diff --git a/pex/bin/pex.py b/pex/bin/pex.py
index 908d4ee88..684923b04 100755
--- a/pex/bin/pex.py
+++ b/pex/bin/pex.py
@@ -947,7 +947,6 @@ def to_python_interpreter(full_path_or_basename):
         interpreter=interpreter,
         preamble=preamble,
         copy_mode=CopyMode.SYMLINK,
-        include_tools=options.include_tools or options.venv,
     )
 
     if options.resources_directory:
@@ -968,8 +967,9 @@ def to_python_interpreter(full_path_or_basename):
     pex_info.zip_safe = options.zip_safe
     pex_info.unzip = options.unzip
     pex_info.venv = bool(options.venv)
-    pex_info.venv_bin_path = options.venv
+    pex_info.venv_bin_path = options.venv or BinPath.FALSE
     pex_info.venv_copies = options.venv_copies
+    pex_info.includes_tools = options.include_tools or options.venv
     pex_info.pex_path = options.pex_path
     pex_info.always_write_cache = options.always_write_cache
     pex_info.ignore_errors = options.ignore_errors
diff --git a/pex/pex.py b/pex/pex.py
index 6a7da6855..f7e25dd98 100644
--- a/pex/pex.py
+++ b/pex/pex.py
@@ -469,15 +469,14 @@ def execute(self):
 
         try:
             if self._vars.PEX_TOOLS:
-                try:
-                    from pex.tools import main as tools
-                except ImportError as e:
+                if not self._pex_info.includes_tools:
                     die(
                         "The PEX_TOOLS environment variable was set, but this PEX was not built "
-                        "with tools (Re-build the PEX file with `pex --include-tools ...`):"
-                        " {}".format(e)
+                        "with tools (Re-build the PEX file with `pex --include-tools ...`)"
                     )
 
+                from pex.tools import main as tools
+
                 exit_value = tools.main(pex=self, pex_prog_path=sys.argv[0])
             else:
                 self.activate()
diff --git a/pex/pex_bootstrapper.py b/pex/pex_bootstrapper.py
index 81127f430..898bf43b0 100644
--- a/pex/pex_bootstrapper.py
+++ b/pex/pex_bootstrapper.py
@@ -369,6 +369,11 @@ def ensure_venv(pex):
         raise AssertionError(
             "Expected PEX-INFO for {} to have the components of a venv directory".format(pex.path())
         )
+    if not pex_info.includes_tools:
+        raise ValueError(
+            "The PEX_VENV environment variable was set, but this PEX was not built with venv "
+            "support (Re-build the PEX file with `pex --venv ...`)"
+        )
     with atomic_directory(venv_dir, exclusive=True) as venv:
         if not venv.is_finalized:
             from .tools.commands.venv import populate_venv_with_pex
@@ -456,7 +461,7 @@ def bootstrap_pex(entry_point):
     # ENV.PEX_ROOT is consulted by PythonInterpreter and Platform so set that up as early as
     # possible in the run.
     with ENV.patch(PEX_ROOT=pex_info.pex_root):
-        if not ENV.PEX_TOOLS and pex_info.venv:
+        if not (ENV.PEX_UNZIP or ENV.PEX_TOOLS) and pex_info.venv:
             try:
                 target = find_compatible_interpreter(
                     interpreter_constraints=pex_info.interpreter_constraints,
@@ -465,7 +470,10 @@ def bootstrap_pex(entry_point):
                 die(str(e))
             from . import pex
 
-            venv_pex = ensure_venv(pex.PEX(entry_point, interpreter=target))
+            try:
+                venv_pex = ensure_venv(pex.PEX(entry_point, interpreter=target))
+            except ValueError as e:
+                die(str(e))
             os.execv(venv_pex, [venv_pex] + sys.argv[1:])
         else:
             maybe_reexec_pex(pex_info.interpreter_constraints)
diff --git a/pex/pex_builder.py b/pex/pex_builder.py
index b563b57be..368486c71 100644
--- a/pex/pex_builder.py
+++ b/pex/pex_builder.py
@@ -69,12 +69,12 @@ def for_value(cls, value):
 import sys
 
