diff --git a/pkg/specgenutil/util.go b/pkg/specgenutil/util.go
index 222e50f934..ff152f7709 100644
--- a/pkg/specgenutil/util.go
+++ b/pkg/specgenutil/util.go
@@ -285,6 +285,9 @@ func CreateExitCommandArgs(storageConfig storageTypes.StoreOptions, config *conf
 		"--db-backend", config.Engine.DBBackend,
 		fmt.Sprintf("--transient-store=%t", storageConfig.TransientStore),
 	}
+	for _, dir := range config.Engine.HooksDir.Get() {
+		command = append(command, []string{"--hooks-dir", dir}...)
+	}
 	if storageConfig.ImageStore != "" {
 		command = append(command, []string{"--imagestore", storageConfig.ImageStore}...)
 	}
diff --git a/test/system/030-run.bats b/test/system/030-run.bats
index d89d3c1ca2..83c5f92eda 100644
--- a/test/system/030-run.bats
+++ b/test/system/030-run.bats
@@ -1497,6 +1497,50 @@ EOF
     done
 }
 
+# bats test_tags=ci:parallel
+@test "podman run --restart preserves hooks-dir" {
+    # regression test for #17935 to ensure hooks are run on successful restarts
+    ctr=c_$(safename)
+    hooksdir=$PODMAN_TMPDIR/hooks_$(safename)
+
+    skip_if_remote "--hooks-dir is not usable with remote"
+
+    mkdir -p "$hooksdir"
+    cat > "$hooksdir/settings.json" <<EOF
+{
+    "version": "1.0.0",
+    "when": { "always": true },
+    "hook": {
+        "path": "$hooksdir/hook.sh"
+    },
+    "stages": ["prestart", "poststop"]
+}
+EOF
+    cat >"$hooksdir/hook.sh" <<EOF
+#!/bin/sh
+# consume stdin
+cat > /dev/null
+echo ran >> "$hooksdir/log"
+EOF
+    chmod +x "$hooksdir/hook.sh"
+
+    run_podman run -d --restart=on-failure:2 \
+        --name="$ctr" --hooks-dir="$hooksdir" $IMAGE false
+
+    wait_for_restart_count "$ctr" 2 "restart preserves hooks-dir"
+
+    # also make sure 3rd restart has finished
+    # wait also waits until 'cleanup' is done, so poststop hook is
+    # done running after this command
+    run_podman wait "$ctr"
+    run_podman rm "$ctr"
+
+    # check prestart and poststop ran 3 times each
+    assert "$(wc -l < "$hooksdir/log")" = 6
+
+    rm -r "$hooksdir"
+}
+
 # bats test_tags=ci:parallel
 @test "podman run - custom static_dir" {
     # regression test for #19938 to make sure the cleanup process uses the same
diff --git a/test/system/500-networking.bats b/test/system/500-networking.bats
index 89237483af..f0b7d52312 100644
--- a/test/system/500-networking.bats
+++ b/test/system/500-networking.bats
@@ -968,27 +968,6 @@ EOF
      fi
 }
 
-function wait_for_restart_count() {
-    local cname="$1"
-    local count="$2"
-    local tname="$3"
-
-    local timeout=10
-    while :; do
-        # Previously this would fail as the container would run out of ips after 5 restarts.
-        run_podman inspect --format "{{.RestartCount}}" $cname
-        if [[ "$output" == "$2" ]]; then
-            break
-        fi
-
-        timeout=$((timeout - 1))
-        if [[ $timeout -eq 0 ]]; then
-            die "Timed out waiting for RestartCount with $tname"
-        fi
-        sleep 0.5
-    done
-}
-
 # Test for https://github.com/containers/podman/issues/18615
 # CANNOT BE PARALLELIZED due to strict checking of /run/netns
 @test "podman network cleanup --userns + --restart" {
diff --git a/test/system/helpers.bash b/test/system/helpers.bash
index 838bdf13ed..e61c17f8e0 100644
--- a/test/system/helpers.bash
+++ b/test/system/helpers.bash
@@ -1347,6 +1347,30 @@ function ensure_no_mountpoint() {
     fi
 }
 
+###########################
+# ensure container has been restarted requested times
+###########################
+function wait_for_restart_count() {
+    local cname="$1"
+    local count="$2"
+    local tname="$3"
+
+    local timeout=10
+    while :; do
+        # Previously this would fail as the container would run out of ips after 5 restarts.
+        run_podman inspect --format "{{.RestartCount}}" $cname
+        if [[ "$output" == "$2" ]]; then
+            break
+        fi
+
+        timeout=$((timeout - 1))
+        if [[ $timeout -eq 0 ]]; then
+            die "Timed out waiting for RestartCount with $tname"
+        fi
+        sleep 0.5
+    done
+}
+
 
 # END   miscellaneous tools
 ###############################################################################