diff --git a/Tasks/AzureFileCopyV4/AzureFileCopy.ps1 b/Tasks/AzureFileCopyV4/AzureFileCopy.ps1
index 463e00c57d46..e70099392c19 100644
--- a/Tasks/AzureFileCopyV4/AzureFileCopy.ps1
+++ b/Tasks/AzureFileCopyV4/AzureFileCopy.ps1
@@ -63,6 +63,10 @@ Import-Module $PSScriptRoot\ps_modules\VstsAzureHelpers_
 
 $endpoint = Get-VstsEndpoint -Name $connectedServiceName -Require
 
+# Update PSModulePath for hosted agent
+. "$PSScriptRoot\Utility.ps1"
+CleanUp-PSModulePathForHostedAgent
+
 if (Get-Module Az.Accounts -ListAvailable){
     Initialize-AzModule -Endpoint $endpoint
 }
@@ -75,7 +79,6 @@ Import-VstsLocStrings -LiteralPath $PSScriptRoot/Task.json
 
 # Load all dependent files for execution
 . "$PSScriptRoot\AzureFileCopyRemoteJob.ps1"
-. "$PSScriptRoot\Utility.ps1"
 
 # Enabling detailed logging only when system.debug is true
 $enableDetailedLogging = ($env:system_debug -eq "true")
diff --git a/Tasks/AzureFileCopyV4/Utility.ps1 b/Tasks/AzureFileCopyV4/Utility.ps1
index 732c350d169f..e83a6a65fff9 100644
--- a/Tasks/AzureFileCopyV4/Utility.ps1
+++ b/Tasks/AzureFileCopyV4/Utility.ps1
@@ -1301,4 +1301,30 @@ function Get-InvokeRemoteScriptParameters
         protocol = $protocol;
         sessionOption = $sessionOption
     }
+}
+
+function CleanUp-PSModulePathForHostedAgent {
+    # Clean up PSModulePath for hosted agent
+    $azureRMModulePath = "C:\Modules\azurerm_2.1.0"
+    $azureModulePath = "C:\Modules\azure_2.1.0"
+    $newEnvPSModulePath = $env:PSModulePath
+
+    if ($newEnvPSModulePath.split(";") -contains $azureRMModulePath) {
+        $newEnvPSModulePath = (($newEnvPSModulePath).Split(";") | ? { $_ -ne $azureRMModulePath }) -join ";"
+        write-verbose "$azureRMModulePath removed. Restart the prompt for the changes to take effect."
+    }
+    else {
+        write-verbose "$azureRMModulePath is not present in $newEnvPSModulePath"
+    }
+
+    if ($newEnvPSModulePath.split(";") -contains $azureModulePath) {
+        $newEnvPSModulePath = (($newEnvPSModulePath).Split(";") | ? { $_ -ne $azureModulePath }) -join ";"
+        write-verbose "$azureModulePath removed. Restart the prompt for the changes to take effect."
+    }
+    else {
+        write-verbose "$azureModulePath is not present in $newEnvPSModulePath"
+    }
+
+    $azPSModulePath = "C:\Modules\az_3.1.0"
+    $env:PSModulePath = $azPSModulePath + ";" + $newEnvPSModulePath
 }
\ No newline at end of file
diff --git a/Tasks/AzureFileCopyV4/task.json b/Tasks/AzureFileCopyV4/task.json
index b04317864b1b..f5791654a504 100644
--- a/Tasks/AzureFileCopyV4/task.json
+++ b/Tasks/AzureFileCopyV4/task.json
@@ -13,7 +13,7 @@
     "author": "Microsoft Corporation",
     "version": {
         "Major": 4,
-        "Minor": 165,
+        "Minor": 166,
         "Patch": 0
     },
     "preview": true,
diff --git a/Tasks/AzureFileCopyV4/task.loc.json b/Tasks/AzureFileCopyV4/task.loc.json
index 211234676fc0..30fd8a0c937e 100644
--- a/Tasks/AzureFileCopyV4/task.loc.json
+++ b/Tasks/AzureFileCopyV4/task.loc.json
@@ -13,7 +13,7 @@
   "author": "Microsoft Corporation",
   "version": {
     "Major": 4,
-    "Minor": 165,
+    "Minor": 166,
     "Patch": 0
   },
   "preview": true,