diff --git a/reactos/base/shell/cmd/prompt.c b/reactos/base/shell/cmd/prompt.c
index da6ea9ddaa0..2898a03ce2d 100644
--- a/reactos/base/shell/cmd/prompt.c
+++ b/reactos/base/shell/cmd/prompt.c
@@ -52,7 +52,7 @@
 static TCHAR InfoLine[] = _T("  ReactOS Command Prompt                                      Type HELP = Help  ");
 
 /* The default prompt */
-static TCHAR DefaultPrompt[] = _T("$I$P$G");
+static TCHAR DefaultPrompt[] = _T("$P$G");
 
 
 /*
@@ -256,18 +256,13 @@ INT cmd_prompt(LPTSTR param)
     }
 
     /*
-     * If 'param' is NULL, then we need to set it to default,
-     * because that means the user entered "prompt" only.
-     * So even if 'param' is null you _must_ still set prompt
-     * to the default.  There seems to be some kind of difference
-     * between winxp and 2k in this matter and this way will
-     * cover both. Do not use fixed size of 'szParam' for 'param';
-     * the buffers are 8192 bytes and will later change to dynamic buffer.
+     * Set the PROMPT environment variable. If 'param' is NULL or is
+     * an empty string (the user entered "prompt" only), then remove
+     * the environment variable and therefore use the default prompt.
+     * Otherwise, use the new prompt.
      */
-
-    /* Set the PROMPT environment variable */
     if (!SetEnvironmentVariable(_T("PROMPT"),
-                                (param[0] != _T('\0') ? param : DefaultPrompt)))
+                                (param && param[0] != _T('\0') ? param : NULL)))
     {
         return 1;
     }
diff --git a/reactos/boot/bootdata/hivesys.inf b/reactos/boot/bootdata/hivesys.inf
index 751e1df160f..1b7e10d9673 100644
--- a/reactos/boot/bootdata/hivesys.inf
+++ b/reactos/boot/bootdata/hivesys.inf
@@ -1211,10 +1211,11 @@ HKLM,"SYSTEM\CurrentControlSet\Control\Session Manager\DOS Devices","UNC",0x0000
 ; System environment settings
 HKLM,"SYSTEM\CurrentControlSet\Control\Session Manager\Environment","ComSpec",0x00020000,"%SystemRoot%\system32\cmd.exe"
 HKLM,"SYSTEM\CurrentControlSet\Control\Session Manager\Environment","Path",0x00020000,"%SystemRoot%\bin;%SystemRoot%\system32;%SystemRoot%;%SystemRoot%\system32\wbem"
-HKLM,"SYSTEM\CurrentControlSet\Control\Session Manager\Environment","windir",0x00020000,"%SystemRoot%"
+HKLM,"SYSTEM\CurrentControlSet\Control\Session Manager\Environment","PATHEXT",0x00000000,".COM;.EXE;.BAT;.CMD"
+HKLM,"SYSTEM\CurrentControlSet\Control\Session Manager\Environment","PROMPT",0x00000000,"$I$P$G"
 HKLM,"SYSTEM\CurrentControlSet\Control\Session Manager\Environment","TEMP",0x00020000,"%SystemDrive%\TEMP"
 HKLM,"SYSTEM\CurrentControlSet\Control\Session Manager\Environment","TMP",0x00020000,"%SystemDrive%\TEMP"
-HKLM,"SYSTEM\CurrentControlSet\Control\Session Manager\Environment","PATHEXT",0x00000000,".COM;.EXE;.BAT;.CMD"
+HKLM,"SYSTEM\CurrentControlSet\Control\Session Manager\Environment","windir",0x00020000,"%SystemRoot%"
 
 
 ; Known DLLs