diff --git a/cmake/modules/kconfig.cmake b/cmake/modules/kconfig.cmake
index def17f16ae6..ac5f1b83e4c 100644
--- a/cmake/modules/kconfig.cmake
+++ b/cmake/modules/kconfig.cmake
@@ -99,15 +99,9 @@ zephyr_file(CONF_FILES ${BOARD_EXTENSION_DIRS} KCONF board_extension_conf_files
 # separated list instead.
 string(REPLACE ";" "?" DTS_ROOT_BINDINGS "${DTS_ROOT_BINDINGS}")
 
-# Export each `ZEPHYR_<module>_MODULE_DIR` to Kconfig.
-# This allows Kconfig files to refer relative from a modules root as:
-# source "$(ZEPHYR_FOO_MODULE_DIR)/Kconfig"
+# Export each `ZEPHYR_<module>_KCONFIG` to Kconfig.
 foreach(module_name ${ZEPHYR_MODULE_NAMES})
   zephyr_string(SANITIZE TOUPPER MODULE_NAME_UPPER ${module_name})
-  list(APPEND
-       ZEPHYR_KCONFIG_MODULES_DIR
-       "ZEPHYR_${MODULE_NAME_UPPER}_MODULE_DIR=${ZEPHYR_${MODULE_NAME_UPPER}_MODULE_DIR}"
-  )
 
   if(ZEPHYR_${MODULE_NAME_UPPER}_KCONFIG)
     list(APPEND
diff --git a/scripts/zephyr_module.py b/scripts/zephyr_module.py
index 8aabe676784..aeda845639e 100755
--- a/scripts/zephyr_module.py
+++ b/scripts/zephyr_module.py
@@ -393,8 +393,11 @@ def process_kconfig(module, meta):
     module_path = PurePath(module)
     module_yml = module_path.joinpath('zephyr/module.yml')
     kconfig_extern = section.get('kconfig-ext', False)
+    name_sanitized = meta['name-sanitized']
+    snippet = f'ZEPHYR_{name_sanitized.upper()}_MODULE_DIR := {module_path.as_posix()}\n'
+
     if kconfig_extern:
-        return kconfig_snippet(meta, module_path, blobs=blobs, taint_blobs=taint_blobs)
+        return snippet + kconfig_snippet(meta, module_path, blobs=blobs, taint_blobs=taint_blobs)
 
     kconfig_setting = section.get('kconfig', None)
     if not validate_setting(kconfig_setting, module):
@@ -404,12 +407,10 @@ def process_kconfig(module, meta):
 
     kconfig_file = os.path.join(module, kconfig_setting or 'zephyr/Kconfig')
     if os.path.isfile(kconfig_file):
-        return kconfig_snippet(meta, module_path, Path(kconfig_file),
-                               blobs=blobs, taint_blobs=taint_blobs)
+        return snippet + kconfig_snippet(meta, module_path, Path(kconfig_file),
+                                         blobs=blobs, taint_blobs=taint_blobs)
     else:
-        name_sanitized = meta['name-sanitized']
-        snippet = kconfig_module_opts(name_sanitized, blobs, taint_blobs)
-        return '\n'.join(snippet) + '\n'
+        return snippet + '\n'.join(kconfig_module_opts(name_sanitized, blobs, taint_blobs)) + '\n'
 
 
 def process_sysbuildkconfig(module, meta):
@@ -417,8 +418,11 @@ def process_sysbuildkconfig(module, meta):
     module_path = PurePath(module)
     module_yml = module_path.joinpath('zephyr/module.yml')
     kconfig_extern = section.get('sysbuild-kconfig-ext', False)
+    name_sanitized = meta['name-sanitized']
+    snippet = f'ZEPHYR_{name_sanitized.upper()}_MODULE_DIR := {module_path.as_posix()}\n'
+
     if kconfig_extern:
-        return kconfig_snippet(meta, module_path, sysbuild=True)
+        return snippet + kconfig_snippet(meta, module_path, sysbuild=True)
 
     kconfig_setting = section.get('sysbuild-kconfig', None)
     if not validate_setting(kconfig_setting, module):
@@ -429,10 +433,10 @@ def process_sysbuildkconfig(module, meta):
     if kconfig_setting is not None:
         kconfig_file = os.path.join(module, kconfig_setting)
         if os.path.isfile(kconfig_file):
-            return kconfig_snippet(meta, module_path, Path(kconfig_file))
+            return snippet + kconfig_snippet(meta, module_path, Path(kconfig_file))
 
-    name_sanitized = meta['name-sanitized']
-    return (f'config ZEPHYR_{name_sanitized.upper()}_MODULE\n'
+    return snippet + \
+           (f'config ZEPHYR_{name_sanitized.upper()}_MODULE\n'
             f'   bool\n'
             f'   default y\n')