diff --git a/crates/nu-cli/src/config_files.rs b/crates/nu-cli/src/config_files.rs
index 3a02f75e86..e51b34cf7a 100644
--- a/crates/nu-cli/src/config_files.rs
+++ b/crates/nu-cli/src/config_files.rs
@@ -226,15 +226,8 @@ pub fn eval_config_contents(
             engine_state.file = prev_file;
 
             // Merge the environment in case env vars changed in the config
-            match engine_state.cwd(Some(stack)) {
-                Ok(cwd) => {
-                    if let Err(e) = engine_state.merge_env(stack, cwd) {
-                        report_error_new(engine_state, &e);
-                    }
-                }
-                Err(e) => {
-                    report_error_new(engine_state, &e);
-                }
+            if let Err(e) = engine_state.merge_env(stack) {
+                report_error_new(engine_state, &e);
             }
         }
     }
diff --git a/crates/nu-cli/src/lib.rs b/crates/nu-cli/src/lib.rs
index 6f151adad1..8be40d9354 100644
--- a/crates/nu-cli/src/lib.rs
+++ b/crates/nu-cli/src/lib.rs
@@ -20,7 +20,6 @@ pub use config_files::eval_config_contents;
 pub use eval_cmds::{evaluate_commands, EvaluateCommandsOpts};
 pub use eval_file::evaluate_file;
 pub use menus::NuHelpCompleter;
-pub use nu_cmd_base::util::get_init_cwd;
 pub use nu_highlight::NuHighlight;
 pub use print::Print;
 pub use prompt::NushellPrompt;
diff --git a/crates/nu-cli/src/repl.rs b/crates/nu-cli/src/repl.rs
index 5b0db96741..03ebb61982 100644
--- a/crates/nu-cli/src/repl.rs
+++ b/crates/nu-cli/src/repl.rs
@@ -15,10 +15,7 @@ use crate::{
 use crossterm::cursor::SetCursorStyle;
 use log::{error, trace, warn};
 use miette::{ErrReport, IntoDiagnostic, Result};
-use nu_cmd_base::{
-    hook::eval_hook,
-    util::{get_editor, get_guaranteed_cwd},
-};
+use nu_cmd_base::{hook::eval_hook, util::get_editor};
 use nu_color_config::StyleComputer;
 #[allow(deprecated)]
 use nu_engine::{convert_env_values, current_dir_str, env_to_strings};
@@ -111,8 +108,7 @@ pub fn evaluate_repl(
             PipelineData::empty(),
             false,
         );
-        let cwd = get_guaranteed_cwd(engine_state, &unique_stack);
-        engine_state.merge_env(&mut unique_stack, cwd)?;
+        engine_state.merge_env(&mut unique_stack)?;
     }
 
     let hostname = System::host_name();
@@ -260,12 +256,10 @@ fn loop_iteration(ctx: LoopContext) -> (bool, Stack, Reedline) {
         hostname,
     } = ctx;
 
-    let cwd = get_guaranteed_cwd(engine_state, &stack);
-
     let mut start_time = std::time::Instant::now();
     // Before doing anything, merge the environment from the previous REPL iteration into the
     // permanent state.
-    if let Err(err) = engine_state.merge_env(&mut stack, cwd) {
+    if let Err(err) = engine_state.merge_env(&mut stack) {
         report_error_new(engine_state, &err);
     }
     perf!("merge env", start_time, use_color);
diff --git a/crates/nu-cli/tests/completions/mod.rs b/crates/nu-cli/tests/completions/mod.rs
index a7f88dc3b0..47f16da8a1 100644
--- a/crates/nu-cli/tests/completions/mod.rs
+++ b/crates/nu-cli/tests/completions/mod.rs
@@ -18,11 +18,11 @@ use support::{
 #[fixture]
 fn completer() -> NuCompleter {
     // Create a new engine
-    let (dir, _, mut engine, mut stack) = new_engine();
+    let (_, _, mut engine, mut stack) = new_engine();
 
     // Add record value as example
     let record = "def tst [--mod -s] {}";
-    assert!(support::merge_input(record.as_bytes(), &mut engine, &mut stack, dir).is_ok());
+    assert!(support::merge_input(record.as_bytes(), &mut engine, &mut stack).is_ok());
 
