diff --git a/lib/spack/spack/build_environment.py b/lib/spack/spack/build_environment.py
index 45353ec640..cabde7dc86 100644
--- a/lib/spack/spack/build_environment.py
+++ b/lib/spack/spack/build_environment.py
@@ -207,3 +207,8 @@ def setup_package(pkg):
     set_compiler_environment_variables(pkg)
     set_build_environment_variables(pkg)
     set_module_variables_for_package(pkg)
+
+    # Allow dependencies to set up environment as well.
+    for dep_spec in pkg.spec.traverse(root=False):
+        dep_spec.package.setup_dependent_environment(
+            pkg.module, dep_spec, pkg.spec)
diff --git a/lib/spack/spack/package.py b/lib/spack/spack/package.py
index 6e319a1f87..b18d054990 100644
--- a/lib/spack/spack/package.py
+++ b/lib/spack/spack/package.py
@@ -829,11 +829,6 @@ def do_install(self, **kwargs):
                 self.stage.chdir_to_source()
                 build_env.setup_package(self)
 
-                # Allow dependencies to further set up the environment.
-                for dep_spec in self.spec.traverse(root=False):
-                    dep_spec.package.setup_dependent_environment(
-                        self.module, dep_spec, self.spec)
-
                 if fake_install:
                     self.do_fake_install()
                 else: