diff --git a/src/test/py/bazel/windows_remote_test.py b/src/test/py/bazel/windows_remote_test.py
index a717b035819e67..79bbcdc59b9755 100644
--- a/src/test/py/bazel/windows_remote_test.py
+++ b/src/test/py/bazel/windows_remote_test.py
@@ -124,7 +124,12 @@ def testShTestRunsRemotely(self):
         ')',
     ])
     self.ScratchFile(
-        'foo/foo_test.sh', ['#!/bin/sh', 'echo hello test'], executable=True)
+        'foo/foo_test.sh', [
+            '#!/bin/sh',
+            'echo hello test',
+            'echo "RUNFILES_MANIFEST_FILE: \\"${RUNFILES_MANIFEST_FILE:-}\\""'
+        ],
+        executable=True)
     self.ScratchFile('bar/BUILD', ['exports_files(["bar.txt"])'])
     self.ScratchFile('bar/bar.txt', ['hello'])
 
@@ -132,6 +137,7 @@ def testShTestRunsRemotely(self):
     exit_code, stdout, stderr = self._RunRemoteBazel(
         ['test', '--test_output=all', '//foo:foo_test'])
     self.AssertExitCode(exit_code, 0, stderr, stdout)
+    self.assertIn('RUNFILES_MANIFEST_FILE: ""', stdout)
 
   # The Java launcher uses Rlocation which has differing behavior for local and
   # remote.
diff --git a/tools/test/test-setup.sh b/tools/test/test-setup.sh
index efb282fddd42e2..4d81b3500880b9 100755
--- a/tools/test/test-setup.sh
+++ b/tools/test/test-setup.sh
@@ -126,9 +126,9 @@ function rlocation() {
 
 export -f rlocation
 export -f is_absolute
-# If RUNFILES_MANIFEST_ONLY is set to 1, then test programs should use manifest file to find
-# runfiles.
-if [[ "${RUNFILES_MANIFEST_ONLY:-}" == "1" ]]; then
+# If RUNFILES_MANIFEST_ONLY is set to 1 and the manifest file does exist,
+# then test programs should use manifest file to find runfiles.
+if [[ "${RUNFILES_MANIFEST_ONLY:-}" == "1" && -e "${RUNFILES_MANIFEST_FILE:-}" ]]; then
   export RUNFILES_MANIFEST_FILE
   export RUNFILES_MANIFEST_ONLY
 fi