     // Instantiate a new completer
     NuCompleter::new(Arc::new(engine), Arc::new(stack))
@@ -31,12 +31,12 @@ fn completer() -> NuCompleter {
 #[fixture]
 fn completer_strings() -> NuCompleter {
     // Create a new engine
-    let (dir, _, mut engine, mut stack) = new_engine();
+    let (_, _, mut engine, mut stack) = new_engine();
 
     // Add record value as example
     let record = r#"def animals [] { ["cat", "dog", "eel" ] }
     def my-command [animal: string@animals] { print $animal }"#;
-    assert!(support::merge_input(record.as_bytes(), &mut engine, &mut stack, dir).is_ok());
+    assert!(support::merge_input(record.as_bytes(), &mut engine, &mut stack).is_ok());
 
     // Instantiate a new completer
     NuCompleter::new(Arc::new(engine), Arc::new(stack))
@@ -45,7 +45,7 @@ fn completer_strings() -> NuCompleter {
 #[fixture]
 fn extern_completer() -> NuCompleter {
     // Create a new engine
-    let (dir, _, mut engine, mut stack) = new_engine();
+    let (_, _, mut engine, mut stack) = new_engine();
 
     // Add record value as example
     let record = r#"
@@ -56,7 +56,7 @@ fn extern_completer() -> NuCompleter {
             -b: string@animals
         ]
     "#;
-    assert!(support::merge_input(record.as_bytes(), &mut engine, &mut stack, dir).is_ok());
+    assert!(support::merge_input(record.as_bytes(), &mut engine, &mut stack).is_ok());
 
     // Instantiate a new completer
     NuCompleter::new(Arc::new(engine), Arc::new(stack))
@@ -65,7 +65,7 @@ fn extern_completer() -> NuCompleter {
 #[fixture]
 fn custom_completer() -> NuCompleter {
     // Create a new engine
-    let (dir, _, mut engine, mut stack) = new_engine();
+    let (_, _, mut engine, mut stack) = new_engine();
 
     // Add record value as example
     let record = r#"
@@ -79,7 +79,7 @@ fn custom_completer() -> NuCompleter {
             completer: $external_completer
         }
     "#;
-    assert!(support::merge_input(record.as_bytes(), &mut engine, &mut stack, dir).is_ok());
+    assert!(support::merge_input(record.as_bytes(), &mut engine, &mut stack).is_ok());
 
     // Instantiate a new completer
     NuCompleter::new(Arc::new(engine), Arc::new(stack))
@@ -801,11 +801,11 @@ fn folder_with_directorycompletions() {
 #[test]
 fn variables_completions() {
     // Create a new engine
-    let (dir, _, mut engine, mut stack) = new_engine();
+    let (_, _, mut engine, mut stack) = new_engine();
 
     // Add record value as example
     let record = "let actor = { name: 'Tom Hardy', age: 44 }";
-    assert!(support::merge_input(record.as_bytes(), &mut engine, &mut stack, dir).is_ok());
+    assert!(support::merge_input(record.as_bytes(), &mut engine, &mut stack).is_ok());
 
     // Instantiate a new completer
     let mut completer = NuCompleter::new(Arc::new(engine), Arc::new(stack));
@@ -916,11 +916,11 @@ fn variables_completions() {
 
 #[test]
 fn alias_of_command_and_flags() {
-    let (dir, _, mut engine, mut stack) = new_engine();
+    let (_, _, mut engine, mut stack) = new_engine();
 
     // Create an alias
     let alias = r#"alias ll = ls -l"#;
-    assert!(support::merge_input(alias.as_bytes(), &mut engine, &mut stack, dir).is_ok());
+    assert!(support::merge_input(alias.as_bytes(), &mut engine, &mut stack).is_ok());
 
     let mut completer = NuCompleter::new(Arc::new(engine), Arc::new(stack));
 
@@ -935,11 +935,11 @@ fn alias_of_command_and_flags() {
 
 #[test]
 fn alias_of_basic_command() {
-    let (dir, _, mut engine, mut stack) = new_engine();
+    let (_, _, mut engine, mut stack) = new_engine();
 
