diff --git a/docs/python-search-path.md b/docs/python-search-path.md
new file mode 100644
index 000000000..7a766d581
--- /dev/null
+++ b/docs/python-search-path.md
@@ -0,0 +1,57 @@
+# Customizing Python search path
+
+In order to locate Python packages in modules, before v5.0.0, EasyBuild conventionally used the `PYTHONPATH` environment variable. However, this has several issues:
+
+1. `PYTHONPATH` has highest priority; it prevents users from making a custom virtual environment on top of modules and shadowing packages.
+2. Packages are picked up even for incompatible python versions, e.g. an OS installed old python 3.6 will break if packages from 3.12 exists in `PYTHONPATH`.
+3. Modules can't have optional dependencies on different Python versions, as PYTHONPATH points directly to the `site-packages` subdirectory.
+4. Packages with `pth` files can't work with PYTHONPATH and requires being added to the site dir.
+
+Unfortunately, Python offers no environment variables to do the correct thing here.
+To solve this (initially for Python `multi_deps`) EasyBuild has for a long time supported the use of the custom `EBPYTHONPREFIXES` via a `sitecustomize.py` script for the Python modules we build. 
+It is included in standard Python installations made with EasyBuild. You can opt out of using `sitecustomize.py` if you have strong technical reasons to avoid it.
+
+The `sitecustomize.py` script does the correct thing by only considering the correct Python version, and puts Python packages provided by the environment module at the lowest priority, allowing a user venv to override them.
+
+## Using `--prefer-python-search-path` 
+
+Since v5.0.0 the new global configuration option `--prefer-python-search-path` can be used for EasyBuild to prefer the use of either `PYTHONPATH` or `EBPYTHONPREFIXES`.
+For backwards compatibility with existing modules, EasyBuild was unfortunately required to keep `PYTHONPATH` as the default.
+Note that the option is just the preferred option, if the package path doesn't follow the standard `lib/pythonY.X/site-packages` format then `PYTHONPATH` must be used. If multi-deps is used, then `EBPYTHONPREFIXES` is required.
+
+If you wish to switch to `EBPYTHONPREFIXES`, you should also traverse the existing Python bundles you have installed and make sure to rebuild the modules.
+Failure to do so might leave you with a few easyconfigs that require shadowing of older package versions not working correctly due to the import priority changing.
+
+If you are building a new software stack from scratch, you can safely switch this option to `EBPYTHONPREFIXES` and enjoy the benefits.
+
+## Fixing existing modules
+
+You can convert existing modules by rebuilding them with `eb --module-only --rebuild ...`.
+You can find the modules that use `PYTHONPATH` by e.g. grepping through your modules:
+
+```bash
+grep --include '*.lua' -Rl 'PYTHONPATH.*site-packages' /path/to/modules/all
+```
+
+If you use the default module naming scheme
+
+```bash
+cd $MODULEPATH
+grep -Rl PYTHONPATH */*.lua | grep -v EasyBuild | sed -e 's+/+-+' | sed -e 's+lua$+eb+' | xargs eb --rebuild --module-only
+```
+
+If done correctly, your old module files will have gone from
+
+```lua
+prepend_path("PYTHONPATH", pathJoin(root, "lib", "python3.12", "site-packages"))
+# or
+prepend_path("PYTHONPATH", pathJoin(root, "lib/python3.12/site-packages"))
+```
+
+to
+
+```lua
+prepend_path("EBPYTHONPREFIXES", root)
+```
+
+Remember to back up all your module files first before rebuilding.
diff --git a/mkdocs.yml b/mkdocs.yml
index 6cb670066..1b4aa1b02 100644
--- a/mkdocs.yml
+++ b/mkdocs.yml
@@ -73,6 +73,7 @@ nav:
       - Cray support: cray-support.md
       - Customizing EasyBuild via hooks: hooks.md
       - Including Python modules: including-additional-python-modules.md
+      - Customizing Python search path: python-search-path.md
       - Packaging support: packaging-support.md
       - RPATH support: rpath-support.md
       - Using external modules: using-external-modules.md