diff --git a/cli/args/mod.rs b/cli/args/mod.rs
index 4026edc47f..1f29a6d232 100644
--- a/cli/args/mod.rs
+++ b/cli/args/mod.rs
@@ -838,7 +838,7 @@ impl CliOptions {
         .coverage_dir
         .as_ref()
         .map(ToOwned::to_owned)
-        .or_else(|| env::var("DENO_UNSTABLE_COVERAGE_DIR").ok()),
+        .or_else(|| env::var("DENO_COVERAGE_DIR").ok()),
       _ => None,
     }
   }
diff --git a/tests/specs/coverage/set_coverage_in_env_var/__test__.jsonc b/tests/specs/coverage/set_coverage_in_env_var/__test__.jsonc
new file mode 100644
index 0000000000..c7e9fe0fa8
--- /dev/null
+++ b/tests/specs/coverage/set_coverage_in_env_var/__test__.jsonc
@@ -0,0 +1,18 @@
+{
+  "tempDir": true,
+  "steps": [
+    {
+      "args": "test -A",
+      "output": "test.out",
+      "envs": {
+        "DENO_COVERAGE_DIR": "my_coverage_dir"
+      },
+      "exitCode": 0
+    },
+    {
+      "args": "coverage my_coverage_dir",
+      "output": "coverage.out",
+      "exitCode": 0
+    }
+  ]
+}
diff --git a/tests/specs/coverage/set_coverage_in_env_var/coverage.out b/tests/specs/coverage/set_coverage_in_env_var/coverage.out
new file mode 100644
index 0000000000..eb55868b09
--- /dev/null
+++ b/tests/specs/coverage/set_coverage_in_env_var/coverage.out
@@ -0,0 +1,7 @@
+--------------------------------
+File       | Branch % | Line % |
+--------------------------------
+ source.ts |    100.0 |  100.0 |
+--------------------------------
+ All files |    100.0 |  100.0 |
+--------------------------------
diff --git a/tests/specs/coverage/set_coverage_in_env_var/source.ts b/tests/specs/coverage/set_coverage_in_env_var/source.ts
new file mode 100644
index 0000000000..8d9b8a22a1
--- /dev/null
+++ b/tests/specs/coverage/set_coverage_in_env_var/source.ts
@@ -0,0 +1,3 @@
+export function add(a: number, b: number): number {
+  return a + b;
+}
diff --git a/tests/specs/coverage/set_coverage_in_env_var/test.out b/tests/specs/coverage/set_coverage_in_env_var/test.out
new file mode 100644
index 0000000000..a04617607b
--- /dev/null
+++ b/tests/specs/coverage/set_coverage_in_env_var/test.out
@@ -0,0 +1,7 @@
+Check [WILDCARD]/test.ts
+running 1 test from ./test.ts
+add() ... ok ([WILDCARD])
+
+ok | 1 passed | 0 failed ([WILDCARD])
+
+[WILDCARD]
\ No newline at end of file
diff --git a/tests/specs/coverage/set_coverage_in_env_var/test.ts b/tests/specs/coverage/set_coverage_in_env_var/test.ts
new file mode 100644
index 0000000000..46be64c639
--- /dev/null
+++ b/tests/specs/coverage/set_coverage_in_env_var/test.ts
@@ -0,0 +1,7 @@
+import { add } from "./source.ts";
+
+Deno.test("add()", () => {
+  if (add(1, 2) !== 3) {
+    throw new Error("test failed");
+  }
+});