     // Create an alias
     let alias = r#"alias ll = ls "#;
-    assert!(support::merge_input(alias.as_bytes(), &mut engine, &mut stack, dir).is_ok());
+    assert!(support::merge_input(alias.as_bytes(), &mut engine, &mut stack).is_ok());
 
     let mut completer = NuCompleter::new(Arc::new(engine), Arc::new(stack));
 
@@ -954,14 +954,14 @@ fn alias_of_basic_command() {
 
 #[test]
 fn alias_of_another_alias() {
-    let (dir, _, mut engine, mut stack) = new_engine();
+    let (_, _, mut engine, mut stack) = new_engine();
 
     // Create an alias
     let alias = r#"alias ll = ls -la"#;
-    assert!(support::merge_input(alias.as_bytes(), &mut engine, &mut stack, dir.clone()).is_ok());
+    assert!(support::merge_input(alias.as_bytes(), &mut engine, &mut stack).is_ok());
     // Create the second alias
     let alias = r#"alias lf = ll -f"#;
-    assert!(support::merge_input(alias.as_bytes(), &mut engine, &mut stack, dir).is_ok());
+    assert!(support::merge_input(alias.as_bytes(), &mut engine, &mut stack).is_ok());
 
     let mut completer = NuCompleter::new(Arc::new(engine), Arc::new(stack));
 
@@ -978,7 +978,7 @@ fn run_external_completion(completer: &str, input: &str) -> Vec<Suggestion> {
     let completer = format!("$env.config.completions.external.completer = {completer}");
 
     // Create a new engine
-    let (dir, _, mut engine_state, mut stack) = new_engine();
+    let (_, _, mut engine_state, mut stack) = new_engine();
     let (block, delta) = {
         let mut working_set = StateWorkingSet::new(&engine_state);
         let block = parse(&mut working_set, None, completer.as_bytes(), false);
@@ -994,7 +994,7 @@ fn run_external_completion(completer: &str, input: &str) -> Vec<Suggestion> {
     );
 
     // Merge environment into the permanent state
-    assert!(engine_state.merge_env(&mut stack, &dir).is_ok());
+    assert!(engine_state.merge_env(&mut stack).is_ok());
 
     // Instantiate a new completer
     let mut completer = NuCompleter::new(Arc::new(engine_state), Arc::new(stack));
@@ -1172,11 +1172,11 @@ fn custom_completer_triggers_cursor_after_word(mut custom_completer: NuCompleter
 #[ignore = "was reverted, still needs fixing"]
 #[rstest]
 fn alias_offset_bug_7648() {
-    let (dir, _, mut engine, mut stack) = new_engine();
+    let (_, _, mut engine, mut stack) = new_engine();
 
     // Create an alias
     let alias = r#"alias ea = ^$env.EDITOR /tmp/test.s"#;
-    assert!(support::merge_input(alias.as_bytes(), &mut engine, &mut stack, dir).is_ok());
+    assert!(support::merge_input(alias.as_bytes(), &mut engine, &mut stack).is_ok());
 
     let mut completer = NuCompleter::new(Arc::new(engine), Arc::new(stack));
 
@@ -1191,11 +1191,11 @@ fn alias_offset_bug_7648() {
 #[ignore = "was reverted, still needs fixing"]
 #[rstest]
 fn alias_offset_bug_7754() {
-    let (dir, _, mut engine, mut stack) = new_engine();
+    let (_, _, mut engine, mut stack) = new_engine();
 
     // Create an alias
     let alias = r#"alias ll = ls -l"#;
-    assert!(support::merge_input(alias.as_bytes(), &mut engine, &mut stack, dir).is_ok());
+    assert!(support::merge_input(alias.as_bytes(), &mut engine, &mut stack).is_ok());
 
     let mut completer = NuCompleter::new(Arc::new(engine), Arc::new(stack));
 
diff --git a/crates/nu-cli/tests/completions/support/completions_helpers.rs b/crates/nu-cli/tests/completions/support/completions_helpers.rs
index 027ac9d997..f6daf1223d 100644
--- a/crates/nu-cli/tests/completions/support/completions_helpers.rs
+++ b/crates/nu-cli/tests/completions/support/completions_helpers.rs
@@ -62,7 +62,7 @@ pub fn new_engine() -> (PathBuf, String, EngineState, Stack) {
     );
 
