diff --git a/crates/nu-cli/src/repl.rs b/crates/nu-cli/src/repl.rs
index 965066d2e4..1fe5109cfc 100644
--- a/crates/nu-cli/src/repl.rs
+++ b/crates/nu-cli/src/repl.rs
@@ -63,8 +63,6 @@ pub fn evaluate_repl(
     let config = engine_state.get_config();
     let use_color = config.use_ansi_coloring.get(engine_state);
 
-    confirm_stdin_is_terminal()?;
-
     let mut entry_num = 0;
 
     // Let's grab the shell_integration configs
@@ -104,6 +102,8 @@ pub fn evaluate_repl(
         engine_state.merge_env(&mut unique_stack)?;
     }
 
+    confirm_stdin_is_terminal()?;
+
     let hostname = System::host_name();
     if shell_integration_osc2 {
         run_shell_integration_osc2(None, engine_state, &mut unique_stack, use_color);
diff --git a/src/main.rs b/src/main.rs
index 8f228b5f1f..32a602707e 100644
--- a/src/main.rs
+++ b/src/main.rs
@@ -323,36 +323,6 @@ fn main() -> Result<()> {
         "NU_VERSION".to_string(),
         Value::string(env!("CARGO_PKG_VERSION"), Span::unknown()),
     );
-    // Add SHLVL if interactive
-    if engine_state.is_interactive {
-        engine_state.add_env_var("PROMPT_INDICATOR".to_string(), Value::test_string("> "));
-        engine_state.add_env_var(
-            "PROMPT_INDICATOR_VI_NORMAL".to_string(),
-            Value::test_string("> "),
-        );
-        engine_state.add_env_var(
-            "PROMPT_INDICATOR_VI_INSERT".to_string(),
-            Value::test_string(": "),
-        );
-        engine_state.add_env_var(
-            "PROMPT_MULTILINE_INDICATOR".to_string(),
-            Value::test_string("::: "),
-        );
-        engine_state.add_env_var(
-            "TRANSIENT_PROMPT_MULTILINE_INDICATOR".to_string(),
-            Value::test_string(""),
-        );
-        engine_state.add_env_var(
-            "TRANSIENT_PROMPT_COMMAND_RIGHT".to_string(),
-            Value::test_string(""),
-        );
-        let mut shlvl = engine_state
-            .get_env_var("SHLVL")
-            .map(|x| x.as_str().unwrap_or("0").parse::<i64>().unwrap_or(0))
-            .unwrap_or(0);
-        shlvl += 1;
-        engine_state.add_env_var("SHLVL".to_string(), Value::int(shlvl, Span::unknown()));
-    }
 
     if parsed_nu_cli_args.no_std_lib.is_none() {
         load_standard_library(&mut engine_state)?;
@@ -510,6 +480,35 @@ fn main() -> Result<()> {
             input,
         );
     } else {
+        // Environment variables that apply only when in REPL
+        engine_state.add_env_var("PROMPT_INDICATOR".to_string(), Value::test_string("> "));
+        engine_state.add_env_var(
+            "PROMPT_INDICATOR_VI_NORMAL".to_string(),
+            Value::test_string("> "),
+        );
+        engine_state.add_env_var(
+            "PROMPT_INDICATOR_VI_INSERT".to_string(),
+            Value::test_string(": "),
+        );
+        engine_state.add_env_var(
+            "PROMPT_MULTILINE_INDICATOR".to_string(),
+            Value::test_string("::: "),
+        );
+        engine_state.add_env_var(
+            "TRANSIENT_PROMPT_MULTILINE_INDICATOR".to_string(),
+            Value::test_string(""),
+        );
+        engine_state.add_env_var(
+            "TRANSIENT_PROMPT_COMMAND_RIGHT".to_string(),
+            Value::test_string(""),
+        );
+        let mut shlvl = engine_state
+            .get_env_var("SHLVL")
+            .map(|x| x.as_str().unwrap_or("0").parse::<i64>().unwrap_or(0))
+            .unwrap_or(0);
+        shlvl += 1;
+        engine_state.add_env_var("SHLVL".to_string(), Value::int(shlvl, Span::unknown()));
+
         run_repl(&mut engine_state, parsed_nu_cli_args, entire_start_time)?
     }
 
diff --git a/tests/shell/environment/env.rs b/tests/shell/environment/env.rs
index 98f1e1ded8..ab97eb6872 100644
--- a/tests/shell/environment/env.rs
+++ b/tests/shell/environment/env.rs
@@ -231,17 +231,36 @@ fn std_log_env_vars_have_defaults() {
 }
 
 #[test]
-fn env_shlvl() {
+fn env_shlvl_commandstring_does_not_increment() {
     let actual = nu!("
         $env.SHLVL = 5
-        nu -i -c 'print $env.SHLVL'
+        nu -c 'print $env.SHLVL; exit'
+    ");
+
+    assert_eq!(actual.out, "5");
+}
+
+// Note: Do not use -i / --interactive in tests.
+// -i attempts to acquire a terminal, and if more than one
+// test tries to obtain a terminal at the same time, the
+// test run will likely hang, at least for some users.
+// Instead, use -e / --execute with an `exit` to test REPL
+// functionality as demonstrated below.
+#[test]
+fn env_shlvl_in_repl() {
+    let actual = nu!("
+        $env.SHLVL = 5
+        nu --no-std-lib -n -e 'print $env.SHLVL; exit'
     ");
 
     assert_eq!(actual.out, "6");
+}
 
+#[test]
+fn env_shlvl_in_exec_repl() {
     let actual = nu!("
         $env.SHLVL = 29
-        nu -i -c \"exec nu -i -c 'print $env.SHLVL'\"
+        nu -c \"exec nu --no-std-lib -n -e 'print $env.SHLVL; exit'\"
     ");
 
     assert_eq!(actual.out, "30");