diff --git a/src/libstore/build.cc b/src/libstore/build.cc
index 0e0f8a545..273f25363 100644
--- a/src/libstore/build.cc
+++ b/src/libstore/build.cc
@@ -956,6 +956,9 @@ private:
     /* Fill in the environment for the builder. */
     void initEnv();
 
+    /* Setup tmp dir location. */
+    void initTmpDir();
+
     /* Write a JSON file containing the derivation attributes. */
     void writeStructuredAttrs();
 
@@ -2383,6 +2386,7 @@ void DerivationGoal::startBuilder()
         if (res != 0 && settings.sandboxFallback) {
             useChroot = false;
             tmpDirInSandbox = tmpDir;
+            initTmpDir();
             goto fallback;
         } else if (res != 0)
             throw Error("unable to start build process");
@@ -2438,32 +2442,7 @@ void DerivationGoal::startBuilder()
 }
 
 
-void DerivationGoal::initEnv()
-{
-    env.clear();
-
-    /* Most shells initialise PATH to some default (/bin:/usr/bin:...) when
-       PATH is not set.  We don't want this, so we fill it in with some dummy
-       value. */
-    env["PATH"] = "/path-not-set";
-
-    /* Set HOME to a non-existing path to prevent certain programs from using
-       /etc/passwd (or NIS, or whatever) to locate the home directory (for
-       example, wget looks for ~/.wgetrc).  I.e., these tools use /etc/passwd
-       if HOME is not set, but they will just assume that the settings file
-       they are looking for does not exist if HOME is set but points to some
-       non-existing path. */
-    env["HOME"] = homeDir;
-
-    /* Tell the builder where the Nix store is.  Usually they
-       shouldn't care, but this is useful for purity checking (e.g.,
-       the compiler or linker might only want to accept paths to files
-       in the store or in the build directory). */
-    env["NIX_STORE"] = worker.store.storeDir;
-
-    /* The maximum number of cores to utilize for parallel building. */
-    env["NIX_BUILD_CORES"] = (format("%d") % settings.buildCores).str();
-
+void DerivationGoal::initTmpDir() {
     /* In non-structured mode, add all bindings specified in the
        derivation via the environment, except those listed in the
        passAsFile attribute. Those are passed as file names pointing
@@ -2501,6 +2480,35 @@ void DerivationGoal::initEnv()
        inode of the current directory doesn't appear in .. (because
        getdents returns the inode of the mount point). */
     env["PWD"] = tmpDirInSandbox;
+}
+
+void DerivationGoal::initEnv()
+{
+    env.clear();
+
+    /* Most shells initialise PATH to some default (/bin:/usr/bin:...) when
+       PATH is not set.  We don't want this, so we fill it in with some dummy
+       value. */
+    env["PATH"] = "/path-not-set";
+
+    /* Set HOME to a non-existing path to prevent certain programs from using
+       /etc/passwd (or NIS, or whatever) to locate the home directory (for
+       example, wget looks for ~/.wgetrc).  I.e., these tools use /etc/passwd
+       if HOME is not set, but they will just assume that the settings file
+       they are looking for does not exist if HOME is set but points to some
+       non-existing path. */
+    env["HOME"] = homeDir;
+
+    /* Tell the builder where the Nix store is.  Usually they
+       shouldn't care, but this is useful for purity checking (e.g.,
+       the compiler or linker might only want to accept paths to files
+       in the store or in the build directory). */
+    env["NIX_STORE"] = worker.store.storeDir;
+
+    /* The maximum number of cores to utilize for parallel building. */
+    env["NIX_BUILD_CORES"] = (format("%d") % settings.buildCores).str();
+
+    initTmpDir();
 
     /* Compatibility hack with Nix <= 0.7: if this is a fixed-output
        derivation, tell the builder, so that for instance `fetchurl'