     // Merge environment into the permanent state
-    let merge_result = engine_state.merge_env(&mut stack, &dir);
+    let merge_result = engine_state.merge_env(&mut stack);
     assert!(merge_result.is_ok());
 
     (dir, dir_str, engine_state, stack)
@@ -143,7 +143,7 @@ pub fn new_quote_engine() -> (PathBuf, String, EngineState, Stack) {
     );
 
     // Merge environment into the permanent state
-    let merge_result = engine_state.merge_env(&mut stack, &dir);
+    let merge_result = engine_state.merge_env(&mut stack);
     assert!(merge_result.is_ok());
 
     (dir, dir_str, engine_state, stack)
@@ -178,7 +178,7 @@ pub fn new_partial_engine() -> (PathBuf, String, EngineState, Stack) {
     );
 
     // Merge environment into the permanent state
-    let merge_result = engine_state.merge_env(&mut stack, &dir);
+    let merge_result = engine_state.merge_env(&mut stack);
     assert!(merge_result.is_ok());
 
     (dir, dir_str, engine_state, stack)
@@ -223,7 +223,6 @@ pub fn merge_input(
     input: &[u8],
     engine_state: &mut EngineState,
     stack: &mut Stack,
-    dir: PathBuf,
 ) -> Result<(), ShellError> {
     let (block, delta) = {
         let mut working_set = StateWorkingSet::new(engine_state);
@@ -246,5 +245,5 @@ pub fn merge_input(
     .is_ok());
 
     // Merge environment into the permanent state
-    engine_state.merge_env(stack, &dir)
+    engine_state.merge_env(stack)
 }
diff --git a/crates/nu-cmd-base/src/hook.rs b/crates/nu-cmd-base/src/hook.rs
index cef5348618..bc2db8eef9 100644
--- a/crates/nu-cmd-base/src/hook.rs
+++ b/crates/nu-cmd-base/src/hook.rs
@@ -1,4 +1,3 @@
-use crate::util::get_guaranteed_cwd;
 use miette::Result;
 use nu_engine::{eval_block, eval_block_with_early_return};
 use nu_parser::parse;
@@ -284,8 +283,7 @@ pub fn eval_hook(
         }
     }
 
-    let cwd = get_guaranteed_cwd(engine_state, stack);
-    engine_state.merge_env(stack, cwd)?;
+    engine_state.merge_env(stack)?;
 
     Ok(output)
 }
diff --git a/crates/nu-cmd-base/src/util.rs b/crates/nu-cmd-base/src/util.rs
index 905c990a9e..a2af4d4773 100644
--- a/crates/nu-cmd-base/src/util.rs
+++ b/crates/nu-cmd-base/src/util.rs
@@ -2,21 +2,7 @@ use nu_protocol::{
     engine::{EngineState, Stack},
     Range, ShellError, Span, Value,
 };
-use std::{ops::Bound, path::PathBuf};
-
-pub fn get_init_cwd() -> PathBuf {
-    std::env::current_dir().unwrap_or_else(|_| {
-        std::env::var("PWD")
-            .map(Into::into)
-            .unwrap_or_else(|_| nu_path::home_dir().unwrap_or_default())
-    })
-}
-
-pub fn get_guaranteed_cwd(engine_state: &EngineState, stack: &Stack) -> PathBuf {
-    engine_state
-        .cwd(Some(stack))
-        .unwrap_or(crate::util::get_init_cwd())
-}
+use std::ops::Bound;
 
 type MakeRangeError = fn(&str, Span) -> ShellError;
 
diff --git a/crates/nu-cmd-lang/src/example_support.rs b/crates/nu-cmd-lang/src/example_support.rs
index bb03bbaf8c..d938729fef 100644
--- a/crates/nu-cmd-lang/src/example_support.rs
+++ b/crates/nu-cmd-lang/src/example_support.rs
@@ -138,7 +138,7 @@ pub fn check_example_evaluates_to_expected_output(
     stack.add_env_var("PWD".to_string(), Value::test_string(cwd.to_string_lossy()));
 
     engine_state
-        .merge_env(&mut stack, cwd)
+        .merge_env(&mut stack)
         .expect("Error merging environment");
 
     let empty_input = PipelineData::empty();
diff --git a/crates/nu-command/src/filesystem/cd.rs b/crates/nu-command/src/filesystem/cd.rs
index 4e09d900d2..91c43435db 100644
--- a/crates/nu-command/src/filesystem/cd.rs
+++ b/crates/nu-command/src/filesystem/cd.rs
@@ -1,4 +1,3 @@
-use nu_cmd_base::util::get_init_cwd;
 use nu_engine::command_prelude::*;
 use nu_utils::filesystem::{have_permission, PermissionResult};
 
