diff --git a/src/locale/localed.c b/src/locale/localed.c
index a2014e3da0..9b6890ebb4 100644
--- a/src/locale/localed.c
+++ b/src/locale/localed.c
@@ -32,7 +32,7 @@
 #include "strv.h"
 #include "user-util.h"
 
-static int locale_update_system_manager(sd_bus *bus, char **l_set, char **l_unset) {
+static int reload_system_manager(sd_bus *bus) {
         _cleanup_(sd_bus_message_unrefp) sd_bus_message *m = NULL;
         _cleanup_(sd_bus_error_free) sd_bus_error error = SD_BUS_ERROR_NULL;
         int r;
@@ -43,21 +43,13 @@ static int locale_update_system_manager(sd_bus *bus, char **l_set, char **l_unse
                         "org.freedesktop.systemd1",
                         "/org/freedesktop/systemd1",
                         "org.freedesktop.systemd1.Manager",
-                        "UnsetAndSetEnvironment");
-        if (r < 0)
-                return bus_log_create_error(r);
-
-        r = sd_bus_message_append_strv(m, l_unset);
-        if (r < 0)
-                return bus_log_create_error(r);
-
-        r = sd_bus_message_append_strv(m, l_set);
+                        "Reload");
         if (r < 0)
                 return bus_log_create_error(r);
 
         r = sd_bus_call(bus, m, 0, &error, NULL);
         if (r < 0)
-                return log_error_errno(r, "Failed to update the manager environment: %s", bus_error_message(&error, r));
+                return log_error_errno(r, "Failed to reload system manager: %s", bus_error_message(&error, r));
 
         return 0;
 }
@@ -393,7 +385,11 @@ static int method_set_locale(sd_bus_message *m, void *userdata, sd_bus_error *er
                 return sd_bus_error_set_errnof(error, r, "Failed to set locale: %m");
         }
 
-        (void) locale_update_system_manager(sd_bus_message_get_bus(m), l_set, l_unset);
+        /* Since we just updated the locale configuration file, ask the system manager to read it again to
+         * update its default locale settings. It's important to not use UnsetAndSetEnvironment or a similar
+         * method because in this case unsetting variables means restoring them to PID1 default values, which
+         * may be outdated, since locale.conf has just changed and PID1 hasn't read it */
+        (void) reload_system_manager(sd_bus_message_get_bus(m));
 
         if (!strv_isempty(l_set)) {
                 _cleanup_free_ char *line = NULL;
diff --git a/test/units/testsuite-73.sh b/test/units/testsuite-73.sh
index f9e2dce1bf..a4fda36da0 100755
--- a/test/units/testsuite-73.sh
+++ b/test/units/testsuite-73.sh
@@ -92,6 +92,19 @@ test_locale() {
         return
     fi
 
+    # start with a known default environment and make sure to also give a
+    # default value to LC_CTYPE= since we're about to also set/unset it. We
+    # also reload PID1 configuration to make sure that PID1 environment itself
+    # is updated as it's not always been the case.
+    assert_rc 0 localectl set-locale "LANG=en_US.UTF-8" "LC_CTYPE=C"
+    systemctl daemon-reload
+    output=$(localectl)
+    assert_in "System Locale: LANG=en_US.UTF-8" "$output"
+    assert_in "LC_CTYPE=C" "$output"
+    output=$(systemctl show-environment)
+    assert_in "LANG=en_US.UTF-8" "$output"
+    assert_in "LC_CTYPE=C" "$output"
+
     # warn when kernel command line has locale settings
     output=$(SYSTEMD_PROC_CMDLINE="locale.LANG=C.UTF-8 locale.LC_CTYPE=ja_JP.UTF-8" localectl 2>&1)
     assert_in "Warning:" "$output"