diff --git a/packages/env/CHANGELOG.md b/packages/env/CHANGELOG.md
index 54bbd44d2b448..1c2b35b28da94 100644
--- a/packages/env/CHANGELOG.md
+++ b/packages/env/CHANGELOG.md
@@ -2,6 +2,10 @@
 
 ## Unreleased
 
+### New feature
+
+-   Execute the local package's `wp-env` instead of the globally installed version if one is available.
+
 ## 8.0.0 (2023-05-24)
 
 ### Breaking Change
diff --git a/packages/env/README.md b/packages/env/README.md
index 0bc3609283033..fb9e9751d9c66 100644
--- a/packages/env/README.md
+++ b/packages/env/README.md
@@ -44,9 +44,9 @@ If your project already has a package.json, it's also possible to use `wp-env` a
 $ npm i @wordpress/env --save-dev
 ```
 
-At this point, you can use the local, project-level version of wp-env via [`npx`](https://www.npmjs.com/package/npx), a utility automatically installed with `npm`.`npx` finds binaries like wp-env installed through node modules. As an example: `npx wp-env start --update`.
+If you have also installed `wp-env` globally, running it will automatically execute the local, project-level package. Alternatively, you can execute `wp-env` via [`npx`](https://www.npmjs.com/package/npx), a utility automatically installed with `npm`.`npx` finds binaries like `wp-env` installed through node modules. As an example: `npx wp-env start --update`.
 
-If you don't wish to use `npx`, modify your package.json and add an extra command to npm `scripts` (https://docs.npmjs.com/misc/scripts):
+If you don't wish to use the global installation or `npx`, modify your `package.json` and add an extra command to npm `scripts` (https://docs.npmjs.com/misc/scripts):
 
 ```json
 "scripts": {
diff --git a/packages/env/bin/wp-env b/packages/env/bin/wp-env
index 7ce3e39103bcd..a6c4784a3e7fb 100755
--- a/packages/env/bin/wp-env
+++ b/packages/env/bin/wp-env
@@ -1,4 +1,20 @@
 #!/usr/bin/env node
 'use strict';
-const command = process.argv.slice( 2 );
-require( '../lib/cli' )().parse( command.length ? command : [ '--help' ] );
+
+// Remove 'node' and the name of the script from the arguments.
+let command = process.argv.slice( 2 );
+// Default to help text when they aren't running any commands.
+if ( ! command.length ) {
+	command = [ '--help' ];
+}
+
+// Rather than just executing the current CLI we will attempt to find a local version
+// and execute that one instead. This prevents users from accidentally using the
+// global CLI when a potentially different local version is expected.
+const localPath = require.resolve( '@wordpress/env/lib/cli.js', {
+	paths: [ process.cwd(), __dirname ],
+} );
+const cli = require( localPath )();
+
+// Now we can execute the CLI with the given command.
+cli.parse( command );
diff --git a/packages/env/lib/cli.js b/packages/env/lib/cli.js
index 72a5eec911e08..1788315b60b9d 100644
--- a/packages/env/lib/cli.js
+++ b/packages/env/lib/cli.js
@@ -11,6 +11,7 @@ const { execSync } = require( 'child_process' );
 /**
  * Internal dependencies
  */
+const pkg = require( '../package.json' );
 const env = require( './env' );
 const parseXdebugMode = require( './parse-xdebug-mode' );
 const {
@@ -110,6 +111,10 @@ module.exports = function cli() {
 		'populate--': true,
 	} );
 
+	// Since we might be running a different CLI version than the one that was called
+	// we need to set the version manually from the correct package.json.
+	yargs.version( pkg.version );
+
 	yargs.command(
 		'start',
 		wpGreen(