diff --git a/client/v2/CHANGELOG.md b/client/v2/CHANGELOG.md
index 335010baca5b..5fae2c385bdc 100644
--- a/client/v2/CHANGELOG.md
+++ b/client/v2/CHANGELOG.md
@@ -47,6 +47,10 @@ Ref: https://keepachangelog.com/en/1.0.0/
 
 * [#17709](https://github.com/cosmos/cosmos-sdk/pull/17709) Address codecs have been removed from `autocli.AppOptions` and `flag.Builder`. Instead client/v2 uses the address codecs present in the context (introduced in [#17503](https://github.com/cosmos/cosmos-sdk/pull/17503)).
 
+### Bug Fixes
+
+* [#20964](https://github.com/cosmos/cosmos-sdk/pull/20964) Fix `GetNodeHomeDirectory` helper in `client/v2/helpers` to respect the `(PREFIX)_HOME` environment variable.
+
 ## [v2.0.0-beta.3] - 2024-07-15
 
 ### Features
diff --git a/client/v2/helpers/home.go b/client/v2/helpers/home.go
index f62ff30490e9..af3fc2886673 100644
--- a/client/v2/helpers/home.go
+++ b/client/v2/helpers/home.go
@@ -6,8 +6,13 @@ import (
 	"strings"
 )
 
+// EnvPrefix is the prefix for environment variables that are used by the CLI.
+// It should match the one used for viper in the CLI.
+var EnvPrefix = ""
+
 // GetNodeHomeDirectory gets the home directory of the node (where the config is located).
-// It parses the home flag if set if the `NODE_HOME` environment variable if set (and ignores name).
+// It parses the home flag if set if the `(PREFIX)_HOME` environment variable if set (and ignores name).
+// When no prefix is set, it reads the `NODE_HOME` environment variable.
 // Otherwise, it returns the default home directory given its name.
 func GetNodeHomeDirectory(name string) (string, error) {
 	// get the home directory from the flag
@@ -21,12 +26,19 @@ func GetNodeHomeDirectory(name string) (string, error) {
 	}
 
 	// get the home directory from the environment variable
-	homeDir := os.Getenv("NODE_HOME")
+	// to not clash with the $HOME system variable, when no prefix is set
+	// we check the NODE_HOME environment variable
+	homeDir, envHome := "", "HOME"
+	if len(EnvPrefix) > 0 {
+		homeDir = os.Getenv(EnvPrefix + "_" + envHome)
+	} else {
+		homeDir = os.Getenv("NODE_" + envHome)
+	}
 	if homeDir != "" {
 		return filepath.Clean(homeDir), nil
 	}
 
-	// return the default home directory
+	// get user home directory
 	userHomeDir, err := os.UserHomeDir()
 	if err != nil {
 		return "", err
diff --git a/docs/learn/advanced/07-cli.md b/docs/learn/advanced/07-cli.md
index b4932ad4c90d..409effef6801 100644
--- a/docs/learn/advanced/07-cli.md
+++ b/docs/learn/advanced/07-cli.md
@@ -182,7 +182,7 @@ this will be more convenient:
 
 ```shell
 # define env variables in .env, .envrc etc
-NODE_HOME=<path to home>
+GAIA_HOME=<path to home>
 GAIA_NODE=<node address>
 GAIA_CHAIN_ID="testchain-1"
 GAIA_KEYRING_BACKEND="test"
diff --git a/simapp/simd/main.go b/simapp/simd/main.go
index 9643af43bc80..4e7549b21411 100644
--- a/simapp/simd/main.go
+++ b/simapp/simd/main.go
@@ -4,6 +4,7 @@ import (
 	"fmt"
 	"os"
 
+	clientv2helpers "cosmossdk.io/client/v2/helpers"
 	"cosmossdk.io/simapp"
 	"cosmossdk.io/simapp/simd/cmd"
 
@@ -12,7 +13,7 @@ import (
 
 func main() {
 	rootCmd := cmd.NewRootCmd()
-	if err := svrcmd.Execute(rootCmd, "", simapp.DefaultNodeHome); err != nil {
+	if err := svrcmd.Execute(rootCmd, clientv2helpers.EnvPrefix, simapp.DefaultNodeHome); err != nil {
 		fmt.Fprintln(rootCmd.OutOrStderr(), err)
 		os.Exit(1)
 	}
diff --git a/simapp/v2/simdv2/main.go b/simapp/v2/simdv2/main.go
index f50850ec6bfa..eb7d9a1b005b 100644
--- a/simapp/v2/simdv2/main.go
+++ b/simapp/v2/simdv2/main.go
@@ -4,6 +4,7 @@ import (
 	"fmt"
 	"os"
 
+	clientv2helpers "cosmossdk.io/client/v2/helpers"
 	"cosmossdk.io/core/transaction"
 	serverv2 "cosmossdk.io/server/v2"
 	"cosmossdk.io/simapp/v2"
@@ -12,7 +13,7 @@ import (
 
 func main() {
 	rootCmd := cmd.NewRootCmd[transaction.Tx]()
-	if err := serverv2.Execute(rootCmd, "", simapp.DefaultNodeHome); err != nil {
+	if err := serverv2.Execute(rootCmd, clientv2helpers.EnvPrefix, simapp.DefaultNodeHome); err != nil {
 		fmt.Fprintln(rootCmd.OutOrStderr(), err)
 		os.Exit(1)
 	}