diff --git a/py/private/py_venv/py_venv.bzl b/py/private/py_venv/py_venv.bzl
index 91ca506c..616b86ee 100644
--- a/py/private/py_venv/py_venv.bzl
+++ b/py/private/py_venv/py_venv.bzl
@@ -80,14 +80,6 @@ def _py_venv_base_impl(ctx):
         "BAZEL_TARGET_NAME": ctx.attr.name,
     }
 
-    passed_env = dict(ctx.attr.env)
-    for k, v in passed_env.items():
-        passed_env[k] = expand_variables(
-            ctx,
-            expand_locations(ctx, v, ctx.attr.data),
-            attribute_name = "env",
-        )
-
     ctx.actions.write(
         output = env_file,
         content = "\n".join(_dict_to_exports(default_env)).strip(),
@@ -235,6 +227,14 @@ def _py_venv_binary_impl(ctx):
         is_executable = True,
     )
 
+    passed_env = dict(ctx.attr.env)
+    for k, v in passed_env.items():
+        passed_env[k] = expand_variables(
+            ctx,
+            expand_locations(ctx, v, ctx.attr.data),
+            attribute_name = "env",
+        )
+
     return [
         DefaultInfo(
             files = depset([
@@ -243,6 +243,10 @@ def _py_venv_binary_impl(ctx):
             executable = ctx.outputs.executable,
             runfiles = rfs,
         ),
+        RunEnvironmentInfo(
+            environment = passed_env,
+            inherited_environment = getattr(ctx.attr, "env_inherit", []),
+        ),
     ]
 
 _attrs = dict({
@@ -311,7 +315,6 @@ _binary_attrs = dict({
 })
 
 _test_attrs = dict({
-    # FIXME: Where does this come from, do we need to keep it?
     "env_inherit": attr.string_list(
         doc = "Specifies additional environment variables to inherit from the external environment when the test is executed by bazel test.",
         default = [],
diff --git a/py/tests/py-internal-venv/BUILD.bazel b/py/tests/py-internal-venv/BUILD.bazel
index f6716781..2834e4b4 100644
--- a/py/tests/py-internal-venv/BUILD.bazel
+++ b/py/tests/py-internal-venv/BUILD.bazel
@@ -13,3 +13,16 @@ py_venv_test(
         "@pypi_cowsay//:pkg",
     ],
 )
+
+py_venv_test(
+    name = "test_env_vars",
+    srcs = ["test_env_vars.py"],
+    env = {
+        "ONE": "un",
+        "TWO": "deux",
+        "RULEDIR": "$(RULEDIR)",
+        "LOCATION": "$(location :test_env_vars.py)",
+        "DEFINE": "$(SOME_VAR)",
+    },
+    main = "test_env_vars.py",
+)
diff --git a/py/tests/py-internal-venv/test_env_vars.py b/py/tests/py-internal-venv/test_env_vars.py
new file mode 100644
index 00000000..0d95a7f6
--- /dev/null
+++ b/py/tests/py-internal-venv/test_env_vars.py
@@ -0,0 +1,17 @@
+import os
+
+
+def test_env(env, expected):
+    assert env in os.environ, f"Expected environ to have key '{env}'"
+
+    _actual = os.environ.get(env)
+    assert _actual == expected, f"Expected environ key '{env}' to equal '{expected}', but got '{_actual}'"
+
+
+test_env('ONE', 'un')
+test_env('TWO', 'deux')
+test_env('LOCATION', "py/tests/py-internal-venv/test_env_vars.py")
+test_env('DEFINE', "SOME_VALUE")
+test_env('BAZEL_TARGET', "//py/tests/py-internal-venv:test_env_vars")
+test_env('BAZEL_WORKSPACE', "aspect_rules_py")
+test_env('BAZEL_TARGET_NAME', "test_env_vars")