diff --git a/ui/desktop/README.md b/ui/desktop/README.md
index 24dd4f865..155aa0400 100644
--- a/ui/desktop/README.md
+++ b/ui/desktop/README.md
@@ -83,18 +83,12 @@ To run as a desktop app:
 
 - `yarn start:desktop`
 
-The Boundary CLI is downloaded and extracted to `electron-app/cli/` folder as part of
-build. CLI version is defined in `electron-app/config/cli.js`.
+The Boundary CLI is NOT downloaded by default, to download and extract the CLI to `electron-app/cli` folder as part of the build, you need to set the environment variable `SETUP_CLI` to true. Example: `SETUP_CLI=true yarn start:desktop`.
+The CLI version is defined in `electron-app/config/cli/VERSION`.
 
 ### Developing Using Non-Release Versions of Boundary
 
-You can also develop using a non-release version of Boundary - bypassing the
-above CLI download behavior - by manually placing the version of Boundary that
-you want to develop with in the `electron-app/cli/` directly (you may need to
-create the directory).
-
-After doing this, run yarn with `BYPASS_CLI_SETUP=true`; example:
-`BYPASS_CLI_SETUP=true yarn start:desktop`.
+To develop using a non-release version of Boundary, download the Boundary CLI version you want to use and extract it to the `electron-app/cli` folder. You may need to create the directory or clean it up beforehand.
 
 ### Environment Variables (DEV)
 
@@ -106,7 +100,7 @@ These environment variables may be used to customized the build.
 | `APP_UPDATER_CURRENT_VERSION` | Version of client. |
 | `APP_UPDATER_LATEST_VERSION_TAG` | Next version for comparison with current version. |
 | `APP_UPDATER_LATEST_VERSION_LOCATION` | Location of app release to use for updating client. Can be a filepath or url. |
-| `BYPASS_CLI_SETUP` | Disable download and extraction of cli. For development use only. |
+| `SETUP_CLI` | Enable download and extraction of CLI. |
 | `BYPASS_APP_UPDATER` | Disable app updater feature. For development use only. |
 | `DISABLE_WINDOW_CHROME` | Disable window chrome. For internal use only. |
 | `ENABLE_MIRAGE` | Enable (`true`) or disable (`false`) mirage. Default value is `true`. |
@@ -150,7 +144,7 @@ These environment variables may be used to customized the build.
 | -------- | ------------- | ----------- |
 | `APP_NAME` | Application Name | The user-facing name of the application, appearing in titles, etc. |
 | `BOUNDARY_DESKTOP_SIGNING_IDENTITY` | | The name of the certificate to use when signing (e.g. Developer ID Application: \* (*)). |
-| `BYPASS_CLI_SETUP` | Set to `true` to launch without bootstrapping the CLI (see above). ||
+| `SETUP_CLI` | Enable download and extraction of CLI. |
 
 ### Running Tests
 
diff --git a/ui/desktop/electron-app/config/cli.js b/ui/desktop/electron-app/config/cli.js
index ba7529137..92e21db87 100644
--- a/ui/desktop/electron-app/config/cli.js
+++ b/ui/desktop/electron-app/config/cli.js
@@ -95,20 +95,20 @@ const extract = async (artifactPath, destination) => {
 
 module.exports = {
   setup: async () => {
-    if (process.env.BYPASS_CLI_SETUP) {
+    if (process.env.SETUP_CLI === 'true') {
+      try {
+        const artifactVersion = await fs.promises.readFile(
+          path.resolve(__dirname, 'cli', 'VERSION'),
+          'utf8',
+        );
+        const artifactPath = await downloadArtifact(artifactVersion.trim());
+        await extract(artifactPath, artifactDestination);
+      } catch (e) {
+        console.error('ERROR: Failed setting up CLI.', e);
+        process.exit(1);
+      }
+    } else {
       console.warn('WARNING: Bypassing cli setup');
-      return;
-    }
-    try {
-      const artifactVersion = await fs.promises.readFile(
-        path.resolve(__dirname, 'cli', 'VERSION'),
-        'utf8',
-      );
-      const artifactPath = await downloadArtifact(artifactVersion.trim());
-      await extract(artifactPath, artifactDestination);
-    } catch (e) {
-      console.error('ERROR: Failed setting up CLI.', e);
-      process.exit(1);
     }
   },
 };
diff --git a/ui/desktop/electron-app/config/forge.config.js b/ui/desktop/electron-app/config/forge.config.js
index 6725c1bb6..fdec91f7d 100644
--- a/ui/desktop/electron-app/config/forge.config.js
+++ b/ui/desktop/electron-app/config/forge.config.js
@@ -4,6 +4,13 @@ const { isMac } = require('../src/helpers/platform.js');
 const fs = require('fs');
 const path = require('path');
 
+// When SETUP_CLI=false we do not download the CLI. If there is no cli directory present
+// we will not copy the CLI to the output binary.app
+let extraResource = [];
+if (fs.existsSync('./cli')) {
+  extraResource = ['./cli'];
+}
+
 module.exports = {
   packagerConfig: {
     ignore: ['/ember-test(/|$)', '/tests(/|$)'],
@@ -39,7 +46,7 @@ module.exports = {
         done();
       },
     ],
-    extraResource: ['./cli'],
+    extraResource,
   },
   makers: [
     {
diff --git a/ui/desktop/electron-app/src/cli/index.js b/ui/desktop/electron-app/src/cli/index.js
index 9139cc90c..7612bd2e5 100644
--- a/ui/desktop/electron-app/src/cli/index.js
+++ b/ui/desktop/electron-app/src/cli/index.js
@@ -4,11 +4,13 @@
  */
 
 const { spawnSync } = require('../helpers/spawn-promise.js');
-const { path } = require('./path.js');
+const { path, isBuiltInCli } = require('./path.js');
 
 module.exports = {
   // Check boundary cli existence
-  exists: () => Boolean(path()),
+  exists: () => Boolean(path),
+
+  isBuiltInCli,
 