 
-def __maybe_run_unzipped__(pex_zip):
+def __maybe_run_unzipped__(pex_zip, pex_root):
   from pex.common import atomic_directory, open_zip
   from pex.tracer import TRACER
   from pex.variables import unzip_dir
 
-  unzip_to = unzip_dir({pex_root!r}, {pex_hash!r})
+  unzip_to = unzip_dir(pex_root, {pex_hash!r})
   with atomic_directory(unzip_to, exclusive=True) as chroot:
     if not chroot.is_finalized:
       with TRACER.timed('Extracting {{}} to {{}}'.format(pex_zip, unzip_to)):
@@ -89,17 +89,17 @@ def __maybe_run_unzipped__(pex_zip):
   os.execv(sys.executable, [sys.executable, unzip_to] + sys.argv[1:])
 
 
-def __maybe_run_venv__(pex):
+def __maybe_run_venv__(pex, pex_root, pex_path):
   from pex.common import is_exe
   from pex.tracer import TRACER
   from pex.variables import venv_dir
 
   venv_home = venv_dir(
-    pex_root={pex_root!r}, 
+    pex_root=pex_root, 
     pex_hash={pex_hash!r},
     interpreter_constraints={interpreter_constraints!r},
     strip_pex_env={strip_pex_env!r},
-    pex_path={pex_path!r},
+    pex_path=pex_path,
   )
   venv_pex = os.path.join(venv_home, 'pex')
   if not is_exe(venv_pex):
@@ -133,19 +133,37 @@ def __maybe_run_venv__(pex):
 sys.path.insert(0, os.path.abspath(os.path.join(__entry_point__, {bootstrap_dir!r})))
 
 from pex.variables import ENV, Variables
-if Variables.PEX_VENV.value_or(ENV, {is_venv!r}):
-  if not {is_venv!r}:
-    from pex.common import die
-    die(
-      "The PEX_VENV environment variable was set, but this PEX was not built with venv support "
-      "(Re-build the PEX file with `pex --venv ...`):"
+__pex_root__ = Variables.PEX_ROOT.value_or(ENV, {pex_root!r})
+if ENV.PEX_VENV and ENV.PEX_UNZIP:
+  if {is_venv!r}:
+    default_mode = (
+      "Venv: Build a venv from the PEX zip file at {{}} under {{}} and run from there.".format(
+        __entry_point__, __pex_root__
+      )
     )
-  if not ENV.PEX_TOOLS:  # We need to run from the PEX for access to tools.
-    __maybe_run_venv__(__entry_point__)
+  elif {is_unzip!r}:
+    default_mode = "Unzip: Unzip the PEX zip file at {{}} under {{}} and run from there.".format(
+        __entry_point__, __pex_root__
+    )
+  else:
+    default_mode = "Zipapp: Run from the PEX zip file at {{}}.".format(__entry_point__)
+  from pex.common import die
+  die(
+    "Cannot request both PEX_VENV and PEX_UNZIP via environment variable.\\n"
+    "Please use just one of those environment variables or else unset both and accept this PEX's "
+    "default mode:\\n{{}}".format(default_mode)
+  )
+
+if not (ENV.PEX_UNZIP or ENV.PEX_TOOLS) and Variables.PEX_VENV.value_or(ENV, {is_venv!r}):
+  __maybe_run_venv__(
+    __entry_point__,
+    pex_root=__pex_root__,
+    pex_path=Variables.PEX_PATH.value_or(ENV, {pex_path!r}),
+  )
 elif Variables.PEX_UNZIP.value_or(ENV, {is_unzip!r}):
   import zipfile
   if zipfile.is_zipfile(__entry_point__):
-    __maybe_run_unzipped__(__entry_point__)
+    __maybe_run_unzipped__(__entry_point__, __pex_root__)
 
