diff --git a/lib/module.js b/lib/module.js
index 9a6b641a753588..b965bbd8dae73f 100644
--- a/lib/module.js
+++ b/lib/module.js
@@ -617,7 +617,16 @@ Module._initPaths = function() {
     homeDir = process.env.HOME;
   }
 
-  var paths = [path.resolve(process.execPath, '..', '..', 'lib', 'node')];
+  // $PREFIX/lib/node, where $PREFIX is the root of the Node.js installation.
+  var prefixDir;
+  // process.execPath is $PREFIX/bin/node except on Windows where it is
+  // $PREFIX\node.exe.
+  if (isWindows) {
+    prefixDir = path.resolve(process.execPath, '..');
+  } else {
+    prefixDir = path.resolve(process.execPath, '..', '..');
+  }
+  var paths = [path.resolve(prefixDir, 'lib', 'node')];
 
   if (homeDir) {
     paths.unshift(path.resolve(homeDir, '.node_libraries'));
diff --git a/test/fixtures/test-module-loading-globalpaths/home-pkg-in-both/.node_libraries/foo.js b/test/fixtures/test-module-loading-globalpaths/home-pkg-in-both/.node_libraries/foo.js
new file mode 100644
index 00000000000000..eb278f95762215
--- /dev/null
+++ b/test/fixtures/test-module-loading-globalpaths/home-pkg-in-both/.node_libraries/foo.js
@@ -0,0 +1 @@
+exports.string = '$HOME/.node_libraries';
diff --git a/test/fixtures/test-module-loading-globalpaths/home-pkg-in-both/.node_modules/foo.js b/test/fixtures/test-module-loading-globalpaths/home-pkg-in-both/.node_modules/foo.js
new file mode 100644
index 00000000000000..8a665b3e98cfe2
--- /dev/null
+++ b/test/fixtures/test-module-loading-globalpaths/home-pkg-in-both/.node_modules/foo.js
@@ -0,0 +1 @@
+exports.string = '$HOME/.node_modules';
diff --git a/test/fixtures/test-module-loading-globalpaths/home-pkg-in-node_libraries/.node_libraries/foo.js b/test/fixtures/test-module-loading-globalpaths/home-pkg-in-node_libraries/.node_libraries/foo.js
new file mode 100644
index 00000000000000..eb278f95762215
--- /dev/null
+++ b/test/fixtures/test-module-loading-globalpaths/home-pkg-in-node_libraries/.node_libraries/foo.js
@@ -0,0 +1 @@
+exports.string = '$HOME/.node_libraries';
diff --git a/test/fixtures/test-module-loading-globalpaths/home-pkg-in-node_modules/.node_modules/foo.js b/test/fixtures/test-module-loading-globalpaths/home-pkg-in-node_modules/.node_modules/foo.js
new file mode 100644
index 00000000000000..8a665b3e98cfe2
--- /dev/null
+++ b/test/fixtures/test-module-loading-globalpaths/home-pkg-in-node_modules/.node_modules/foo.js
@@ -0,0 +1 @@
+exports.string = '$HOME/.node_modules';
diff --git a/test/fixtures/test-module-loading-globalpaths/local-pkg/node_modules/foo.js b/test/fixtures/test-module-loading-globalpaths/local-pkg/node_modules/foo.js
new file mode 100644
index 00000000000000..63e844e4d4060b
--- /dev/null
+++ b/test/fixtures/test-module-loading-globalpaths/local-pkg/node_modules/foo.js
@@ -0,0 +1 @@
+exports.string = 'local';
diff --git a/test/fixtures/test-module-loading-globalpaths/local-pkg/test.js b/test/fixtures/test-module-loading-globalpaths/local-pkg/test.js
new file mode 100644
index 00000000000000..8054983e992ce8
--- /dev/null
+++ b/test/fixtures/test-module-loading-globalpaths/local-pkg/test.js
@@ -0,0 +1,2 @@
+'use strict';
+console.log(require('foo').string);
diff --git a/test/fixtures/test-module-loading-globalpaths/node_path/foo.js b/test/fixtures/test-module-loading-globalpaths/node_path/foo.js
new file mode 100644
index 00000000000000..3ce43c49206f73
--- /dev/null
+++ b/test/fixtures/test-module-loading-globalpaths/node_path/foo.js
@@ -0,0 +1 @@
+exports.string = '$NODE_PATH';
diff --git a/test/parallel/test-module-loading-globalpaths.js b/test/parallel/test-module-loading-globalpaths.js
new file mode 100644
index 00000000000000..d789f5409901ba
--- /dev/null
+++ b/test/parallel/test-module-loading-globalpaths.js
@@ -0,0 +1,101 @@
+'use strict';
+const common = require('../common');
+const assert = require('assert');
+const path = require('path');
+const fs = require('fs');
+const child_process = require('child_process');
+const pkgName = 'foo';
+
+if (process.argv[2] === 'child') {
+  console.log(require(pkgName).string);
+} else {
+  common.refreshTmpDir();
+
+  // Copy node binary into a test $PREFIX directory.