   // Returns JSON-formatted version information from the CLI
   version: () => {
diff --git a/ui/desktop/electron-app/src/cli/path.js b/ui/desktop/electron-app/src/cli/path.js
index 46df9ef0a..4f20eda44 100644
--- a/ui/desktop/electron-app/src/cli/path.js
+++ b/ui/desktop/electron-app/src/cli/path.js
@@ -6,15 +6,34 @@
 const path = require('path');
 const { isWindows } = require('../helpers/platform.js');
 const isDev = require('electron-is-dev');
+const { existsSync } = require('node:fs');
+const which = require('which');
+
+const binaryName = isWindows() ? 'boundary.exe' : 'boundary';
+const builtInCliPath = isDev
+  ? path.resolve(__dirname, '..', '..', 'cli', binaryName)
+  : path.resolve(process.resourcesPath, 'cli', binaryName);
+
+// Return true if the CLI in usage is the built in. False if relies on system CLI.
+const isBuiltInCli = existsSync(builtInCliPath);
+
+/**
+ * Returns Boundary CLI path if the CLI is built in or the Boundary binary name
+ * if not, so we assume boundary is available within user $PATH.
+ */
+const pathBoundary = isBuiltInCli
+  ? builtInCliPath
+  : // On Windows, we need to filter out the path that is within the current working directory.
+  // This is necessary because the spawn methods may not always find the correct binary path.
+  // The `which` module returns an array of all available paths for the 'boundary' binary.
+  // We then filter out the path that is within the current working directory.
+  isWindows()
+  ? which
+      .sync(binaryName, { nothrow: true, all: true })
+      .filter((binary) => !binary.startsWith(process.cwd()))[0]
+  : binaryName;
 
 module.exports = {
-  // Returns boundary cli path
-  path: () => {
-    const name = isWindows() ? 'boundary.exe' : 'boundary';
-
-    // The CLI will be located in a different location once packaged up in an ASAR
-    return isDev
-      ? path.resolve(__dirname, '..', '..', 'cli', name)
-      : path.resolve(process.resourcesPath, 'cli', name);
-  },
+  path: pathBoundary,
+  isBuiltInCli,
 };
diff --git a/ui/desktop/electron-app/src/helpers/app-updater.js b/ui/desktop/electron-app/src/helpers/app-updater.js
index af04fd8e1..41fef07f1 100644
--- a/ui/desktop/electron-app/src/helpers/app-updater.js
+++ b/ui/desktop/electron-app/src/helpers/app-updater.js
@@ -12,6 +12,7 @@ const { autoUpdater, dialog, app } = require('electron');
 const { isWindows, isLinux } = require('../helpers/platform.js');
 const config = require('../../config/config.js');
 const log = require('electron-log/main');
+const boundaryCli = require('../cli/index.js');
 
 let currentVersion = config.releaseVersion;
 const debug = process.env.DEBUG_APP_UPDATER;
@@ -170,6 +171,11 @@ module.exports = {
      */
     if (isWindows() || isLinux()) return;
 
+    /**
+     * Skip the app updater if we are NOT using the built in CLI
+     */
+    if (!boundaryCli.isBuiltInCli) return;
+
     let latestVersion;
     if (debug) {
       latestVersion = process.env.APP_UPDATER_LATEST_VERSION_TAG;
diff --git a/ui/desktop/electron-app/src/helpers/spawn-promise.js b/ui/desktop/electron-app/src/helpers/spawn-promise.js
index e057c0498..19ef4c5a3 100644
--- a/ui/desktop/electron-app/src/helpers/spawn-promise.js
+++ b/ui/desktop/electron-app/src/helpers/spawn-promise.js
@@ -32,7 +32,7 @@ module.exports = {
    */
   spawnAsyncJSONPromise(command, token) {
     return new Promise((resolve, reject) => {
-      const childProcess = spawn(path(), command, {
+      const childProcess = spawn(path, command, {
         env: {
           ...process.env,
           BOUNDARY_TOKEN: token,
@@ -77,7 +77,7 @@ module.exports = {
    * @param {object} envVars
    * @returns {{stdout: string | undefined, stderr: string | undefined}}   */
   spawnSync(args, envVars = {}) {
-    const childProcess = spawnSync(path(), args, {
+    const childProcess = spawnSync(path, args, {
       // Some of our outputs (namely cache daemon searching) can be very large.
       // This an undocumented hack to allow for an unlimited buffer size which
       // could change at any time. If it does, we should just set an arbitrarily
@@ -103,7 +103,7 @@ module.exports = {
    */
   spawn(command, options) {
     return new Promise((resolve, reject) => {
-      const childProcess = spawn(path(), command, options);
+      const childProcess = spawn(path, command, options);
       childProcess.stdout.on('data', (data) => {
         resolve({ childProcess, stdout: data.toString() });
       });