 from pex.pex_bootstrapper import bootstrap_pex
 bootstrap_pex(__entry_point__)
@@ -178,7 +196,6 @@ def __init__(
         pex_info=None,  # type: Optional[PexInfo]
         preamble=None,  # type: Optional[str]
         copy_mode=CopyMode.LINK,  # type: CopyMode.Value
-        include_tools=False,  # type: bool
     ):
         # type: (...) -> None
         """Initialize a pex builder.
@@ -192,8 +209,6 @@ def __init__(
         :keyword preamble: If supplied, execute this code prior to bootstrapping this PEX
           environment.
         :keyword copy_mode: Create the pex environment using the given copy mode.
-        :keyword include_tools: If True, include runtime tools which can be executed by exporting
-                                `PEX_TOOLS=1`.
 
         .. versionchanged:: 0.8
           The temporary directory created when ``path`` is not specified is now garbage collected on
@@ -204,7 +219,6 @@ def __init__(
         self._pex_info = pex_info or PexInfo.default(self._interpreter)
         self._preamble = preamble or ""
         self._copy_mode = copy_mode
-        self._include_tools = include_tools
 
         self._shebang = self._interpreter.identity.hashbang()
         self._logger = logging.getLogger(__name__)
@@ -568,7 +582,7 @@ def _prepare_bootstrap(self):
             # do use at runtime, does.
             root_module_names=["attr", "packaging", "pkg_resources", "pyparsing"],
         )
-        if self._include_tools:
+        if self._pex_info.includes_tools:
             # The `repository extract` tool needs setuptools and wheel to build sdists and wheels
             # and distutils needs .dist-info to discover setuptools (and wheel).
             vendor.vendor_runtime(
@@ -586,7 +600,7 @@ def _prepare_bootstrap(self):
             provider = ZipProvider(mod)
 
         bootstrap_packages = ["", "third_party"]
-        if self._include_tools:
+        if self._pex_info.includes_tools:
             bootstrap_packages.extend(["tools", "tools/commands"])
         for package in bootstrap_packages:
             for fn in provider.resource_listdir(package):
diff --git a/pex/pex_info.py b/pex/pex_info.py
index d90f79584..6c7bf4820 100644
--- a/pex/pex_info.py
+++ b/pex/pex_info.py
@@ -279,6 +279,16 @@ def venv_dir(self):
             pex_path=self.pex_path,
         )
 
+    @property
+    def includes_tools(self):
+        # type: () -> bool
+        return self._pex_info.get("includes_tools", self.venv)
+
+    @includes_tools.setter
+    def includes_tools(self, value):
+        # type: (bool) -> None
+        self._pex_info["includes_tools"] = bool(value)
+
     @property
     def strip_pex_env(self):
         """Whether or not this PEX should strip `PEX_*` env vars before executing its entrypoint.
diff --git a/pex/variables.py b/pex/variables.py
index b1f809bc3..b4cc1048b 100644
--- a/pex/variables.py
+++ b/pex/variables.py
@@ -523,7 +523,7 @@ def PEX_EXTRA_SYS_PATH(self):
         """
         return self._maybe_get_string("PEX_EXTRA_SYS_PATH")
 
-    @defaulted_property(default=os.path.expanduser("~/.pex"))
+    @defaulted_property(default="~/.pex")
     def PEX_ROOT(self):
         # type: () -> str
         """Directory.
@@ -536,7 +536,8 @@ def PEX_ROOT(self):
         return self._get_path("PEX_ROOT")
 
