diff --git a/dv/uvm/core_ibex/scripts/compile_tb.py b/dv/uvm/core_ibex/scripts/compile_tb.py
index 6d38e69a7..022982697 100755
--- a/dv/uvm/core_ibex/scripts/compile_tb.py
+++ b/dv/uvm/core_ibex/scripts/compile_tb.py
@@ -85,40 +85,42 @@ def _main() -> int:
         md.dir_tb.mkdir(exist_ok=True, parents=True)
         md.tb_build_log = md.dir_tb/'compile_tb.log'
 
-        subst_vars_dict = {
-            'core_ibex': md.ibex_dv_root,
-            'tb_dir': md.dir_tb,
-            'tb_build_log': md.tb_build_log,
-            'cmp_opts': get_compile_opts(md.ibex_config,
-                                         md.simulator),
-            'dir_shared_cov': (md.dir_shared_cov if md.cov else ''),
-            'xlm_cov_cfg_file': f"{md.ot_xcelium_cov_scripts}/cover.ccf",
-            'dut_cov_rtl_path': md.dut_cov_rtl_path
-        }
-
         # Locate the spike .pc files to allow us to link against it when
         # building, riscv-fesvr isn't strictly required but the DV flow has been
         # observed to see build failures where it isn't present with CentOS 7.
         spike_iss_pc = ['riscv-riscv', 'riscv-disasm', 'riscv-fdt',
             'riscv-fesvr']
-
-        iss_pkgconfig_dict = {
-            'ISS_CFLAGS'  : ['--cflags'],
-            'ISS_LDFLAGS' : ['--libs-only-other'],
-            'ISS_LIBS'    : ['--libs-only-l', '--libs-only-L'],
-        }
-        md.envvar_PKG_CONFIG_PATH = dict(os.environ).get('PKG_CONFIG_PATH')
         try:
             subprocess.check_output(['pkg-config', '--exists'] + spike_iss_pc)
         except subprocess.CalledProcessError as err:
             raise RuntimeError(
                 f'Failed to find {spike_iss_pc} pkg-config packages. '
                 f'Did you set the PKG_CONFIG_PATH correctly?') from err
-        subst_vars_dict.update(
-            {k: _get_iss_pkgconfig_flags(v,
-                                         spike_iss_pc,
-                                         md.simulator)
-             for k, v in iss_pkgconfig_dict.items()})
+
+        # Now call out to pkg-config to return the appropriate flags for compilation
+        # (The keys here are the substitution placeholders in rtl_simulation.yaml)
+        iss_pkgconfig_dict = {
+            'ISS_CFLAGS'  : ['--cflags'],
+            'ISS_LDFLAGS' : ['--libs-only-other'],
+            'ISS_LIBS'    : ['--libs-only-l', '--libs-only-L'],
+        }
+        iss_cc_subst_vars_dict = \
+            {k: _get_iss_pkgconfig_flags(v, spike_iss_pc, md.simulator)
+             for k, v in iss_pkgconfig_dict.items()}
+
+        # Populate the entire set of variables to substitute in the templated
+        # compilation command, including the compiler flags for the ISS.
+        subst_vars_dict = {
+            'core_ibex': md.ibex_dv_root,
+            'tb_dir': md.dir_tb,
+            'tb_build_log': md.tb_build_log,
+            'cmp_opts': get_compile_opts(md.ibex_config,
+                                         md.simulator),
+            'dir_shared_cov': (md.dir_shared_cov if md.cov else ''),
+            'xlm_cov_cfg_file': f"{md.ot_xcelium_cov_scripts}/cover.ccf",
+            'dut_cov_rtl_path': md.dut_cov_rtl_path
+        }
+        subst_vars_dict.update(iss_cc_subst_vars_dict)
 
         md.tb_build_stdout = md.dir_tb/'compile_tb_stdstreams.log'
         md.tb_build_cmds = riscvdv_interface.get_tool_cmds(