@@ -41,9 +40,11 @@ impl Command for Cd {
         let physical = call.has_flag(engine_state, stack, "physical")?;
         let path_val: Option<Spanned<String>> = call.opt(engine_state, stack, 0)?;
 
-        // If getting PWD failed, default to the initial directory. This way, the
-        // user can use `cd` to recover PWD to a good state.
-        let cwd = engine_state.cwd(Some(stack)).unwrap_or(get_init_cwd());
+        // If getting PWD failed, default to the home directory. The user can
+        // use `cd` to reset PWD to a good state.
+        let cwd = engine_state
+            .cwd(Some(stack))
+            .unwrap_or(nu_path::home_dir().unwrap_or_default());
 
         let path_val = {
             if let Some(path) = path_val {
diff --git a/crates/nu-command/src/filesystem/start.rs b/crates/nu-command/src/filesystem/start.rs
index 87aa34cf72..9b0fb6d84f 100644
--- a/crates/nu-command/src/filesystem/start.rs
+++ b/crates/nu-command/src/filesystem/start.rs
@@ -58,9 +58,8 @@ impl Command for Start {
             open_path(url.as_str(), engine_state, stack, path.span)?;
         } else {
             // try to distinguish between file not found and opening url without prefix
-            if let Ok(canon_path) =
-                canonicalize_with(path_no_whitespace, std::env::current_dir()?.as_path())
-            {
+            let cwd = engine_state.cwd(Some(stack))?;
+            if let Ok(canon_path) = canonicalize_with(path_no_whitespace, cwd) {
                 open_path(canon_path, engine_state, stack, path.span)?;
             } else {
                 // open crate does not allow opening URL without prefix
diff --git a/crates/nu-protocol/src/engine/engine_state.rs b/crates/nu-protocol/src/engine/engine_state.rs
index e393d78d41..90af0f785e 100644
--- a/crates/nu-protocol/src/engine/engine_state.rs
+++ b/crates/nu-protocol/src/engine/engine_state.rs
@@ -295,11 +295,7 @@ impl EngineState {
     }
 
     /// Merge the environment from the runtime Stack into the engine state
-    pub fn merge_env(
-        &mut self,
-        stack: &mut Stack,
-        cwd: impl AsRef<Path>,
-    ) -> Result<(), ShellError> {
+    pub fn merge_env(&mut self, stack: &mut Stack) -> Result<(), ShellError> {
         let mut config_updated = false;
 
         for mut scope in stack.env_vars.drain(..) {
@@ -329,9 +325,6 @@ impl EngineState {
             }
         }
 
-        // TODO: better error
-        std::env::set_current_dir(cwd)?;
-
         if config_updated {
             // Make plugin GC config changes take effect immediately.
             #[cfg(feature = "plugin")]
diff --git a/crates/nu-std/src/lib.rs b/crates/nu-std/src/lib.rs
index a20e3fc5da..e6c8f30556 100644
--- a/crates/nu-std/src/lib.rs
+++ b/crates/nu-std/src/lib.rs
@@ -98,8 +98,7 @@ use std pwd
 
     eval_block::<WithoutDebug>(engine_state, &mut stack, &block, pipeline_data)?;
 
-    let cwd = engine_state.cwd(Some(&stack))?;
-    engine_state.merge_env(&mut stack, cwd)?;
+    engine_state.merge_env(&mut stack)?;
 
     Ok(())
 }
diff --git a/src/config_files.rs b/src/config_files.rs
index 30977a6d0e..913a332d38 100644
--- a/src/config_files.rs
+++ b/src/config_files.rs
@@ -165,15 +165,8 @@ pub(crate) fn read_default_env_file(engine_state: &mut EngineState, stack: &mut
     );
 
