diff --git a/src/cmd/go/build.go b/src/cmd/go/build.go
index 718edd2f77fdb..b7c7e0584fc84 100644
--- a/src/cmd/go/build.go
+++ b/src/cmd/go/build.go
@@ -1880,7 +1880,7 @@ func (b *builder) runOut(dir string, desc string, env []string, cmdargs ...inter
 		cmd.Stdout = &buf
 		cmd.Stderr = &buf
 		cmd.Dir = dir
-		cmd.Env = mergeEnvLists(env, envForDir(cmd.Dir))
+		cmd.Env = mergeEnvLists(env, envForDir(cmd.Dir, os.Environ()))
 		err := cmd.Run()
 
 		// cmd.Run will fail on Unix if some other process has the binary
diff --git a/src/cmd/go/go_test.go b/src/cmd/go/go_test.go
index 0718869aa66da..77b2628982bb8 100644
--- a/src/cmd/go/go_test.go
+++ b/src/cmd/go/go_test.go
@@ -2294,6 +2294,21 @@ func TestIssue11709(t *testing.T) {
 	tg.run("run", tg.path("run.go"))
 }
 
+func TestIssue12096(t *testing.T) {
+	tg := testgo(t)
+	defer tg.cleanup()
+	tg.tempFile("test_test.go", `
+		package main
+		import ("os"; "testing")
+		func TestEnv(t *testing.T) {
+			if os.Getenv("TERM") != "" {
+				t.Fatal("TERM is set")
+			}
+		}`)
+	tg.unsetenv("TERM")
+	tg.run("test", tg.path("test_test.go"))
+}
+
 func TestGoBuildOutput(t *testing.T) {
 	tg := testgo(t)
 	defer tg.cleanup()
diff --git a/src/cmd/go/main.go b/src/cmd/go/main.go
index 88a94417d74a8..8ebde8925990d 100644
--- a/src/cmd/go/main.go
+++ b/src/cmd/go/main.go
@@ -446,11 +446,10 @@ func runOut(dir string, cmdargs ...interface{}) []byte {
 // The environment is the current process's environment
 // but with an updated $PWD, so that an os.Getwd in the
 // child will be faster.
-func envForDir(dir string) []string {
-	env := os.Environ()
+func envForDir(dir string, base []string) []string {
 	// Internally we only use rooted paths, so dir is rooted.
 	// Even if dir is not rooted, no harm done.
-	return mergeEnvLists([]string{"PWD=" + dir}, env)
+	return mergeEnvLists([]string{"PWD=" + dir}, base)
 }
 
 // mergeEnvLists merges the two environment lists such that
diff --git a/src/cmd/go/test.go b/src/cmd/go/test.go
index 0ba18837143a2..ba1ab82680d9c 100644
--- a/src/cmd/go/test.go
+++ b/src/cmd/go/test.go
@@ -1027,7 +1027,7 @@ func (b *builder) runTest(a *action) error {
 
 	cmd := exec.Command(args[0], args[1:]...)
 	cmd.Dir = a.p.Dir
-	cmd.Env = envForDir(cmd.Dir)
+	cmd.Env = envForDir(cmd.Dir, origEnv)
 	var buf bytes.Buffer
 	if testStreamOutput {
 		cmd.Stdout = os.Stdout
diff --git a/src/cmd/go/vcs.go b/src/cmd/go/vcs.go
index 2ee1057a5839c..28a7540dfe43c 100644
--- a/src/cmd/go/vcs.go
+++ b/src/cmd/go/vcs.go
@@ -344,7 +344,7 @@ func (v *vcsCmd) run1(dir string, cmdline string, keyval []string, verbose bool)
 
 	cmd := exec.Command(v.cmd, args...)
 	cmd.Dir = dir
-	cmd.Env = envForDir(cmd.Dir)
+	cmd.Env = envForDir(cmd.Dir, os.Environ())
 	if buildX {
 		fmt.Printf("cd %s\n", dir)
 		fmt.Printf("%s %s\n", v.cmd, strings.Join(args, " "))