diff --git a/release/scripts/modules/bpy_hydra.py b/release/scripts/modules/bpy_hydra.py
index fc5700992293..6b2b0a3e5cd8 100644
--- a/release/scripts/modules/bpy_hydra.py
+++ b/release/scripts/modules/bpy_hydra.py
@@ -36,6 +36,9 @@ __all__ = (
     "get_render_plugins",
 )
 
+import os
+from pathlib import Path
+
 import bpy
 import _bpy_hydra
 
@@ -59,6 +62,8 @@ class HydraRenderEngine(bpy.types.RenderEngine):
     @classmethod
     def register(cls):
         _bpy_hydra.init()
+        os.environ['PXR_MTLX_STDLIB_SEARCH_PATHS'] = str(Path(bpy.app.binary_path).parent / "materialx/libraries") + \
+                                                     os.pathsep + os.environ.get('PXR_MTLX_STDLIB_SEARCH_PATHS', "")
 
     @classmethod
     def unregister(cls):
diff --git a/source/blender/render/hydra/python.cc b/source/blender/render/hydra/python.cc
index c0a57d6c857d..9401a76a8f91 100644
--- a/source/blender/render/hydra/python.cc
+++ b/source/blender/render/hydra/python.cc
@@ -18,47 +18,24 @@
 
 namespace blender::render::hydra {
 
-void setup_usd_mtlx_environment()
-{
-  /* PXR_MTLX_STDLIB_SEARCH_PATHS - path to the MaterialX standard library
-   * USD's MaterialX code expects to be set. */
-
-  static bool mtlx_env_set = false;
-  if (mtlx_env_set) {
-    return;
-  }
-  mtlx_env_set = true;
-
-  char stdlib_path[FILE_MAX] = "";
-  size_t stdlib_path_len = BLI_path_join(
-      stdlib_path, sizeof(stdlib_path), BKE_appdir_program_dir(), "materialx", "libraries");
-  if (stdlib_path_len == 0 || !BLI_exists(stdlib_path)) {
-    return;
-  }
-
-  set_env_paths("PXR_MTLX_STDLIB_SEARCH_PATHS", {stdlib_path});
-}
-
 static PyObject *init_func(PyObject * /*self*/, PyObject *args)
 {
   CLOG_INFO(LOG_EN, 1, "Init");
 
   pxr::PlugRegistry::GetInstance().RegisterPlugins(std::string(BKE_appdir_program_dir()) +
                                                    "/blender.shared/usd");
-  setup_usd_mtlx_environment();
 
   Py_RETURN_NONE;
 }
 
 static PyObject *register_plugins_func(PyObject * /*self*/, PyObject *args)
 {
-  PyObject *pyplugin_dirs, *pypath_dirs;
-  if (!PyArg_ParseTuple(args, "OO", &pyplugin_dirs, &pypath_dirs)) {
+  PyObject *pyplugin_dirs;
+  if (!PyArg_ParseTuple(args, "O", &pyplugin_dirs)) {
     Py_RETURN_NONE;
   }
 
-
-  std::vector<std::string> plugin_dirs, path_dirs;
+  std::vector<std::string> plugin_dirs;
   PyObject *pyiter, *pyitem;
 
   pyiter = PyObject_GetIter(pyplugin_dirs);
@@ -70,19 +47,6 @@ static PyObject *register_plugins_func(PyObject * /*self*/, PyObject *args)
     Py_DECREF(pyiter);
   }
 
-  pyiter = PyObject_GetIter(pypath_dirs);
-  if (pyiter) {
-    while (pyitem = PyIter_Next(pyiter)) {
-      path_dirs.push_back(PyUnicode_AsUTF8(pyitem));
-      Py_DECREF(pyitem);
-    }
-    Py_DECREF(pyiter);
-  }
-
-  if (!path_dirs.empty()) {
-    set_env_paths("PATH", path_dirs);
-  }
-
   pxr::PlugRegistry &registry = pxr::PlugRegistry::GetInstance();
   registry.RegisterPlugins(plugin_dirs);
 
@@ -92,10 +56,7 @@ static PyObject *register_plugins_func(PyObject * /*self*/, PyObject *args)
   for (auto &s : plugin_dirs) {
     ss << s << ", ";
   }
-  ss << "], path=[";
-  for (auto &s : path_dirs) {
-    ss << s << ", ";
-  }
+  ss << "]";
   CLOG_INFO(LOG_EN, 1, "Register %s", ss.str().c_str());
 
   Py_RETURN_NONE;
diff --git a/source/blender/render/hydra/utils.cc b/source/blender/render/hydra/utils.cc
index a1ad16654aa4..8d37a14ef7ac 100644
--- a/source/blender/render/hydra/utils.cc
+++ b/source/blender/render/hydra/utils.cc
@@ -99,27 +99,4 @@ std::string cache_image(Main *bmain,
   return tempfile;
 }
 
-void set_env_paths(std::string const &name, std::vector<std::string> path_dirs)
-{
-  const char *env = BLI_getenv(name.c_str());
-  ;
-  std::stringstream ss;
-  int i = 0;
-  for (std::string &s : path_dirs) {
-    ++i;
-    ss << s;
-    if (i < path_dirs.size() || env) {
-#ifdef _WIN32
-      ss << ";";
-#else
-      ss << ":";
-#endif
-    }
-  }
-  if (env) {
-    ss << env;
-  }
-  BLI_setenv(name.c_str(), ss.str().c_str());
-}
-
 }  // namespace blender::render::hydra
diff --git a/source/blender/render/hydra/utils.h b/source/blender/render/hydra/utils.h
index 7bf8f3be0c97..05d7c85fc610 100644
--- a/source/blender/render/hydra/utils.h
+++ b/source/blender/render/hydra/utils.h
@@ -21,6 +21,5 @@ std::string cache_image(Main *bmain,
                         ImageUser *iuser,
                         ImageSaveOptions *opts,
                         ReportList *reports);
-void set_env_paths(std::string const &name, std::vector<std::string> path_dirs);
 
 }  // namespace blender::render::hydra