diff --git a/dsc/tests/dsc_discovery.tests.ps1 b/dsc/tests/dsc_discovery.tests.ps1
index d68024204..6d377a3bc 100644
--- a/dsc/tests/dsc_discovery.tests.ps1
+++ b/dsc/tests/dsc_discovery.tests.ps1
@@ -220,4 +220,35 @@ Describe 'tests for resource discovery' {
             $env:DSC_RESOURCE_PATH = $oldPath
         }
     }
+
+    It 'DSC_RESOURCE_PATH should be used for executable lookup' {
+        $dscTest = Get-Command dscecho -ErrorAction Stop
+        $target = if ($IsWindows) {
+            'echoIt.exe'
+        } else {
+            'echoIt'
+        }
+        Copy-Item -Path "$($dscTest.Source)" -Destination "$testdrive\$target"
+        $manifest = Get-Content -Raw -Path "$(Split-Path -Path $dscTest.Source -Parent)\echo.dsc.resource.json" | ConvertFrom-Json
+        $manifest.type = 'Test/MyEcho'
+        $manifest.get.executable = $target
+        $manifest.set = $null
+        $manifest.test = $null
+        $manifest.schema.command.executable = $target
+        Set-Content -Path "$testdrive/test.dsc.resource.json" -Value ($manifest | ConvertTo-Json -Depth 10)
+
+        $oldPath = $env:DSC_RESOURCE_PATH
+        try {
+            $env:DSC_RESOURCE_PATH = $testdrive
+            $out = dsc resource get -r 'Test/MyEcho' -i '{"output":"Custom"}' 2> "$testdrive/error.txt" | ConvertFrom-Json
+            $LASTEXITCODE | Should -Be 0
+            $out.actualState.output | Should -BeExactly 'Custom'
+            dsc resource get -r 'Microsoft.DSC.Debug/Echo' -i '{"output":"Custom"}' 2> "$testdrive/error.txt" | ConvertFrom-Json
+            $LASTEXITCODE | Should -Be 7
+            Get-Content -Raw -Path "$testdrive/error.txt" | Should -Match "ERROR.*?Resource not found"
+        }
+        finally {
+            $env:DSC_RESOURCE_PATH = $oldPath
+        }
+    }
 }
diff --git a/dsc/tests/dsc_extension_discover.tests.ps1 b/dsc/tests/dsc_extension_discover.tests.ps1
index ff5f92044..d865c9599 100644
--- a/dsc/tests/dsc_extension_discover.tests.ps1
+++ b/dsc/tests/dsc_extension_discover.tests.ps1
@@ -4,9 +4,8 @@
 Describe 'Discover extension tests' {
     BeforeAll {
         $oldPath = $env:PATH
-        $separator = [System.IO.Path]::PathSeparator
         $toolPath = Resolve-Path -Path "$PSScriptRoot/../../extensions/test/discover"
-        $env:PATH = "$toolPath$separator$oldPath"
+        $env:PATH = "$toolPath" + [System.IO.Path]::PathSeparator + $oldPath
     }
 
     AfterAll {
@@ -75,10 +74,10 @@ Describe 'Discover extension tests' {
         Set-Content -Path "$TestDrive/test.dsc.extension.json" -Value $extension_json
         Copy-Item -Path "$toolPath/discover.ps1" -Destination $TestDrive | Out-Null
         Copy-Item -Path "$toolPath/resources" -Destination $TestDrive -Recurse | Out-Null
-        $env:DSC_RESOURCE_PATH = $TestDrive
+        $env:DSC_RESOURCE_PATH = "$TestDrive" + [System.IO.Path]::PathSeparator + (Split-Path (Get-Command pwsh).Source -Parent)
         try {
             $out = dsc extension list | ConvertFrom-Json
-            $out.Count | Should -Be 1
+            $out.Count | Should -Be 1 -Because ($out | Out-String)
             $out.type | Should -Be 'Test/DiscoverRelative'
             $out = dsc resource list 2> $TestDrive/error.log
             write-verbose -verbose (Get-Content -Path "$TestDrive/error.log" -Raw)
diff --git a/dsc/tests/dsc_resource_input.tests.ps1 b/dsc/tests/dsc_resource_input.tests.ps1
index 75da70949..74f33bf79 100644
--- a/dsc/tests/dsc_resource_input.tests.ps1
+++ b/dsc/tests/dsc_resource_input.tests.ps1
@@ -85,7 +85,7 @@ Describe 'tests for resource input' {
     }
 '@
         $oldPath = $env:DSC_RESOURCE_PATH
-        $env:DSC_RESOURCE_PATH = $TestDrive
+        $env:DSC_RESOURCE_PATH = $TestDrive + [System.IO.Path]::PathSeparator + $env:PATH
         Set-Content $TestDrive/EnvVarInput.dsc.resource.json -Value $manifest
     }
 
diff --git a/dsc/tests/dsc_set.tests.ps1 b/dsc/tests/dsc_set.tests.ps1
index 8a58cbbb8..d6fa25a77 100644
--- a/dsc/tests/dsc_set.tests.ps1
+++ b/dsc/tests/dsc_set.tests.ps1
@@ -147,7 +147,7 @@ changedProperties:
 