+  const prefixPath = path.join(common.tmpDir, 'install');
+  fs.mkdirSync(prefixPath);
+  let testExecPath;
+  if (common.isWindows) {
+    testExecPath = path.join(prefixPath, path.basename(process.execPath));
+  } else {
+    const prefixBinPath = path.join(prefixPath, 'bin');
+    fs.mkdirSync(prefixBinPath);
+    testExecPath = path.join(prefixBinPath, path.basename(process.execPath));
+  }
+  const mode = fs.statSync(process.execPath).mode;
+  fs.writeFileSync(testExecPath, fs.readFileSync(process.execPath));
+  fs.chmodSync(testExecPath, mode);
+
+  const runTest = (expectedString, env) => {
+    const child = child_process.execFileSync(testExecPath,
+                                             [ __filename, 'child' ],
+                                             { encoding: 'utf8', env: env });
+    assert.strictEqual(child.trim(), expectedString);
+  };
+
+  const testFixturesDir = path.join(common.fixturesDir,
+                                    path.basename(__filename, '.js'));
+
+  const env = Object.assign({}, process.env);
+  // Turn on module debug to aid diagnosing failures.
+  env['NODE_DEBUG'] = 'module';
+  // Unset NODE_PATH.
+  delete env['NODE_PATH'];
+
+  // Test empty global path.
+  const noPkgHomeDir = path.join(common.tmpDir, 'home-no-pkg');
+  fs.mkdirSync(noPkgHomeDir);
+  env['HOME'] = env['USERPROFILE'] = noPkgHomeDir;
+  assert.throws(
+      () => {
+        child_process.execFileSync(testExecPath, [ __filename, 'child' ],
+                                   { encoding: 'utf8', env: env });
+      },
+      new RegExp('Cannot find module \'' + pkgName + '\''));
+
+  // Test module in $HOME/.node_modules.
+  const modHomeDir = path.join(testFixturesDir, 'home-pkg-in-node_modules');
+  env['HOME'] = env['USERPROFILE'] = modHomeDir;
+  runTest('$HOME/.node_modules', env);
+
+  // Test module in $HOME/.node_libraries.
+  const libHomeDir = path.join(testFixturesDir, 'home-pkg-in-node_libraries');
+  env['HOME'] = env['USERPROFILE'] = libHomeDir;
+  runTest('$HOME/.node_libraries', env);
+
+  // Test module both $HOME/.node_modules and $HOME/.node_libraries.
+  const bothHomeDir = path.join(testFixturesDir, 'home-pkg-in-both');
+  env['HOME'] = env['USERPROFILE'] = bothHomeDir;
+  runTest('$HOME/.node_modules', env);
+
+  // Test module in $PREFIX/lib/node.
+  // Write module into $PREFIX/lib/node.
+  const expectedString = '$PREFIX/lib/node';
+  const prefixLibPath = path.join(prefixPath, 'lib');
+  fs.mkdirSync(prefixLibPath);
+  const prefixLibNodePath = path.join(prefixLibPath, 'node');
+  fs.mkdirSync(prefixLibNodePath);
+  const pkgPath = path.join(prefixLibNodePath, pkgName + '.js');
+  fs.writeFileSync(pkgPath, 'exports.string = \'' + expectedString + '\';');
+
+  env['HOME'] = env['USERPROFILE'] = noPkgHomeDir;
+  runTest(expectedString, env);
+
+  // Test module in all global folders.
+  env['HOME'] = env['USERPROFILE'] = bothHomeDir;
+  runTest('$HOME/.node_modules', env);
+
+  // Test module in NODE_PATH is loaded ahead of global folders.
+  env['HOME'] = env['USERPROFILE'] = bothHomeDir;
+  env['NODE_PATH'] = path.join(testFixturesDir, 'node_path');
+  runTest('$NODE_PATH', env);
+
+  // Test module in local folder is loaded ahead of global folders.
+  const localDir = path.join(testFixturesDir, 'local-pkg');
+  env['HOME'] = env['USERPROFILE'] = bothHomeDir;
+  env['NODE_PATH'] = path.join(testFixturesDir, 'node_path');
+  const child = child_process.execFileSync(testExecPath,
+                                           [ path.join(localDir, 'test.js') ],
+                                           { encoding: 'utf8', env: env });
+  assert.strictEqual(child.trim(), 'local');
+}