diff --git a/conda_build/metadata.py b/conda_build/metadata.py
index b744a8b3c9..f85de81b3a 100644
--- a/conda_build/metadata.py
+++ b/conda_build/metadata.py
@@ -1942,16 +1942,6 @@ def _get_contents(
             jinja2.FileSystemLoader(path),
         ]
 
-        # search relative to current conda environment directory
-        conda_env_path = os.environ.get(
-            "CONDA_DEFAULT_ENV"
-        )  # path to current conda environment
-        if conda_env_path and os.path.isdir(conda_env_path):
-            conda_env_path = os.path.abspath(conda_env_path)
-            conda_env_path = conda_env_path.replace("\\", "/")  # need unix-style path
-            env_loader = jinja2.FileSystemLoader(conda_env_path)
-            loaders.append(jinja2.PrefixLoader({"$CONDA_DEFAULT_ENV": env_loader}))
-
         undefined_type = jinja2.StrictUndefined
         if permit_undefined_jinja:
             # The UndefinedNeverFail class keeps a global list of all undefined names
diff --git a/news/5495-remove-$CONDA_DEFAULT_ENV-templating-engine b/news/5495-remove-$CONDA_DEFAULT_ENV-templating-engine
new file mode 100644
index 0000000000..5fe0adddb4
--- /dev/null
+++ b/news/5495-remove-$CONDA_DEFAULT_ENV-templating-engine
@@ -0,0 +1,19 @@
+### Enhancements
+
+* <news item>
+
+### Bug fixes
+
+* <news item>
+
+### Deprecations
+
+* Remove broken `$CONDA_DEFAULT_ENV` templating engine. (#5495)
+
+### Docs
+
+* <news item>
+
+### Other
+
+* <news item>