diff --git a/py/tools/py/src/pth.rs b/py/tools/py/src/pth.rs
index 16dde603..6e965caf 100644
--- a/py/tools/py/src/pth.rs
+++ b/py/tools/py/src/pth.rs
@@ -1,6 +1,6 @@
 use std::{
-    fs::{self, File},
-    io::{BufRead, BufReader, BufWriter, Write},
+    fs::{self, DirEntry, File},
+    io::{BufRead, BufReader, BufWriter, Read, Write},
     path::{Path, PathBuf},
 };
 
@@ -19,27 +19,11 @@ impl PthFile {
         }
     }
 
-    pub fn copy_to_site_packages(&self, dest: &Path) -> miette::Result<()> {
-        let dest_pth = dest.join(self.src.file_name().expect(".pth must be a file"));
-
-        if let Some(prefix) = self.prefix.as_deref() {
-            self.prefix_and_write_pth(dest_pth, prefix)
-        } else {
-            fs::copy(self.src.as_path(), dest_pth)
-                .map(|_| ())
-                .into_diagnostic()
-                .wrap_err("Unable to copy .pth file to site-packages")
-        }
-    }
-
-    fn prefix_and_write_pth<P>(&self, dest: P, prefix: &str) -> miette::Result<()>
-    where
-        P: AsRef<Path>,
-    {
+    pub fn set_up_site_packages(&self, dest: &Path) -> miette::Result<()> {
         let source_pth = File::open(self.src.as_path())
             .into_diagnostic()
             .wrap_err("Unable to open source .pth file")?;
-        let dest_pth = File::create(dest)
+        let dest_pth = File::create(dest.join(self.src.file_name().expect(".pth must be a file")))
             .into_diagnostic()
             .wrap_err("Unable to create destination .pth file")?;
 
@@ -47,14 +31,121 @@ impl PthFile {
         let mut writer = BufWriter::new(dest_pth);
 
         let mut line = String::new();
+        let path_prefix = self.prefix.as_ref().map(|pre| Path::new(pre));
+
         while reader.read_line(&mut line).unwrap() > 0 {
-            let entry = Path::new(prefix).join(Path::new(line.trim()));
+            let entry = path_prefix
+                .map(|pre| pre.join(line.trim()))
+                .unwrap_or_else(|| PathBuf::from(line.trim()));
+
             line.clear();
-            writeln!(writer, "{}", entry.to_string_lossy())
-                .into_diagnostic()
-                .wrap_err("Unable to write new .pth file entry with prefix")?;
+
+            match entry.file_name() {
+                Some(name) if name == "site-packages" => {
+                    let src_dir = dest
+                        .join(entry)
+                        .canonicalize()
+                        .into_diagnostic()
+                        .wrap_err("Unable to get full source dir path")?;
+                    create_symlinks(&src_dir, &src_dir, &dest)?;
+                }
+                _ => {
+                    writeln!(writer, "{}", entry.to_string_lossy())
+                        .into_diagnostic()
+                        .wrap_err("Unable to write new .pth file entry")?;
+                }
+            }
         }
 
         Ok(())
     }
 }
+
+fn create_symlinks(dir: &Path, root_dir: &Path, dst_dir: &Path) -> miette::Result<()> {
+    // Create this directory at the destination.
+    let tgt_dir = dst_dir.join(dir.strip_prefix(root_dir).unwrap());
+    std::fs::create_dir_all(&tgt_dir)
+        .into_diagnostic()
+        .wrap_err(format!(
+            "Unable to create parent directory for symlink: {}",
+            tgt_dir.to_string_lossy()
+        ))?;
+
+    // Recurse.
+    let read_dir = fs::read_dir(dir).into_diagnostic().wrap_err(format!(
+        "Unable to read directory {}",
+        dir.to_string_lossy()
+    ))?;
+
+    for entry in read_dir {
+        let entry = entry.into_diagnostic().wrap_err(format!(
+            "Unable to read directory entry {}",
+            dir.to_string_lossy()
+        ))?;
+
+        let path = entry.path();
+
+        // If this path is a directory, recurse into it, else symlink the file now.
+        // We must ignore the `__init__.py` file in the root_dir because these are Bazel inserted
+        // `__init__.py` files in the root site-packages directory. The site-packages directory
+        // itself is not a regular package and is not supposed to have an `__init__.py` file.
+        if path.is_dir() {
+            create_symlinks(&path, root_dir, dst_dir)?;
+        } else if dir != root_dir || entry.file_name() != "__init__.py" {
+            create_symlink(&entry, root_dir, dst_dir)?;
+        }
+    }
+    Ok(())
+}
+
+fn create_symlink(e: &DirEntry, root_dir: &Path, dst_dir: &Path) -> miette::Result<()> {
+    let tgt = e.path();
+    let link = dst_dir.join(tgt.strip_prefix(root_dir).unwrap());
+
+    // If the link already exists, do not return an error if the link is for an `__init__.py` file
+    // with the same content as the new destination. Some packages that should ideally be namespace
+    // packages have copies of `__init__.py` files in their distributions. For example, all the
+    // Nvidia PyPI packages have the same `nvidia/__init__.py`. So we need to either overwrite the
+    // previous symlink, or check that the new location also has the same content.
+    if link.exists()
+        && link.file_name().is_some_and(|x| x == "__init__.py")
+        && is_same_file(link.as_path(), tgt.as_path())?
+    {
+        return Ok(());
+    }
+
+    std::os::unix::fs::symlink(&tgt, &link)
+        .into_diagnostic()
+        .wrap_err(format!(
+            "unable to create symlink: {} -> {}",
+            tgt.to_string_lossy(),
+            link.to_string_lossy()
+        ))?;
+
+    Ok(())
+}
+
+fn is_same_file(p1: &Path, p2: &Path) -> miette::Result<bool> {
+    let f1 = File::open(p1)
+        .into_diagnostic()
+        .wrap_err(format!("Unable to open file {}", p1.to_string_lossy()))?;
+    let f2 = File::open(p2)
+        .into_diagnostic()
+        .wrap_err(format!("Unable to open file {}", p2.to_string_lossy()))?;
+
+    // Check file size is the same.
+    if f1.metadata().unwrap().len() != f2.metadata().unwrap().len() {
+        return Ok(false);
+    }
+
+    // Compare bytes from the two files in pairs, given that they have the same number of bytes.
+    let buf1 = BufReader::new(f1);
+    let buf2 = BufReader::new(f2);
+    for (b1, b2) in buf1.bytes().zip(buf2.bytes()) {
+        if b1.unwrap() != b2.unwrap() {
+            return Ok(false);
+        }
+    }
+
+    return Ok(true);
+}
diff --git a/py/tools/py/src/venv.rs b/py/tools/py/src/venv.rs
index 6e6e65fb..14704275 100644
--- a/py/tools/py/src/venv.rs
+++ b/py/tools/py/src/venv.rs
@@ -51,7 +51,7 @@ pub fn create_venv(
         .into_diagnostic()?;
 
     if let Some(pth) = pth_file {
-        pth.copy_to_site_packages(&venv_location.join(install_paths.platlib()))?
+        pth.set_up_site_packages(&venv_location.join(install_paths.platlib()))?
     }
 
     Ok(())