diff --git a/crates/nu-cmd-lang/src/core_commands/overlay/use_.rs b/crates/nu-cmd-lang/src/core_commands/overlay/use_.rs
index 6590705c92..c8ad90e518 100644
--- a/crates/nu-cmd-lang/src/core_commands/overlay/use_.rs
+++ b/crates/nu-cmd-lang/src/core_commands/overlay/use_.rs
@@ -125,16 +125,6 @@ impl Command for OverlayUse {
                     caller_stack,
                     get_dirs_var_from_call(caller_stack, call),
                 )?;
-                // module_arg_str maybe a directory, in this case
-                // find_in_dirs_env returns a directory.
-                let maybe_parent = maybe_file_path_or_dir.as_ref().and_then(|path| {
-                    if path.is_dir() {
-                        Some(path.to_path_buf())
-                    } else {
-                        path.parent().map(|p| p.to_path_buf())
-                    }
-                });
-
                 let block = engine_state.get_block(block_id);
                 let mut callee_stack = caller_stack
                     .gather_captures(engine_state, &block.captures)
diff --git a/tests/overlays/mod.rs b/tests/overlays/mod.rs
index f3126c8140..55ac5494ff 100644
--- a/tests/overlays/mod.rs
+++ b/tests/overlays/mod.rs
@@ -1,4 +1,4 @@
-use nu_test_support::fs::Stub::FileWithContentToBeTrimmed;
+use nu_test_support::fs::Stub::{FileWithContent, FileWithContentToBeTrimmed};
 use nu_test_support::playground::Playground;
 use nu_test_support::{nu, nu_repl_code};
 use pretty_assertions::assert_eq;
@@ -1408,3 +1408,47 @@ fn overlay_help_no_error() {
     let actual = nu!("overlay use -h");
     assert!(actual.err.is_empty());
 }
+
+#[test]
+fn test_overlay_use_with_printing_file_pwd() {
+    Playground::setup("use_with_printing_file_pwd", |dirs, nu| {
+        let file = dirs.test().join("mod.nu");
+        nu.with_files(&[FileWithContent(
+            file.as_os_str().to_str().unwrap(),
+            r#"
+                export-env {
+                    print $env.FILE_PWD
+                }
+            "#,
+        )]);
+
+        let actual = nu!(
+            cwd: dirs.test(),
+            "overlay use ."
+        );
+
+        assert_eq!(actual.out, dirs.test().to_string_lossy());
+    });
+}
+
+#[test]
+fn test_overlay_use_with_printing_current_file() {
+    Playground::setup("use_with_printing_current_file", |dirs, nu| {
+        let file = dirs.test().join("mod.nu");
+        nu.with_files(&[FileWithContent(
+            file.as_os_str().to_str().unwrap(),
+            r#"
+                export-env {
+                    print $env.CURRENT_FILE
+                }
+            "#,
+        )]);
+
+        let actual = nu!(
+            cwd: dirs.test(),
+            "overlay use ."
+        );
+
+        assert_eq!(actual.out, dirs.test().join("mod.nu").to_string_lossy());
+    });
+}