diff --git a/README.md b/README.md
index 5803a88c0e757..f5a20d592d06d 100644
--- a/README.md
+++ b/README.md
@@ -433,8 +433,10 @@ Moreover, Miri recognizes some environment variables:
   trigger a re-build of the standard library; you have to clear the Miri build
   cache manually (on Linux, `rm -rf ~/.cache/miri`).
 * `MIRI_SYSROOT` (recognized by `cargo miri` and the Miri driver) indicates the sysroot to use. When
-  using `cargo miri`, only set this if you do not want to use the automatically created sysroot. For
-  directly invoking the Miri driver, this variable (or a `--sysroot` flag) is mandatory.
+  using `cargo miri`, this skips the automatic setup -- only set this if you do not want to use the
+  automatically created sysroot. For directly invoking the Miri driver, this variable (or a
+  `--sysroot` flag) is mandatory. When invoking `cargo miri setup`, this indicates where the sysroot
+  will be put.
 * `MIRI_TEST_TARGET` (recognized by the test suite and the `./miri` script) indicates which target
   architecture to test against.  `miri` and `cargo miri` accept the `--target` flag for the same
   purpose.
diff --git a/cargo-miri/src/setup.rs b/cargo-miri/src/setup.rs
index 72d8ef2f75224..f3841a6140839 100644
--- a/cargo-miri/src/setup.rs
+++ b/cargo-miri/src/setup.rs
@@ -17,10 +17,8 @@ pub fn setup(subcommand: &MiriCommand, target: &str, rustc_version: &VersionMeta
     let only_setup = matches!(subcommand, MiriCommand::Setup);
     let ask_user = !only_setup;
     let print_sysroot = only_setup && has_arg_flag("--print-sysroot"); // whether we just print the sysroot path
-    if std::env::var_os("MIRI_SYSROOT").is_some() {
-        if only_setup {
-            println!("WARNING: MIRI_SYSROOT already set, not doing anything.")
-        }
+    if !only_setup && std::env::var_os("MIRI_SYSROOT").is_some() {
+        // Skip setup step if MIRI_SYSROOT is explicitly set, *unless* we are `cargo miri setup`.
         return;
     }
 
@@ -61,8 +59,13 @@ pub fn setup(subcommand: &MiriCommand, target: &str, rustc_version: &VersionMeta
     }
 
     // Determine where to put the sysroot.
-    let user_dirs = directories::ProjectDirs::from("org", "rust-lang", "miri").unwrap();
-    let sysroot_dir = user_dirs.cache_dir();
+    let sysroot_dir = match std::env::var_os("MIRI_SYSROOT") {
+        Some(dir) => PathBuf::from(dir),
+        None => {
+            let user_dirs = directories::ProjectDirs::from("org", "rust-lang", "miri").unwrap();
+            user_dirs.cache_dir().to_owned()
+        }
+    };
     // Sysroot configuration and build details.
     let sysroot_config = if std::env::var_os("MIRI_NO_STD").is_some() {
         SysrootConfig::NoStd
@@ -111,7 +114,7 @@ pub fn setup(subcommand: &MiriCommand, target: &str, rustc_version: &VersionMeta
         (command, rustflags)
     };
     // Make sure all target-level Miri invocations know their sysroot.
-    std::env::set_var("MIRI_SYSROOT", sysroot_dir);
+    std::env::set_var("MIRI_SYSROOT", &sysroot_dir);
 
     // Do the build.
     if only_setup {
@@ -121,7 +124,7 @@ pub fn setup(subcommand: &MiriCommand, target: &str, rustc_version: &VersionMeta
         // We want to be quiet, but still let the user know that something is happening.
         eprint!("Preparing a sysroot for Miri (target: {target})... ");
     }
-    Sysroot::new(sysroot_dir, target)
+    Sysroot::new(&sysroot_dir, target)
         .build_from_source(&rust_src, BuildMode::Check, sysroot_config, rustc_version, cargo_cmd)
         .unwrap_or_else(|_| {
             if only_setup {