diff --git a/CHANGELOG.md b/CHANGELOG.md
index c694ce12a..c22f882bb 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,3 +1,8 @@
+## 1.32.1
+
+* Don't emit permissions errors on Windows and OS X when trying to determine the
+  real case of path names.
+
 ## 1.32.0
 
 * Deprecate passing non-`%` numbers as lightness and saturation to `hsl()`,
diff --git a/lib/src/io.dart b/lib/src/io.dart
index 3187b0e31..c96f7a25a 100644
--- a/lib/src/io.dart
+++ b/lib/src/io.dart
@@ -8,11 +8,15 @@ import 'io/interface.dart'
     if (dart.library.io) 'io/vm.dart'
     if (dart.library.js) 'io/node.dart';
 import 'utils.dart';
+import 'util/character.dart';
 
 export 'io/interface.dart'
     if (dart.library.io) 'io/vm.dart'
     if (dart.library.js) 'io/node.dart';
 
+/// A cache of return values for directories in [_realCasePath].
+final _realCaseCache = <String, String>{};
+
 /// Returns whether the current operating system might be case-insensitive.
 ///
 /// We can't know for sure because different Mac OS systems are configured
@@ -35,18 +39,43 @@ String _realCasePath(String path) {
 
   if (!_couldBeCaseInsensitive) return path;
 
-  var realCasePath = p.rootPrefix(path);
-  for (var component in p.split(path.substring(realCasePath.length))) {
-    var matches = listDir(realCasePath)
-        .where((realPath) => equalsIgnoreCase(p.basename(realPath), component))
-        .toList();
-
-    realCasePath = matches.length != 1
-        // If the file doesn't exist, or if there are multiple options (meaning
-        // the filesystem isn't actually case-insensitive), use `component` as-is.
-        ? p.join(realCasePath, component)
-        : matches[0];
+  if (isWindows) {
+    // Drive names are *always* case-insensitive, so convert them to uppercase.
+    var prefix = p.rootPrefix(path);
+    if (prefix.isNotEmpty && isAlphabetic(prefix.codeUnitAt(0))) {
+      path = prefix.toUpperCase() + path.substring(prefix.length);
+    }
+  }
+
+  String helper(String path) {
+    var dirname = p.dirname(path);
+    if (dirname == path) return path;
+
+    return _realCaseCache.putIfAbsent(path, () {
+      var realDirname = helper(dirname);
+      var basename = p.basename(path);
+
+      try {
+        var matches = listDir(realDirname)
+            .where(
+                (realPath) => equalsIgnoreCase(p.basename(realPath), basename))
+            .toList();
+
+        return matches.length != 1
+            // If the file doesn't exist, or if there are multiple options (meaning
+            // the filesystem isn't actually case-insensitive), use `basename`
+            // as-is.
+            ? p.join(realDirname, basename)
+            : matches[0];
+      } on FileSystemException catch (_) {
+        // If there's an error listing a directory, it's likely because we're
+        // trying to reach too far out of the current directory into something
+        // we don't have permissions for. In that case, just assume we have the
+        // real path.
+        return path;
+      }
+    });
   }
 
-  return realCasePath;
+  return helper(path);
 }
diff --git a/pubspec.yaml b/pubspec.yaml
index 06faa3441..f467bdf61 100644
--- a/pubspec.yaml
+++ b/pubspec.yaml
@@ -1,5 +1,5 @@
 name: sass
-version: 1.32.0
+version: 1.32.1
 description: A Sass implementation in Dart.
 author: Sass Team
 homepage: https://github.com/sass/dart-sass