diff --git a/awx/main/tasks/jobs.py b/awx/main/tasks/jobs.py
index ebfce7b03b..e56da04b9f 100644
--- a/awx/main/tasks/jobs.py
+++ b/awx/main/tasks/jobs.py
@@ -921,7 +921,6 @@ class RunJob(SourceControlMixin, BaseTask):
                 env['ANSIBLE_NET_AUTH_PASS'] = network_cred.get_input('authorize_password', default='')
 
         path_vars = [
-            ('ANSIBLE_COLLECTIONS_PATHS', 'collections_paths', 'requirements_collections', '~/.ansible/collections:/usr/share/ansible/collections'),
             ('ANSIBLE_ROLES_PATH', 'roles_path', 'requirements_roles', '~/.ansible/roles:/usr/share/ansible/roles:/etc/ansible/roles'),
             ('ANSIBLE_COLLECTIONS_PATH', 'collections_path', 'requirements_collections', '~/.ansible/collections:/usr/share/ansible/collections'),
         ]
@@ -1524,7 +1523,7 @@ class RunInventoryUpdate(SourceControlMixin, BaseTask):
             raise NotImplementedError('Cannot update file sources through the task system.')
 
         if inventory_update.source == 'scm' and inventory_update.source_project_update:
-            env_key = 'ANSIBLE_COLLECTIONS_PATHS'
+            env_key = 'ANSIBLE_COLLECTIONS_PATH'
             config_setting = 'collections_paths'
             folder = 'requirements_collections'
             default = '~/.ansible/collections:/usr/share/ansible/collections'
@@ -1542,12 +1541,12 @@ class RunInventoryUpdate(SourceControlMixin, BaseTask):
                         paths = [config_values[config_setting]] + paths
             paths = [os.path.join(CONTAINER_ROOT, folder)] + paths
             env[env_key] = os.pathsep.join(paths)
-        if 'ANSIBLE_COLLECTIONS_PATHS' in env:
-            paths = env['ANSIBLE_COLLECTIONS_PATHS'].split(':')
+        if 'ANSIBLE_COLLECTIONS_PATH' in env:
+            paths = env['ANSIBLE_COLLECTIONS_PATH'].split(':')
         else:
             paths = ['~/.ansible/collections', '/usr/share/ansible/collections']
         paths.append('/usr/share/automation-controller/collections')
-        env['ANSIBLE_COLLECTIONS_PATHS'] = os.pathsep.join(paths)
+        env['ANSIBLE_COLLECTIONS_PATH'] = os.pathsep.join(paths)
 
         return env
 
diff --git a/awx/main/tests/functional/test_inventory_source_injectors.py b/awx/main/tests/functional/test_inventory_source_injectors.py
index 0df9a13226..acced6e59d 100644
--- a/awx/main/tests/functional/test_inventory_source_injectors.py
+++ b/awx/main/tests/functional/test_inventory_source_injectors.py
@@ -230,7 +230,7 @@ def test_inventory_update_injected_content(this_kind, inventory, fake_credential
             len([True for k in content.keys() if k.endswith(inventory_filename)]) > 0
         ), f"'{inventory_filename}' file not found in inventory update runtime files {content.keys()}"
 
-        env.pop('ANSIBLE_COLLECTIONS_PATHS', None)  # collection paths not relevant to this test
+        env.pop('ANSIBLE_COLLECTIONS_PATH', None)
         base_dir = os.path.join(DATA, 'plugins')
         if not os.path.exists(base_dir):
             os.mkdir(base_dir)
diff --git a/awx/playbooks/project_update.yml b/awx/playbooks/project_update.yml
index 2f4ab183c7..1cdf046106 100644
--- a/awx/playbooks/project_update.yml
+++ b/awx/playbooks/project_update.yml
@@ -201,7 +201,7 @@
     # additional_galaxy_env contains environment variables are used for installing roles and collections and will take precedence over items in galaxy_task_env
     additional_galaxy_env:
       # These paths control where ansible-galaxy installs collections and roles on top the filesystem
-      ANSIBLE_COLLECTIONS_PATHS: "{{ projects_root }}/.__awx_cache/{{ local_path }}/stage/requirements_collections"
+      ANSIBLE_COLLECTIONS_PATH: "{{ projects_root }}/.__awx_cache/{{ local_path }}/stage/requirements_collections"
       ANSIBLE_ROLES_PATH: "{{ projects_root }}/.__awx_cache/{{ local_path }}/stage/requirements_roles"
       # Put the local tmp directory in same volume as collection destination
       # otherwise, files cannot be moved accross volumes and will cause error