 
+                    {
+                        $setupArgumentValue = '"{0}"' -f $currentSetupArgument.Value  
+                    }
+                    
                 }
             }
 
diff --git a/Tests/Unit/MSFT_SqlSetup.Tests.ps1 b/Tests/Unit/MSFT_SqlSetup.Tests.ps1
index 2280713c0..84c79d68a 100644
--- a/Tests/Unit/MSFT_SqlSetup.Tests.ps1
+++ b/Tests/Unit/MSFT_SqlSetup.Tests.ps1
@@ -3348,6 +3348,7 @@ try
 
                     It 'Should set the system in the desired state when feature is SQLENGINE' {
                         $testParameters = $mockDefaultParameters.Clone()
+                        # This is also used to regression test issue #1254, SqlSetup fails when root directory is specified.
                         $testParameters += @{
                             SQLSysAdminAccounts = 'COMPANY\User1','COMPANY\SQLAdmins'
                             ASSysAdminAccounts = 'COMPANY\User1','COMPANY\SQLAdmins'