     @PEX_ROOT.validator
-    def _ensure_writeable_pex_root(self, pex_root):
+    def _ensure_writeable_pex_root(self, raw_pex_root):
+        pex_root = os.path.expanduser(raw_pex_root)
         if not can_write_dir(pex_root):
             tmp_root = os.path.realpath(safe_mkdtemp())
             pex_warnings.warn(
diff --git a/tests/test_execution_mode.py b/tests/test_execution_mode.py
new file mode 100644
index 000000000..44786e7bd
--- /dev/null
+++ b/tests/test_execution_mode.py
@@ -0,0 +1,81 @@
+# Copyright 2021 Pants project contributors (see CONTRIBUTORS.md).
+# Licensed under the Apache License, Version 2.0 (see LICENSE).
+
+from __future__ import absolute_import
+
+import os.path
+import subprocess
+from subprocess import CalledProcessError
+
+import pytest
+
+from pex.testing import run_pex_command
+from pex.typing import TYPE_CHECKING
+
+if TYPE_CHECKING:
+    from typing import Any, Callable, Dict, Iterable, Tuple
+
+    CreateColorsPex = Callable[[Iterable[str]], str]
+    ExecuteColorsPex = Callable[[str, Dict[str, str]], Tuple[str, str]]
+
+
+@pytest.fixture
+def create_colors_pex(tmpdir):
+    # type: (Any) -> CreateColorsPex
+    def create(extra_args):
+        pex_file = os.path.join(str(tmpdir), "colors.pex")
+        results = run_pex_command(["ansicolors==1.1.8", "-o", pex_file] + list(extra_args))
+        results.assert_success()
+        return pex_file
+
+    return create
+
+
+@pytest.fixture
+def execute_colors_pex(tmpdir):
+    # type: (Any) -> ExecuteColorsPex
+    def execute(colors_pex, extra_env):
+        pex_root = os.path.join(str(tmpdir), "pex_root")
+        env = os.environ.copy()
+        env.update(extra_env)
+        env["PEX_ROOT"] = pex_root
+        output = subprocess.check_output(
+            [colors_pex, "-c", "import colors; print(colors.__file__)"], env=env
+        )
+        return output.strip().decode("utf-8"), pex_root
+
+    return execute
+
+
+@pytest.mark.parametrize(
+    ["extra_args", "default_dir", "venv_exception_expected"],
+    [
+        pytest.param([], "installed_wheels", True, id="ZIPAPP"),
+        pytest.param(["--include-tools"], "installed_wheels", False, id="ZIPAPP --include-tools"),
+        pytest.param(["--unzip"], "unzipped", True, id="UNZIP"),
+        pytest.param(["--unzip", "--include-tools"], "unzipped", False, id="UNZIP --include-tools"),
+        pytest.param(["--venv"], "venvs", False, id="VENV"),
+    ],
+)
+def test_execution_mode(
+    create_colors_pex,  # type: CreateColorsPex
+    execute_colors_pex,  # type: ExecuteColorsPex
+    extra_args,  # type: Iterable[str]
+    default_dir,  # type: str
+    venv_exception_expected,  # type: bool
+):
+    # type: (...) -> None
+    pex_file = create_colors_pex(extra_args)
+
+    output, pex_root = execute_colors_pex(pex_file, {})
+    assert output.startswith(os.path.join(pex_root, default_dir))
+
+    output, pex_root = execute_colors_pex(pex_file, {"PEX_UNZIP": "1"})
+    assert output.startswith(os.path.join(pex_root, "unzipped"))
+
+    if venv_exception_expected:
+        with pytest.raises(CalledProcessError):
+            execute_colors_pex(pex_file, {"PEX_VENV": "1"})
+    else:
+        output, pex_root = execute_colors_pex(pex_file, {"PEX_VENV": "1"})
+        assert output.startswith(os.path.join(pex_root, "venvs"))
diff --git a/tests/tools/commands/test_interpreter_command.py b/tests/tools/commands/test_interpreter_command.py
index d2dd650b1..3930fbd45 100644
--- a/tests/tools/commands/test_interpreter_command.py
+++ b/tests/tools/commands/test_interpreter_command.py
@@ -47,7 +47,8 @@ def create(
         *other_interpreters  # type: PythonInterpreter
     ):
         # type: (...) -> InterpreterTool
-        pex_builder = PEXBuilder(include_tools=True, interpreter=interpreter)
+        pex_builder = PEXBuilder(interpreter=interpreter)
+        pex_builder.info.includes_tools = True
         pex_builder.freeze()
         return cls(
             tools_pex=pex_builder.path(),