diff --git a/conda_build/build.py b/conda_build/build.py
index 4be112f57b..f6da01e4c9 100644
--- a/conda_build/build.py
+++ b/conda_build/build.py
@@ -1762,15 +1762,14 @@ def bundle_conda(
             if "=" in var:
                 val = var.split("=", 1)[1]
                 var = var.split("=", 1)[0]
+                env_output[var] = val
             elif var not in os.environ:
                 warnings.warn(
                     f"The environment variable '{var}' specified in script_env is undefined.",
                     UserWarning,
                 )
-                val = ""
             else:
-                val = os.environ[var]
-            env_output[var] = val
+                env_output[var] = os.environ[var]
         dest_file = os.path.join(metadata.config.work_dir, output["script"])
         utils.copy_into(os.path.join(metadata.path, output["script"]), dest_file)
         from os import stat
diff --git a/news/5322-undefine-build-vars b/news/5322-undefine-build-vars
new file mode 100644
index 0000000000..67c47373b5
--- /dev/null
+++ b/news/5322-undefine-build-vars
@@ -0,0 +1,20 @@
+### Enhancements
+
+* <news item>
+
+### Bug fixes
+
+* Ensures that variables mentioned in `script_env` are undefined in multi-output build environment
+  if undefined in the environment `conda-build` is invoked from.
+
+### Deprecations
+
+* <news item>
+
+### Docs
+
+* <news item>
+
+### Other
+
+* <news item>
diff --git a/tests/test-recipes/split-packages/_build_script_relying_on_missing_var/meta.yaml b/tests/test-recipes/split-packages/_build_script_relying_on_missing_var/meta.yaml
new file mode 100644
index 0000000000..55ce0b9d0d
--- /dev/null
+++ b/tests/test-recipes/split-packages/_build_script_relying_on_missing_var/meta.yaml
@@ -0,0 +1,14 @@
+package:
+  name: test_build_script_relying_on_missing_var
+  version: 1.0
+
+outputs:
+  - name: test_1
+    build:
+      script_env:
+        - TEST_FN_DOESNT_EXIST
+      script:
+        - python -c "import os; print('val...' + os.environ['TEST_FN_DOESNT_EXIST'])"
+      requirements:
+        host:
+          - python
diff --git a/tests/test_subpackages.py b/tests/test_subpackages.py
index 4307eb0f5b..881a4eb4cb 100644
--- a/tests/test_subpackages.py
+++ b/tests/test_subpackages.py
@@ -11,7 +11,7 @@
 from conda.base.context import context
 
 from conda_build import api, utils
-from conda_build.exceptions import CondaBuildUserError
+from conda_build.exceptions import BuildScriptException, CondaBuildUserError
 from conda_build.metadata import MetaDataTuple
 from conda_build.render import finalize_metadata
 
@@ -354,6 +354,18 @@ def test_build_script_and_script_env_warn_empty_script_env(testing_config):
         api.build(recipe, config=testing_config)
 
 
+@pytest.mark.sanity
+def test_build_script_does_not_set_env_from_script_env_if_missing(
+    testing_config, capfd, monkeypatch
+):
+    monkeypatch.delenv("TEST_FN_DOESNT_EXIST", raising=False)
+    recipe = os.path.join(subpackage_dir, "_build_script_relying_on_missing_var")
+    with pytest.raises(BuildScriptException):
+        api.build(recipe, config=testing_config)
+    captured = capfd.readouterr()
+    assert "KeyError: 'TEST_FN_DOESNT_EXIST'" in captured.err
+
+
 @pytest.mark.sanity
 @pytest.mark.skipif(sys.platform != "darwin", reason="only implemented for mac")
 def test_strong_run_exports_from_build_applies_to_host(testing_config):