diff --git a/pkgs/development/libraries/xdg-desktop-portal/default.nix b/pkgs/development/libraries/xdg-desktop-portal/default.nix
index c914dddfa208..4fe1af0717e7 100644
--- a/pkgs/development/libraries/xdg-desktop-portal/default.nix
+++ b/pkgs/development/libraries/xdg-desktop-portal/default.nix
@@ -6,6 +6,7 @@
 , docbook_xml_dtd_412
 , docbook_xml_dtd_43
 , docbook_xsl
+, docutils
 , systemdMinimal
 , geoclue2
 , glib
@@ -30,7 +31,7 @@
 
 stdenv.mkDerivation (finalAttrs: {
   pname = "xdg-desktop-portal";
-  version = "1.17.0";
+  version = "1.17.2";
 
   outputs = [ "out" "installedTests" ];
 
@@ -38,7 +39,7 @@ stdenv.mkDerivation (finalAttrs: {
     owner = "flatpak";
     repo = "xdg-desktop-portal";
     rev = finalAttrs.version;
-    sha256 = "sha256-OGf2ohP/Qd+ff3KfJYoHu9wbCAUXCP3wm/utjqkgccE=";
+    sha256 = "sha256-ZNIGnoDw6bBf4k+PeBckGMFxnDfR3oVbj3cqdLY3M+Q=";
   };
 
   patches = [
@@ -52,12 +53,19 @@ stdenv.mkDerivation (finalAttrs: {
 
     # Allow installing installed tests to a separate output.
     ./installed-tests-path.patch
+
+    # `XDG_DESKTOP_PORTAL_DIR` originally was used for upstream tests. But we are making use
+    # of this in the NixOS module, this actually blocks any configs from being loaded since
+    # configs are not expected to be placed in a portal implementation or even under the
+    # `share/xdg-desktop-portal/portals/` path.
+    ./separate-env-for-portal-config.patch
   ];
 
   nativeBuildInputs = [
     docbook_xml_dtd_412
     docbook_xml_dtd_43
     docbook_xsl
+    docutils # for rst2man
     libxml2
     meson
     ninja
diff --git a/pkgs/development/libraries/xdg-desktop-portal/separate-env-for-portal-config.patch b/pkgs/development/libraries/xdg-desktop-portal/separate-env-for-portal-config.patch
new file mode 100644
index 000000000000..020d98c20700
--- /dev/null
+++ b/pkgs/development/libraries/xdg-desktop-portal/separate-env-for-portal-config.patch
@@ -0,0 +1,33 @@
+diff --git a/src/portal-impl.c b/src/portal-impl.c
+index 0fa9682e..99f379dc 100644
+--- a/src/portal-impl.c
++++ b/src/portal-impl.c
+@@ -433,8 +433,7 @@ load_portal_configuration (gboolean opt_verbose)
+ 
+   desktops = get_current_lowercase_desktops ();
+ 
+-  /* We need to override this in the tests */
+-  portal_dir = g_getenv ("XDG_DESKTOP_PORTAL_DIR");
++  portal_dir = g_getenv ("NIXOS_XDG_DESKTOP_PORTAL_CONFIG_DIR_OVERRIDE");
+ 
+   if (portal_dir != NULL)
+     {
+@@ -464,6 +463,18 @@ load_portal_configuration (gboolean opt_verbose)
+   if (load_config_directory (SYSCONFDIR "/" XDP_SUBDIR, desktops, opt_verbose))
+     return;
+ 
++  portal_dir = g_getenv ("NIXOS_XDG_DESKTOP_PORTAL_CONFIG_DIR");
++
++  if (portal_dir == NULL)
++    /* We need to override this in the tests */
++    portal_dir = g_getenv ("XDG_DESKTOP_PORTAL_DIR");
++
++  if (portal_dir != NULL)
++    {
++      if (load_config_directory (portal_dir, desktops, opt_verbose))
++        return;
++    }
++
+   /* $XDG_DATA_HOME/xdg-desktop-portal/(DESKTOP-)portals.conf
+    * (just for consistency with other XDG specifications) */
+   g_clear_pointer (&user_portal_dir, g_free);