The __PYVENV_LAUNCHER__ variable gets set by each launcher instance. We get one launcher process for every level of nesting, and the last launcher to run sets the final value that will be seen by the real python.exe. Possibly the launcher could resolve the home values until it reaches a solid python.exe (i.e. no pyvenv.cfg file), and thus avoid the nested chain of launcher processes and ensure that the real python.exe sees the correct value of __PYVENV_LAUNCHER__.