diff --git a/.gitignore b/.gitignore
index bc1b2fe275..f7f72fbf41 100644
--- a/.gitignore
+++ b/.gitignore
@@ -83,7 +83,8 @@ celerybeat-schedule
 *.sage.py
 
 # Environments
-.env
+/.env
+.env.local
 .venv
 env/
 venv/
@@ -159,9 +160,6 @@ jspm_packages/
 # Yarn Integrity file
 .yarn-integrity
 
-# dotenv environment variables file
-.env
-
 # next.js build output
 .next
 
diff --git a/packages/playground-website/.env b/packages/playground-website/.env
new file mode 100644
index 0000000000..150450da60
--- /dev/null
+++ b/packages/playground-website/.env
@@ -0,0 +1,2 @@
+# Bundle and use local version of typespec libraries
+VITE_USE_LOCAL_LIBRARIES=true
diff --git a/packages/playground-website/index.html b/packages/playground-website/index.html
index a25d6a1f18..b37aea3620 100644
--- a/packages/playground-website/index.html
+++ b/packages/playground-website/index.html
@@ -6,8 +6,8 @@
     <title>TypeSpec Playground</title>
     <script async src="./node_modules/es-module-shims/dist/es-module-shims.js"></script>
     <script>
-      const noLibraryBundling = "%VITE_NO_LIBRARY_BUNDLING%" === "true";
-      if (noLibraryBundling) {
+      const useLocalLibrary = "%VITE_USE_LOCAL_LIBRARIES%" === "true";
+      if (!useLocalLibrary) {
         document.currentScript.after(
           Object.assign(document.createElement("script"), {
             type: "importmap-shim",
diff --git a/packages/playground-website/vite.config.ts b/packages/playground-website/vite.config.ts
index c360e28d43..9fb3e03440 100644
--- a/packages/playground-website/vite.config.ts
+++ b/packages/playground-website/vite.config.ts
@@ -4,7 +4,7 @@ import { defineConfig, loadEnv } from "vite";
 
 export default defineConfig(({ mode }) => {
   const env = loadEnv(mode, process.cwd());
-  const noLibraryBundling = env["VITE_NO_LIBRARY_BUNDLING"] === "true";
+  const useLocalLibraries = env["VITE_USE_LOCAL_LIBRARIES"] === "true";
 
   const config = definePlaygroundViteConfig({
     defaultEmitter: "@typespec/openapi3",
@@ -51,7 +51,7 @@ export default defineConfig(({ mode }) => {
       githubIssueUrl: `https://github.com/microsoft/typespec/issues/new`,
       documentationUrl: "https://microsoft.github.io/typespec",
     },
-    skipBundleLibraries: noLibraryBundling,
+    skipBundleLibraries: useLocalLibraries,
   });
 
   config.plugins!.push(