diff --git a/src/pya/pya/pya.cc b/src/pya/pya/pya.cc
index 46f452fe3..9da57b0d2 100644
--- a/src/pya/pya/pya.cc
+++ b/src/pya/pya/pya.cc
@@ -34,6 +34,7 @@
 #include "gsiDecl.h"
 #include "gsiDeclBasic.h"
 #include "tlLog.h"
+#include "tlEnv.h"
 #include "tlStream.h"
 #include "tlTimer.h"
 #include "tlFileUtils.h"
@@ -223,21 +224,42 @@ PythonInterpreter::PythonInterpreter (bool embedded)
 
   std::string app_path = tl::get_exe_file ();
 
-#if PY_MAJOR_VERSION >= 3
+  //  If set, use $KLAYOUT_PYTHONPATH to initialize the path.
+  //  Otherwise there may be some conflict between external installations and KLayout.
 
-  //  if set, use $KLAYOUT_PYTHONPATH to initialize the path
-# if defined(_WIN32)
+  bool has_klayout_pythonpath = false;
+
+  //  Python is not easily convinced to use an external path properly.
+  //  So we simply redirect PYTHONPATH
+  std::string pythonpath_name ("PYTHONPATH");
+  std::string klayout_pythonpath_name ("KLAYOUT_PYTHONPATH");
+  if (tl::has_env (pythonpath_name)) {
+    tl::unset_env (pythonpath_name);
+  }
+  if (tl::has_env (klayout_pythonpath_name)) {
+    has_klayout_pythonpath = true;
+    tl::set_env (pythonpath_name, tl::get_env (klayout_pythonpath_name));
+  }
+
+  //  If set, use $KLAYOUT_PYTHONHOME to initialize the path.
+  //  Otherwise there may be some conflict between external installations and KLayout.
+
+  //  Python is not easily convinced to use an external path properly.
+  //  So we simply redirect PYTHONHOME
+  std::string pythonhome_name ("PYTHONHOME");
+  std::string klayout_pythonhome_name ("KLAYOUT_PYTHONHOME");
+  if (tl::has_env (pythonhome_name)) {
+    tl::unset_env (pythonhome_name);
+  }
+  if (tl::has_env (klayout_pythonhome_name)) {
+    tl::set_env (pythonhome_name, tl::get_env (klayout_pythonhome_name));
+  }
+
+#if defined(_WIN32) && PY_MAJOR_VERSION >= 3
 
   tl_assert (sizeof (wchar_t) == 2);
 
-  Py_SetPythonHome ((wchar_t *) L"");  //  really ignore $PYTHONHOME + without this, we get dummy error message about lacking path for libraries
-
-  const wchar_t *python_path = _wgetenv (L"KLAYOUT_PYTHONPATH");
-  if (python_path) {
-
-    Py_SetPath (python_path);
-
-  } else {
+  if (! has_klayout_pythonpath) {
 
     //  If present, read the paths from a file in INST_PATH/.python-paths.txt.
     //  The content of this file is evaluated as an expression and the result
@@ -289,18 +311,6 @@ PythonInterpreter::PythonInterpreter (bool embedded)
 
   }
 
-# else
-
-  const char *python_path = getenv ("KLAYOUT_PYTHONPATH");
-  if (python_path) {
-
-    std::wstring path = tl::to_wstring (tl::to_string_from_local (python_path));
-    Py_SetPath (path.c_str ());
-
-  }
-
-# endif
-
 #endif
 
 #if PY_MAJOR_VERSION < 3
@@ -366,6 +376,13 @@ PythonInterpreter::PythonInterpreter (bool embedded)
   m_pya_module.reset (new pya::PythonModule ());
   m_pya_module->init (pya_module_name, module);
   m_pya_module->make_classes ();
+
+  //  Add a reference to the "pymod" directory close to our own library.
+  //  We can put build-in modules there.
+  std::string module_path = tl::get_module_path ((void *) &reset_interpreter);
+  if (! module_path.empty ()) {
+    add_path (tl::combine_path (tl::absolute_path (module_path), "pymod"));
+  }
 }
 
 PythonInterpreter::~PythonInterpreter ()