diff --git a/dotnet/src/Microsoft.Agents.AI.LocalCodeAct/Internal/ProcessBridge.cs b/dotnet/src/Microsoft.Agents.AI.LocalCodeAct/Internal/ProcessBridge.cs
index f0a4498f8f4..dee86154c38 100644
--- a/dotnet/src/Microsoft.Agents.AI.LocalCodeAct/Internal/ProcessBridge.cs
+++ b/dotnet/src/Microsoft.Agents.AI.LocalCodeAct/Internal/ProcessBridge.cs
@@ -106,18 +106,14 @@ public async Task<ExecutionResult> RunAsync(string code, CancellationToken cance
 
     private void ConfigureEnvironment(ProcessStartInfo startInfo)
     {
-        // Null => inherit the parent environment (documented contract on
-        // LocalCodeActProviderOptions.Environment). Callers wanting a scrubbed
-        // environment pass an empty dictionary.
-        if (this._environment is null)
-        {
-            return;
-        }
-
         startInfo.Environment.Clear();
-        foreach (var kvp in this._environment)
+
+        if (this._environment is not null)
         {
-            startInfo.Environment[kvp.Key] = kvp.Value;
+            foreach (var kvp in this._environment)
+            {
+                startInfo.Environment[kvp.Key] = kvp.Value;
+            }
         }
 
         // Without these on Windows, Python may fail to load its standard library.
diff --git a/dotnet/src/Microsoft.Agents.AI.LocalCodeAct/LocalCodeActProviderOptions.cs b/dotnet/src/Microsoft.Agents.AI.LocalCodeAct/LocalCodeActProviderOptions.cs
index 1dc86108abf..208b9fe24f5 100644
--- a/dotnet/src/Microsoft.Agents.AI.LocalCodeAct/LocalCodeActProviderOptions.cs
+++ b/dotnet/src/Microsoft.Agents.AI.LocalCodeAct/LocalCodeActProviderOptions.cs
@@ -27,10 +27,9 @@ public sealed class LocalCodeActProviderOptions
     /// Gets or sets environment variables passed to the subprocess.
     /// </summary>
     /// <remarks>
-    /// When <see langword="null"/>, the subprocess inherits the parent process environment
-    /// (the default <see cref="System.Diagnostics.ProcessStartInfo"/> behavior). To run with
-    /// a restricted environment, supply a dictionary containing only the variables the
-    /// subprocess should see — pass an empty dictionary for a fully scrubbed environment.
+    /// The subprocess does not inherit the parent process environment. When this property is
+    /// <see langword="null"/> or empty, the subprocess runs with a scrubbed environment.
+    /// Otherwise, the subprocess receives only the variables in the supplied dictionary.
     /// On Windows, a small set of system variables (SYSTEMROOT, SYSTEMDRIVE, COMSPEC,
     /// PATHEXT, TEMP, TMP) is back-filled from the parent environment when not already
     /// present so Python can locate its standard library.
diff --git a/dotnet/src/Microsoft.Agents.AI.LocalCodeAct/README.md b/dotnet/src/Microsoft.Agents.AI.LocalCodeAct/README.md
index 13ca7c38477..ef212e27115 100644
--- a/dotnet/src/Microsoft.Agents.AI.LocalCodeAct/README.md
+++ b/dotnet/src/Microsoft.Agents.AI.LocalCodeAct/README.md
@@ -156,7 +156,8 @@ scanned for **new** files after execution, and those files are returned as
 ## Environment Variables
 
