diff --git a/packages/util/http-proxy/src/install.ts b/packages/util/http-proxy/src/install.ts
index 1b1bb79326..0fa3c85c24 100644
--- a/packages/util/http-proxy/src/install.ts
+++ b/packages/util/http-proxy/src/install.ts
@@ -76,28 +76,54 @@ export function proxyRouteFor(url: URL): ProxyRoute {
  * @returns a function restoring every name this call changed.
  */
 function applyPolicyEnv(policy: ProxyPolicy): () => void {
+  const previousInherited = inheritedProxyEnv
+  inheritedProxyEnv = previousInherited ?? snapshotProxyEnv()
+  const published: Record<string, string | undefined> = {}
+  for (const [field, names] of Object.entries(POLICY_ENV_NAMES)) {
+    const value = policy[field as keyof typeof POLICY_ENV_NAMES]
+    for (const name of names) published[name] = value
+  }
+  const restore = writeProxyEnv(published)
+  return () => {
+    restore()
+    inheritedProxyEnv = previousInherited
+  }
+}
+
+/**
+ * Read every proxy name this package publishes, as `process.env` holds it now.
+ *
+ * @returns one entry per name in {@link POLICY_ENV_NAMES}; `undefined` marks an absent name.
+ */
+function snapshotProxyEnv(): Record<string, string | undefined> {
+  const snapshot: Record<string, string | undefined> = {}
+  for (const names of Object.values(POLICY_ENV_NAMES)) {
+    for (const name of names) snapshot[name] = process.env[name]
+  }
+  return snapshot
+}
+
+/**
+ * Set every proxy name to the value `values` holds for it, removing a name whose value is `undefined`.
+ *
+ * @param values - the value each name in {@link POLICY_ENV_NAMES} should hold.
+ * @returns a function restoring every name to what it held before this call.
+ */
+function writeProxyEnv(values: Readonly<Record<string, string | undefined>>): () => void {
   // Snapshot EVERY name before writing any of them. Windows folds environment names case-insensitively,
   // so reading the uppercase spelling after writing the lowercase one would read back the value just
   // written and restore the policy instead of the user's environment.
-  const previous = new Map<string, string | undefined>()
-  for (const names of Object.values(POLICY_ENV_NAMES)) {
-    for (const name of names) previous.set(name, process.env[name])
-  }
-  const previousInherited = inheritedProxyEnv
-  inheritedProxyEnv = previousInherited ?? Object.fromEntries(previous)
-  for (const [field, names] of Object.entries(POLICY_ENV_NAMES)) {
-    const value = policy[field as keyof typeof POLICY_ENV_NAMES]
-    for (const name of names) {
-      if (value === undefined || value === '') Reflect.deleteProperty(process.env, name)
-      else process.env[name] = value
-    }
+  const previous = snapshotProxyEnv()
+  for (const name of Object.keys(previous)) {
+    const value = values[name]
+    if (value === undefined) Reflect.deleteProperty(process.env, name)
+    else process.env[name] = value
   }
   return () => {
-    for (const [name, value] of previous) {
+    for (const [name, value] of Object.entries(previous)) {
       if (value === undefined) Reflect.deleteProperty(process.env, name)
       else process.env[name] = value
     }
-    inheritedProxyEnv = previousInherited
   }
 }
 
@@ -159,6 +185,11 @@ async function installGlobalProxy(policy: ProxyPolicy): Promise<() => Promise<vo
       }
     }
     const previousInstalled = installed
+    // The install underneath published its normalized policy into `process.env`, which is what a
+    // spawned child copies. With no policy active there is no normalization to stand behind, so the
+    // user's own values return for the window and the outer install's come back when it ends. An
+    // install underneath that proxied nothing published nothing, and there is nothing to put back.
+    const restoreEnv = inheritedProxyEnv === undefined ? undefined : writeProxyEnv(inheritedProxyEnv)
     const undici = await import('undici')
     const previous = undici.getGlobalDispatcher()
     const direct = new undici.Agent()
@@ -169,6 +200,7 @@ async function installGlobalProxy(policy: ProxyPolicy): Promise<() => Promise<vo
       undici.setGlobalDispatcher(previous)
       active = previousPolicy
       installed = previousInstalled
+      restoreEnv?.()
       await direct.close()
     }
   }
diff --git a/packages/util/http-proxy/tests/install.spec.ts b/packages/util/http-proxy/tests/install.spec.ts
index 52e8011e6f..e514997c7b 100644
--- a/packages/util/http-proxy/tests/install.spec.ts
+++ b/packages/util/http-proxy/tests/install.spec.ts
@@ -357,6 +357,51 @@ describe('installing over an existing installation', () => {
   })
 })
 
+describe('the environment while a direct policy is layered over a proxied one', () => {
+  it('hands a child the user\'s own values, and the outer normalization again afterwards', async () => {
+    await withCleanProxyEnv(async () => {
+      // The user exported one usable proxy and one this package refuses.
+      process.env.HTTP_PROXY = proxyUrl
+      process.env.https_proxy = 'socks5://127.0.0.1:1080'
+      const outer = await install(env({ HTTP_PROXY: proxyUrl, https_proxy: 'socks5://127.0.0.1:1080' }))
+      try {
+        // The outer install published its policy: the refused scheme is removed in both casings.
+        expect([process.env.HTTPS_PROXY, process.env.https_proxy]).toEqual([undefined, undefined])
+        const off = await install(env({}))
+        try {
+          // A spawned child copies `process.env`, and `proxyEnvironmentForChild()` adds nothing under a
+          // direct policy — so what it copies has to be the user's own environment, not a normalization
+          // no active policy stands behind: the SOCKS value they set for `curl` is theirs again.
+          expect(process.env.HTTP_PROXY).toBe(proxyUrl)
+          expect([process.env.HTTPS_PROXY, process.env.https_proxy]).toContain('socks5://127.0.0.1:1080')
+          expect(proxyEnvironmentForChild()).toEqual({})
+        } finally {
+          await off.dispose()
+        }
+        // Ending the window re-applies what the outer install published.
+        expect([process.env.HTTPS_PROXY, process.env.https_proxy]).toEqual([undefined, undefined])
+        expect(process.env.HTTP_PROXY).toBe(proxyUrl)
+      } finally {
+        await outer.dispose()
+      }
+    })
+  })
+
+  it('touches no environment when the install underneath proxied nothing', async () => {
+    process.env.HTTP_PROXY = 'http://untouched.example'
+    const outer = await install(env({}))
+    const inner = await install(env({}))
+    try {
+      expect(process.env.HTTP_PROXY).toBe('http://untouched.example')
+    } finally {
+      await inner.dispose()
+      await outer.dispose()
+      expect(process.env.HTTP_PROXY).toBe('http://untouched.example')
+      delete process.env.HTTP_PROXY
+    }
+  })
+})
+
 describe('the published environment', () => {
   it('restores every name from one snapshot taken before any write', async () => {
     process.env.http_proxy = 'http://before.example'