         $oldPath = $env:DSC_RESOURCE_PATH
         try {
-            $env:DSC_RESOURCE_PATH = $TestDrive
+            $env:DSC_RESOURCE_PATH = $TestDrive + [System.IO.Path]::PathSeparator + $env:PATH
             $out = '{ "test": true }' | dsc resource set -r Test/SetNoTest -f - --output-format $format | Out-String
             $LASTEXITCODE | Should -Be 0
             $out.Trim() | Should -BeExactly $expected
@@ -160,7 +160,7 @@ changedProperties:
     It 'set can be used on a resource that does not implement test' {
         $oldPath = $env:DSC_RESOURCE_PATH
         try {
-            $env:DSC_RESOURCE_PATH = $TestDrive
+            $env:DSC_RESOURCE_PATH = $TestDrive + [System.IO.Path]::PathSeparator + $env:PATH
             $out = '{ "test": true }' | dsc resource set -r Test/SetNoTest -f - | ConvertFrom-Json
             $LASTEXITCODE | Should -Be 0
             $out.BeforeState.test | Should -Be $true
diff --git a/dsc_lib/locales/en-us.toml b/dsc_lib/locales/en-us.toml
index 528faf557..2b89e7b89 100644
--- a/dsc_lib/locales/en-us.toml
+++ b/dsc_lib/locales/en-us.toml
@@ -72,6 +72,7 @@ couldNotReadSetting = "Could not read 'resourcePath' setting"
 appendingEnvPath = "Appending PATH to resourcePath"
 originalPath = "Original PATH: %{path}"
 failedGetEnvPath = "Failed to get PATH environment variable"
+failedJoinEnvPath = "Failed to join PATH environment variable"
 exeHomeAlreadyInPath = "Exe home is already in path: %{path}"
 addExeHomeToPath = "Adding exe home to path: %{path}"
 usingResourcePath = "Using Resource Path: %{path}"
diff --git a/dsc_lib/src/discovery/command_discovery.rs b/dsc_lib/src/discovery/command_discovery.rs
index ec604ee30..61bacc2b6 100644
--- a/dsc_lib/src/discovery/command_discovery.rs
+++ b/dsc_lib/src/discovery/command_discovery.rs
@@ -149,8 +149,16 @@ impl CommandDiscovery {
         let mut uniques: HashSet<PathBuf> = HashSet::new();
         paths.retain(|e|uniques.insert((*e).clone()));
 
-        // if exe home is not already in PATH env var then add it to env var and list of searched paths
-        if !using_custom_path {
+        if using_custom_path {
+            // when using custom path, intent is to isolate the search of manifests and executables to the custom path
+            // so we replace the PATH with the custom path
+            if let Ok(new_path) = env::join_paths(paths.clone()) {
+                env::set_var("PATH", new_path);
+            } else {
+                return Err(DscError::Operation(t!("discovery.commandDiscovery.failedJoinEnvPath").to_string()));
+            }
+        } else {
+            // if exe home is not already in PATH env var then add it to env var and list of searched paths
             if let Some(exe_home) = get_exe_path()?.parent() {
                 let exe_home_pb = exe_home.to_path_buf();
                 if paths.contains(&exe_home_pb) {
diff --git a/runcommandonset/tests/runcommandonset.get.tests.ps1 b/runcommandonset/tests/runcommandonset.get.tests.ps1
index 18b50ac45..aec3ddab8 100644
--- a/runcommandonset/tests/runcommandonset.get.tests.ps1
+++ b/runcommandonset/tests/runcommandonset.get.tests.ps1
@@ -2,15 +2,6 @@
 # Licensed under the MIT License.
 
 Describe 'tests for runcommandonset get' {
-    BeforeAll {
-        $oldPath = $env:DSC_RESOURCE_PATH
-        $env:DSC_RESOURCE_PATH = Join-Path $PSScriptRoot ".."
-    }
-
-    AfterAll {
-        $env:DSC_RESOURCE_PATH = $oldPath
-    }
-
     It 'Input passed for executable, arguments, and exit code' {
         $json = @"
         {
@@ -21,6 +12,7 @@ Describe 'tests for runcommandonset get' {
 "@
 
         $result = $json | dsc resource get -r Microsoft.DSC.Transitional/RunCommandOnSet -f - | ConvertFrom-Json
+        $LASTEXITCODE | Should -Be 0
         $result.actualState.arguments | Should -BeExactly @('bar', 'baz')
         $result.actualState.executable | Should -BeExactly 'foo'
         $result.actualState.exitCode | Should -BeExactly 5
diff --git a/runcommandonset/tests/runcommandonset.set.tests.ps1 b/runcommandonset/tests/runcommandonset.set.tests.ps1
index 6f38ea0ed..3ca57e9f9 100644
--- a/runcommandonset/tests/runcommandonset.set.tests.ps1
+++ b/runcommandonset/tests/runcommandonset.set.tests.ps1
@@ -2,21 +2,12 @@
 # Licensed under the MIT License.
 
 Describe 'tests for runcommandonset set' {
-    BeforeAll {
-        $oldPath = $env:DSC_RESOURCE_PATH
-        $env:DSC_RESOURCE_PATH = Join-Path $PSScriptRoot ".."
-    }
-
     AfterEach {
         if (Test-Path $TestDrive/output.txt) {
             Remove-Item -Path $TestDrive/output.txt
         }
     }
 
-    AfterAll {
-        $env:DSC_RESOURCE_PATH = $oldPath
-    }
-
     It 'Input for executable and arguments can be sent to the resource' {
         $input_json = @"
         {