     // Merge the environment in case env vars changed in the config
-    match engine_state.cwd(Some(stack)) {
-        Ok(cwd) => {
-            if let Err(e) = engine_state.merge_env(stack, cwd) {
-                report_error_new(engine_state, &e);
-            }
-        }
-        Err(e) => {
-            report_error_new(engine_state, &e);
-        }
+    if let Err(e) = engine_state.merge_env(stack) {
+        report_error_new(engine_state, &e);
     }
 }
 
@@ -243,15 +236,8 @@ fn eval_default_config(
     );
 
     // Merge the environment in case env vars changed in the config
-    match engine_state.cwd(Some(stack)) {
-        Ok(cwd) => {
-            if let Err(e) = engine_state.merge_env(stack, cwd) {
-                report_error_new(engine_state, &e);
-            }
-        }
-        Err(e) => {
-            report_error_new(engine_state, &e);
-        }
+    if let Err(e) = engine_state.merge_env(stack) {
+        report_error_new(engine_state, &e);
     }
 }
 
diff --git a/src/main.rs b/src/main.rs
index 2c0c4d5e4b..cd23a35ce7 100644
--- a/src/main.rs
+++ b/src/main.rs
@@ -21,7 +21,6 @@ use command::gather_commandline_args;
 use log::{trace, Level};
 use miette::Result;
 use nu_cli::gather_parent_env_vars;
-use nu_cmd_base::util::get_init_cwd;
 use nu_lsp::LanguageServer;
 use nu_path::canonicalize_with;
 use nu_protocol::{
@@ -44,6 +43,27 @@ fn get_engine_state() -> EngineState {
     nu_explore::add_explore_context(engine_state)
 }
 
+/// Get the directory where the Nushell executable is located.
+fn current_exe_directory() -> PathBuf {
+    let mut path = std::env::current_exe().expect("current_exe() should succeed");
+    path.pop();
+    path
+}
+
+/// Get the current working directory from the environment.
+fn current_dir_from_environment() -> PathBuf {
+    if let Ok(cwd) = std::env::current_dir() {
+        return cwd;
+    }
+    if let Ok(cwd) = std::env::var("PWD") {
+        return cwd.into();
+    }
+    if let Some(home) = nu_path::home_dir() {
+        return home;
+    }
+    current_exe_directory()
+}
+
 fn main() -> Result<()> {
     let entire_start_time = std::time::Instant::now();
     let mut start_time = std::time::Instant::now();
@@ -54,10 +74,11 @@ fn main() -> Result<()> {
         miette_hook(x);
     }));
 
-    // Get initial current working directory.
-    let init_cwd = get_init_cwd();
     let mut engine_state = get_engine_state();
 
+    // Get the current working directory from the environment.
+    let init_cwd = current_dir_from_environment();
+
     // Custom additions
     let delta = {
         let mut working_set = nu_protocol::engine::StateWorkingSet::new(&engine_state);
@@ -318,6 +339,12 @@ fn main() -> Result<()> {
             _ => std::process::exit(1),
         }
         std::process::exit(0)
+    } else {
+        // If we're not running a testbin, set the current working directory to
+        // the location of the Nushell executable. This prevents the OS from
+        // locking the directory where the user launched Nushell.
+        std::env::set_current_dir(current_exe_directory())
+            .expect("set_current_dir() should succeed");
     }
     perf!("run test_bins", start_time, use_color);
 
diff --git a/src/test_bins.rs b/src/test_bins.rs
index b20c01f997..7cd542e732 100644
--- a/src/test_bins.rs
+++ b/src/test_bins.rs
@@ -251,13 +251,9 @@ pub fn nu_repl() {
     for (i, line) in source_lines.iter().enumerate() {
         let mut stack = Stack::with_parent(top_stack.clone());
 
-        let cwd = engine_state
-            .cwd(Some(&stack))
-            .unwrap_or_else(|err| outcome_err(&engine_state, &err));
-
         // Before doing anything, merge the environment from the previous REPL iteration into the
         // permanent state.
-        if let Err(err) = engine_state.merge_env(&mut stack, &cwd) {
+        if let Err(err) = engine_state.merge_env(&mut stack) {
             outcome_err(&engine_state, &err);
         }