diff --git a/bin/exec.ml b/bin/exec.ml
index b4a0ec6e9ef..c6bc7df9a0e 100644
--- a/bin/exec.ml
+++ b/bin/exec.ml
@@ -69,10 +69,9 @@ module Command_to_exec = struct
 
   type t =
     { get_path_and_build_if_necessary :
-        string -> (Path.t, [ `Already_reported ]) result Fiber.t
+        string -> (Path.t * Env.t, [ `Already_reported ]) result Fiber.t
     ; prog : string
     ; args : string list
-    ; env : Env.t
     }
 
   (* Helper function to spawn a new process running a command in an
@@ -90,9 +89,9 @@ module Command_to_exec = struct
 
   (* Run the command, first (re)building the program which the command is
      invoking *)
-  let build_and_run_in_child_process { get_path_and_build_if_necessary; prog; args; env } =
+  let build_and_run_in_child_process { get_path_and_build_if_necessary; prog; args } =
     get_path_and_build_if_necessary prog
-    |> Fiber.map ~f:(Result.map ~f:(spawn_process ~args ~env))
+    |> Fiber.map ~f:(Result.map ~f:(fun (p, env) -> spawn_process ~args ~env p))
   ;;
 end
 
@@ -306,8 +305,7 @@ module Exec_context = struct
       Memo.run
       @@
       let open Memo.O in
-      let* env = env
-      and* sctx = sctx in
+      let* sctx = sctx in
       let expand = Cmd_arg.expand ~root:(Common.root common) ~sctx in
       let* prog = expand prog in
       let+ args = Memo.parallel_map args ~f:expand in
@@ -316,10 +314,12 @@ module Exec_context = struct
             (* TODO we should release the dune lock. But we aren't doing it
                because we don't unload the database files we've marshalled.
             *)
-            build (fun () -> get_path_and_build_if_necessary ~prog))
+            build (fun () ->
+              let+ env = env
+              and+ path = get_path_and_build_if_necessary ~prog in
+              path, env))
       ; prog
       ; args
-      ; env
       }
     in
     Watch.loop ~command_to_exec
diff --git a/test/blackbox-tests/test-cases/pkg/gh10959.t b/test/blackbox-tests/test-cases/pkg/gh10959.t
new file mode 100644
index 00000000000..2c1bd0ed57b
--- /dev/null
+++ b/test/blackbox-tests/test-cases/pkg/gh10959.t
@@ -0,0 +1,44 @@
+Repro `dune exec --watch` crash with pkg management
+
+  $ . ./helpers.sh
+
+  $ cat >dune-project <<EOF
+  > (lang dune 3.13)
+  > (pin
+  >  (url file://$PWD/_multiple)
+  >  (package (name foo))
+  >  (package (name bar)))
+  > (package
+  >  (name main)
+  >  (depends foo bar))
+  > EOF
+
+  $ cat >dune <<EOF
+  > (executable
+  >  (name x))
+  > EOF
+  $ cat >x.ml <<EOF
+  > let () = print_endline "hello"
+  > EOF
+
+  $ mkdir dune.lock
+  $ cat >dune.lock/lock.dune <<EOF
+  > (lang package 0.1)
+  > (repositories
+  >  (complete true))
+  > EOF
+
+  $ cat >dune.lock/test.pkg <<EOF
+  > (version 0.0.1)
+  > (build
+  >  (system "echo building test"))
+  > EOF
+
+  $ dune exec -w ./x.exe > output.log 2>&1 &
+  $ PID=$!
+  $ sleep 2
+  $ cat output.log | sort
+  Success, waiting for filesystem changes...
+  building test
+  hello
+  $ kill $PID