diff --git a/Makefile b/Makefile
index 4918d012304..ea95b30bf21 100644
--- a/Makefile
+++ b/Makefile
@@ -1,8 +1,8 @@
 SHELL = /bin/bash
 
-# Source local env file if present (gitignored)
--include .env
-export
+# PYTHONPATH default for Python targets; overridden if 'source env' was run.
+PYTHONPATH ?= python/az/aro
+export PYTHONPATH
 
 TAG ?= $(shell git describe --exact-match 2>/dev/null)
 COMMIT = $(shell git rev-parse --short=7 HEAD)$(shell [[ $$(git status --porcelain) = "" ]] || echo -dirty)
diff --git a/env.example b/env.example
index fe099144d91..75694196e3d 100644
--- a/env.example
+++ b/env.example
@@ -3,6 +3,7 @@ export AZURE_PREFIX="${AZURE_PREFIX:-$USER}"
 export LOCATION="${LOCATION:-westeurope}"
 export NO_CACHE=false
 export AZURE_EXTENSION_DEV_SOURCES="$(pwd)/python"
+export PYTHONPATH=python/az/aro
 
 export CLUSTER_RESOURCEGROUP="${AZURE_PREFIX}-v4-$LOCATION"
 export CLUSTER_NAME="${AZURE_PREFIX}-aro-cluster"