diff --git a/setuptools/build_meta.py b/setuptools/build_meta.py
index e8f1c72d59..1fb4c3b108 100644
--- a/setuptools/build_meta.py
+++ b/setuptools/build_meta.py
@@ -385,7 +385,8 @@ def _build_with_temp_dir(self, setup_command, result_extension,
 
         # Build in a temporary directory, then copy to the target.
         os.makedirs(result_directory, exist_ok=True)
-        with tempfile.TemporaryDirectory(dir=result_directory) as tmp_dist_dir:
+        temp_opts = {"prefix": ".tmp-", "dir": result_directory}
+        with tempfile.TemporaryDirectory(**temp_opts) as tmp_dist_dir:
             sys.argv = [
                 *sys.argv[:1],
                 *self._global_args(config_settings),
diff --git a/setuptools/tests/test_config_discovery.py b/setuptools/tests/test_config_discovery.py
index 85b64b31dd..f65b00b61f 100644
--- a/setuptools/tests/test_config_discovery.py
+++ b/setuptools/tests/test_config_discovery.py
@@ -248,6 +248,19 @@ def test_flat_layout_with_multiple_modules(self, tmp_path):
         with pytest.raises(PackageDiscoveryError, match="multiple (packages|modules)"):
             _get_dist(tmp_path, {})
 
+    def test_py_modules_when_wheel_dir_is_cwd(self, tmp_path):
+        """Regression for issue 3692"""
+        from setuptools import build_meta
+
+        pyproject = '[project]\nname = "test"\nversion = "1"'
+        (tmp_path / "pyproject.toml").write_text(DALS(pyproject), encoding="utf-8")
+        (tmp_path / "foo.py").touch()
+        with jaraco.path.DirectoryStack().context(tmp_path):
+            build_meta.build_wheel(".")
+        # Ensure py_modules are found
+        wheel_files = get_wheel_members(next(tmp_path.glob("*.whl")))
+        assert "foo.py" in wheel_files
+
 
 class TestNoConfig:
     DEFAULT_VERSION = "0.0.0"  # Default version given by setuptools