diff --git a/PowerShell.Common.props b/PowerShell.Common.props
index 28bc08cc5db..cfaddee74e3 100644
--- a/PowerShell.Common.props
+++ b/PowerShell.Common.props
@@ -176,6 +176,27 @@
     <DebugType>portable</DebugType>
   </PropertyGroup>
 
+  <!-- Define properties for Framework dependent deployments in Packages
+        https://learn.microsoft.com/en-us/dotnet/core/project-sdk/msbuild-props#apphostdotnetsearch
+        For FxDependent, we want to search for the apphost in the Environment or global location,
+        as this was not causing any issues.
+        For FxDependentDeployment, we want to search ONLY in global location.
+        For SelfContained, we want to search in the app local location.
+  -->
+  <PropertyGroup Condition=" '$(AppDeployment)' == 'FxDependent' ">
+    <!-- Specify both to keep existing behavior because we have not had complaints about this scenario -->
+    <AppHostDotNetSearch>EnvironmentVariable;Global</AppHostDotNetSearch>
+  </PropertyGroup>
+
+  <PropertyGroup Condition=" '$(AppDeployment)' == 'FxDependentDeployment' ">
+    <!-- If we specify Environment too, it searches that first, no matter what order we specify-->
+    <AppHostDotNetSearch>Global</AppHostDotNetSearch>
+  </PropertyGroup>
+
+  <PropertyGroup Condition=" '$(AppDeployment)' == 'SelfContained' ">
+    <AppHostDotNetSearch>AppLocal</AppHostDotNetSearch>
+  </PropertyGroup>
+
   <!-- Define all OS, release configuration properties -->
   <PropertyGroup Condition=" '$(Configuration)' == 'Release' ">
     <PublishReadyToRun>true</PublishReadyToRun>
diff --git a/build.psm1 b/build.psm1
index 45705e53fa6..c60bec719f2 100644
--- a/build.psm1
+++ b/build.psm1
@@ -492,13 +492,24 @@ Fix steps:
         $Arguments += "/property:IsWindows=false"
     }
 
-    # Framework Dependent builds do not support ReadyToRun as it needs a specific runtime to optimize for.
-    # The property is set in Powershell.Common.props file.
-    # We override the property through the build command line.
-    if(($Options.Runtime -like 'fxdependent*' -or $ForMinimalSize) -and $Options.Runtime -notmatch $optimizedFddRegex) {
-        $Arguments += "/property:PublishReadyToRun=false"
+    # We pass in the AppDeployment property to indicate which type of deployment we are doing.
+    # This allows the PowerShell.Common.props to set the correct properties for the build.
+    $AppDeployment = if(($Options.Runtime -like 'fxdependent*' -or $ForMinimalSize) -and $Options.Runtime -notmatch $optimizedFddRegex) {
+        # Global and zip files
+        "FxDependent"
+    }
+    elseif($Options.Runtime -like 'fxdependent*' -and $Options.Runtime -match $optimizedFddRegex) {
+        # These are Optimized and must come from the correct version of the runtime.
+        # Global
+        "FxDependentDeployment"
+    }
+    else {
+        # The majority of our packages
+        # AppLocal
+        "SelfContained"
     }
 
+    $Arguments += "/property:AppDeployment=$AppDeployment"
     $Arguments += "--configuration", $Options.Configuration
     $Arguments += "--framework", $Options.Framework