diff --git a/.prettierignore b/.prettierignore
index 9d33d7a0..74e89e95 100644
--- a/.prettierignore
+++ b/.prettierignore
@@ -9,3 +9,4 @@ CHANGELOG.md
 .gitignore
 .prettierignore
 *.png
+*.svg
diff --git a/demo/public/_locales/en/messages.json b/demo/src/public/_locales/en/messages.json
similarity index 100%
rename from demo/public/_locales/en/messages.json
rename to demo/src/public/_locales/en/messages.json
diff --git a/demo/public/icon/128.png b/demo/src/public/icon/128.png
similarity index 100%
rename from demo/public/icon/128.png
rename to demo/src/public/icon/128.png
diff --git a/demo/public/icon/16.png b/demo/src/public/icon/16.png
similarity index 100%
rename from demo/public/icon/16.png
rename to demo/src/public/icon/16.png
diff --git a/demo/public/icon/32.png b/demo/src/public/icon/32.png
similarity index 100%
rename from demo/public/icon/32.png
rename to demo/src/public/icon/32.png
diff --git a/demo/public/icon/48.png b/demo/src/public/icon/48.png
similarity index 100%
rename from demo/public/icon/48.png
rename to demo/src/public/icon/48.png
diff --git a/demo/public/icon/96.png b/demo/src/public/icon/96.png
similarity index 100%
rename from demo/public/icon/96.png
rename to demo/src/public/icon/96.png
diff --git a/docs/get-started/assets.md b/docs/get-started/assets.md
index 6837c556..d844f994 100644
--- a/docs/get-started/assets.md
+++ b/docs/get-started/assets.md
@@ -2,7 +2,7 @@
 
 WXT has two directories for storing assets like CSS, images, or fonts.
 
-- `<rootDir>/public`: Store files that will be copied into the output directory as-is
+- `<srcDir>/public`: Store files that will be copied into the output directory as-is
 - `<srcDir>/assets`: Store files that will be processed by Vite during the build process
 
 ## `/public` Directory
diff --git a/docs/get-started/configuration.md b/docs/get-started/configuration.md
index bd8b9e20..4f4ff1aa 100644
--- a/docs/get-started/configuration.md
+++ b/docs/get-started/configuration.md
@@ -25,7 +25,7 @@ WXT allows you to edit several directories to your liking:
 - `root` (default: `process.cwd()`) - Root of the WXT project
 - `srcDir` (default: `<rootDir>`) - Location of all your source code
 - `entrypointsDir` (default: `<srcDir>/entrypoints`) - Folder containing all the entrypoints.
-- `publicDir` (default: `<rootDir>/public`) - Folder containing [public assets](/get-started/assets.md)
+- `publicDir` (default: `<srcDir>/public`) - Folder containing [public assets](/get-started/assets.md)
 
 ### Example
 
diff --git a/src/core/utils/getInternalConfig.ts b/src/core/utils/getInternalConfig.ts
index 0358c14c..5ad951ff 100644
--- a/src/core/utils/getInternalConfig.ts
+++ b/src/core/utils/getInternalConfig.ts
@@ -83,7 +83,7 @@ export async function getInternalConfig(
     srcDir,
     userConfig.entrypointsDir ?? 'entrypoints',
   );
-  const publicDir = resolve(root, userConfig.publicDir ?? 'public');
+  const publicDir = resolve(srcDir, userConfig.publicDir ?? 'public');
   const wxtDir = resolve(root, '.wxt');
   const typesDir = resolve(wxtDir, 'types');
 
diff --git a/templates/svelte/public/icon/128.png b/templates/svelte/src/public/icon/128.png
similarity index 100%
rename from templates/svelte/public/icon/128.png
rename to templates/svelte/src/public/icon/128.png
diff --git a/templates/svelte/public/icon/16.png b/templates/svelte/src/public/icon/16.png
similarity index 100%
rename from templates/svelte/public/icon/16.png
rename to templates/svelte/src/public/icon/16.png
diff --git a/templates/svelte/public/icon/32.png b/templates/svelte/src/public/icon/32.png
similarity index 100%
rename from templates/svelte/public/icon/32.png
rename to templates/svelte/src/public/icon/32.png
diff --git a/templates/svelte/public/icon/48.png b/templates/svelte/src/public/icon/48.png
similarity index 100%
rename from templates/svelte/public/icon/48.png
rename to templates/svelte/src/public/icon/48.png
diff --git a/templates/svelte/public/icon/96.png b/templates/svelte/src/public/icon/96.png
similarity index 100%
rename from templates/svelte/public/icon/96.png
rename to templates/svelte/src/public/icon/96.png
diff --git a/templates/svelte/public/wxt.svg b/templates/svelte/src/public/wxt.svg
similarity index 100%
rename from templates/svelte/public/wxt.svg
rename to templates/svelte/src/public/wxt.svg