diff --git a/docker/install-dynamic-plugins.py b/docker/install-dynamic-plugins.py
index 17810adc37..f2d9be5d67 100755
--- a/docker/install-dynamic-plugins.py
+++ b/docker/install-dynamic-plugins.py
@@ -1036,8 +1036,8 @@ def main():
     catalog_index_image = os.environ.get("CATALOG_INDEX_IMAGE", "")
     catalog_index_default_file = None
     if catalog_index_image:
-        # default to <dynamic-plugins-root>/extensions if the env var is not set, to make it easier to run locally.
-        catalog_entities_parent_dir = os.environ.get("CATALOG_ENTITIES_EXTRACT_DIR", os.path.join(dynamic_plugins_root, "extensions"))
+        # default to a temporary directory if the env var is not set
+        catalog_entities_parent_dir = os.environ.get("CATALOG_ENTITIES_EXTRACT_DIR", os.path.join(tempfile.gettempdir(), "extensions"))
         catalog_index_default_file = extract_catalog_index(catalog_index_image, dynamic_plugins_root, catalog_entities_parent_dir)
 
     skip_integrity_check = os.environ.get("SKIP_INTEGRITY_CHECK", "").lower() == "true"
diff --git a/docs/dynamic-plugins/installing-plugins.md b/docs/dynamic-plugins/installing-plugins.md
index d8e8645bc0..5eb36f2259 100644
--- a/docs/dynamic-plugins/installing-plugins.md
+++ b/docs/dynamic-plugins/installing-plugins.md
@@ -81,9 +81,9 @@ When the `CATALOG_INDEX_IMAGE` is set and the index image contains a `catalog-en
 The extraction destination is governed by the `CATALOG_ENTITIES_EXTRACT_DIR` environment variable:
 
 - If `CATALOG_ENTITIES_EXTRACT_DIR` is set, entities are extracted to `<CATALOG_ENTITIES_EXTRACT_DIR>/catalog-entities`
-- If not set, it defaults to `<dynamic-plugins-root>/marketplace/catalog-entities`
+- If not set, it defaults to `/tmp/extensions/catalog-entities`
 
-**Note:** If the catalog index image does not contain the `catalog-entities/marketplace` directory, a warning will be printed but the extraction of `dynamic-plugins.default.yaml` will still succeed.
+**Note:** If the catalog index image does not contain the `catalog-entities/extensions` (or `catalog-entities/marketplace`) directory, a warning will be printed but the extraction of `dynamic-plugins.default.yaml` will still succeed.
 
 ## Installing External Dynamic Plugins