diff --git a/awx/playbooks/project_update.yml b/awx/playbooks/project_update.yml
index cc05066647..745b14ca9e 100644
--- a/awx/playbooks/project_update.yml
+++ b/awx/playbooks/project_update.yml
@@ -152,6 +152,7 @@
         changed_when: "'Installing ' in galaxy_collection_result.stdout"
         environment:
           ANSIBLE_FORCE_COLOR: False
+          ANSIBLE_COLLECTIONS_PATHS: "{{ collections_destination }}"
 
       when: collections_enabled|bool
       delegate_to: localhost