diff --git a/lib/spack/spack/test/util/environment.py b/lib/spack/spack/test/util/environment.py
index 417dd2e337..eff07cbee9 100644
--- a/lib/spack/spack/test/util/environment.py
+++ b/lib/spack/spack/test/util/environment.py
@@ -151,3 +151,21 @@ def test_reverse_environment_modifications(working_env):
 
     start_env.pop("UNSET")
     assert os.environ == start_env
+
+
+def test_escape_double_quotes_in_shell_modifications():
+    to_validate = envutil.EnvironmentModifications()
+
+    to_validate.set("VAR", "$PATH")
+    to_validate.append_path("VAR", "$ANOTHER_PATH")
+
+    to_validate.set("QUOTED_VAR", '"MY_VAL"')
+
+    cmds = to_validate.shell_modifications()
+
+    if sys.platform != "win32":
+        assert 'export VAR="$PATH:$ANOTHER_PATH"' in cmds
+        assert r'export QUOTED_VAR="\"MY_VAL\""' in cmds
+    else:
+        assert "export VAR=$PATH;$ANOTHER_PATH" in cmds
+        assert r'export QUOTED_VAR="MY_VAL"' in cmds
diff --git a/lib/spack/spack/util/environment.py b/lib/spack/spack/util/environment.py
index 6be232bf42..64082ff313 100644
--- a/lib/spack/spack/util/environment.py
+++ b/lib/spack/spack/util/environment.py
@@ -12,7 +12,6 @@
 import pickle
 import platform
 import re
-import shlex
 import socket
 import sys
 from typing import Any, Callable, Dict, List, MutableMapping, Optional, Tuple, Union
@@ -64,6 +63,26 @@
 ModificationList = List[Union["NameModifier", "NameValueModifier"]]
 
 
+_find_unsafe = re.compile(r"[^\w@%+=:,./-]", re.ASCII).search
+
+
+def double_quote_escape(s):
+    """Return a shell-escaped version of the string *s*.
+
+    This is similar to how shlex.quote works, but it escapes with double quotes
+    instead of single quotes, to allow environment variable expansion within
+    quoted strings.
+    """
+    if not s:
+        return '""'
+    if _find_unsafe(s) is None:
+        return s
+
+    # use double quotes, and escape double quotes in the string
+    # the string $"b is then quoted as "$\"b"
+    return '"' + s.replace('"', r"\"") + '"'
+
+
 def is_system_path(path: Path) -> bool:
     """Returns True if the argument is a system path, False otherwise."""
     return bool(path) and (os.path.normpath(path) in SYSTEM_DIRS)
@@ -135,7 +154,7 @@ def _env_var_to_source_line(var: str, val: str) -> str:
             fname=BASH_FUNCTION_FINDER.sub(r"\1", var), decl=val
         )
     else:
-        source_line = f"{var}={shlex.quote(val)}; export {var}"
+        source_line = f"{var}={double_quote_escape(val)}; export {var}"
     return source_line
 
 
@@ -649,7 +668,9 @@ def shell_modifications(
                     cmds += _SHELL_UNSET_STRINGS[shell].format(name)
                 else:
                     if sys.platform != "win32":
-                        cmd = _SHELL_SET_STRINGS[shell].format(name, shlex.quote(new_env[name]))
+                        cmd = _SHELL_SET_STRINGS[shell].format(
+                            name, double_quote_escape(new_env[name])
+                        )
                     else:
                         cmd = _SHELL_SET_STRINGS[shell].format(name, new_env[name])
                     cmds += cmd