diff --git a/lisp/net/tramp.el b/lisp/net/tramp.el
index ef1e4206b6c..27c6dfde334 100644
--- a/lisp/net/tramp.el
+++ b/lisp/net/tramp.el
@@ -505,7 +505,8 @@ interpreted as a regular expression which always matches."
 ;; either lower case or upper case letters.  See
 ;; <https://debbugs.gnu.org/cgi/bugreport.cgi?bug=38079#20>.
 (defcustom tramp-restricted-shell-hosts-alist
-  (when (eq system-type 'windows-nt)
+  (when (and (eq system-type 'windows-nt)
+             (not (string-match-p "sh$" tramp-encoding-shell)))
     (list (format "\\`\\(%s\\|%s\\)\\'"
 		  (regexp-quote (downcase tramp-system-name))
 		  (regexp-quote (upcase tramp-system-name)))))
diff --git a/test/lisp/net/tramp-tests.el b/test/lisp/net/tramp-tests.el
index 1532cbe0493..569e9506d1e 100644
--- a/test/lisp/net/tramp-tests.el
+++ b/test/lisp/net/tramp-tests.el
@@ -5092,6 +5092,7 @@ If UNSTABLE is non-nil, the test is tagged as `:unstable'."
   :tags '(:expensive-test :tramp-asynchronous-processes :unstable)
   (skip-unless (tramp--test-enabled))
   (skip-unless (tramp--test-sh-p))
+  (skip-unless (not (tramp--test-windows-nt-p)))
   (skip-unless (not (tramp--test-crypt-p)))
   ;; Since Emacs 27.1.
   (skip-unless (macrop 'with-connection-local-variables))