diff --git a/api/.env.example b/api/.env.example
index 352ed8fb..966364e5 100644
--- a/api/.env.example
+++ b/api/.env.example
@@ -61,6 +61,7 @@ DISABLE_MANAGEMENT=false         # Disable management routes
 ENABLE_ACCOUNT_REGISTRATION=true # Enable account registration
 UPLOAD_SIZE_LIMIT_MB=200         # Max file upload size (in MB)
 ENABLE_PACKAGE_DIFFING=false     # Enable generating diffs for releases
+TMPDIR=./tmp                     # Temporary directory for server diff package generation
 
 # ==============================
 # Azure KeyVault Configuration (Optional)
diff --git a/api/script/routes/management.ts b/api/script/routes/management.ts
index 97f18557..f74a7d78 100644
--- a/api/script/routes/management.ts
+++ b/api/script/routes/management.ts
@@ -1286,7 +1286,7 @@ export function getManagementRouter(config: ManagementConfig): Router {
   }
 
   function processDiff(accountId: string, appId: string, deploymentId: string, appPackage: storageTypes.Package): q.Promise<void> {
-    if (!appPackage.manifestBlobUrl || process.env.ENABLE_PACKAGE_DIFFING) {
+    if (!appPackage.manifestBlobUrl || !process.env.ENABLE_PACKAGE_DIFFING) {
       // No need to process diff because either:
       //   1. The release just contains a single file.
       //   2. Diffing disabled.
diff --git a/api/script/utils/package-diffing.ts b/api/script/utils/package-diffing.ts
index 385c201e..ac56251e 100644
--- a/api/script/utils/package-diffing.ts
+++ b/api/script/utils/package-diffing.ts
@@ -172,7 +172,7 @@ export class PackageDiffer {
                       readStreamCounter--;
                       if (readStreamCounter === 0 && !readStreamError) {
                         // All read streams have completed successfully
-                        resolve();
+                        resolve(diffFilePath);
                       }
                     });
 
@@ -185,8 +185,8 @@ export class PackageDiffer {
                     if (readStreamError) {
                       reject(readStreamError);
                     } else {
+                      resolve(diffFilePath);
                       diffFile.end();
-                      resolve();
                     }
                   }
                 });