 Pass environment variables explicitly. The subprocess does NOT inherit the host
-environment by default:
+environment by default. On Windows, the system variables required for Python to
+load its standard library are retained:
 
 ```csharp
 using var provider = new LocalCodeActProvider("/usr/bin/python3", new LocalCodeActProviderOptions
diff --git a/dotnet/tests/Microsoft.Agents.AI.LocalCodeAct.UnitTests/LocalExecuteCodeFunctionIntegrationTests.cs b/dotnet/tests/Microsoft.Agents.AI.LocalCodeAct.UnitTests/LocalExecuteCodeFunctionIntegrationTests.cs
index 45952809de8..c95ce790862 100644
--- a/dotnet/tests/Microsoft.Agents.AI.LocalCodeAct.UnitTests/LocalExecuteCodeFunctionIntegrationTests.cs
+++ b/dotnet/tests/Microsoft.Agents.AI.LocalCodeAct.UnitTests/LocalExecuteCodeFunctionIntegrationTests.cs
@@ -108,6 +108,84 @@ public async Task ExecuteCode_AllowsPermittedOsAccessAsync(string code)
         Assert.NotNull(result);
     }
 
+    [Fact]
+    public async Task ExecuteCode_DefaultEnvironmentDoesNotInheritParentVariablesAsync()
+    {
+        SkipIfNoPython();
+
+        // Arrange
+        var variableName = $"AF_LOCALCODEACT_PARENT_{Guid.NewGuid():N}";
+        var parentValue = $"parent-value-{Guid.NewGuid():N}";
+        var originalValue = Environment.GetEnvironmentVariable(variableName);
+        Environment.SetEnvironmentVariable(variableName, parentValue);
+
+        try
+        {
+            var function = new LocalExecuteCodeFunction(s_python!);
+            var args = new AIFunctionArguments
+            {
+                ["code"] = $"import os\nprint(os.environ.get('{variableName}', 'NOT_FOUND'))",
+            };
+
+            // Act
+            var result = await function.InvokeAsync(args, CancellationToken.None);
+
+            // Assert
+            var combined = GetResultText(result);
+            Assert.Contains("NOT_FOUND", combined, StringComparison.Ordinal);
+            Assert.DoesNotContain(parentValue, combined, StringComparison.Ordinal);
+        }
+        finally
+        {
+            Environment.SetEnvironmentVariable(variableName, originalValue);
+        }
+    }
+
+    [Fact]
+    public async Task ExecuteCode_ExplicitEnvironmentDoesNotInheritOtherParentVariablesAsync()
+    {
+        SkipIfNoPython();
+
+        // Arrange
+        var parentVariableName = $"AF_LOCALCODEACT_PARENT_{Guid.NewGuid():N}";
+        var childVariableName = $"AF_LOCALCODEACT_CHILD_{Guid.NewGuid():N}";
+        var parentValue = $"parent-value-{Guid.NewGuid():N}";
+        var childValue = $"child-value-{Guid.NewGuid():N}";
+        var originalValue = Environment.GetEnvironmentVariable(parentVariableName);
+        Environment.SetEnvironmentVariable(parentVariableName, parentValue);
+
+        try
+        {
+            var options = new LocalCodeActProviderOptions
+            {
+                Environment = new Dictionary<string, string>
+                {
+                    [childVariableName] = childValue,
+                },
+            };
+            var function = new LocalExecuteCodeFunction(s_python!, options);
+            var args = new AIFunctionArguments
+            {
+                ["code"] =
+                    $"import os\nprint(os.environ.get('{childVariableName}', 'NOT_FOUND'))\n" +
+                    $"print(os.environ.get('{parentVariableName}', 'NOT_FOUND'))",
+            };
+
+            // Act
+            var result = await function.InvokeAsync(args, CancellationToken.None);
+
+            // Assert
+            var combined = GetResultText(result);
+            Assert.Contains(childValue, combined, StringComparison.Ordinal);
+            Assert.Contains("NOT_FOUND", combined, StringComparison.Ordinal);
+            Assert.DoesNotContain(parentValue, combined, StringComparison.Ordinal);
+        }
+        finally
+        {
+            Environment.SetEnvironmentVariable(parentVariableName, originalValue);
+        }
+    }
+
     [Fact]
     public async Task ExecuteCode_CapturesFilesInWritableMountAsync()
     {