diff --git a/EESSI-install-software.sh b/EESSI-install-software.sh
index a6f34413..7801a70c 100755
--- a/EESSI-install-software.sh
+++ b/EESSI-install-software.sh
@@ -490,6 +490,12 @@ else
             # full EasyBuild command for this easystack file (also shown in the debug shell messages)
             if [[ ${easystack_file} == *"/rebuilds/"* ]]; then
                 eb_cmd="${EB} --easystack ${easystack_file} --rebuild"
+                # for rebuilds on a CVMFS repository, we assume an overlay is used,
+                # and we can safely enable the hook that removes the existing installation directory at the start of the build
+                if [[ ${EASYBUILD_INSTALLPATH} == "/cvmfs"* ]]; then
+                    echo "This is a rebuild, so setting EESSI_FORCE_EARLY_REMOVAL_OF_INSTALL_DIR=1"
+                    export EESSI_FORCE_EARLY_REMOVAL_OF_INSTALL_DIR=1
+                fi
             else
                 eb_cmd="${EB} --easystack ${easystack_file} --robot"
             fi
diff --git a/eb_hooks.py b/eb_hooks.py
index fd3aed75..33e39388 100644
--- a/eb_hooks.py
+++ b/eb_hooks.py
@@ -21,7 +21,7 @@
 from easybuild.tools.build_log import EasyBuildError, print_msg, print_warning
 from easybuild.tools.config import build_option, install_path, update_build_option
 from easybuild.tools.config import ERROR
-from easybuild.tools.filetools import apply_regex_substitutions, copy_dir, copy_file, remove_file, symlink, which
+from easybuild.tools.filetools import apply_regex_substitutions, copy_dir, copy_file, remove_dir, remove_file, symlink, which
 from easybuild.tools.modules import get_software_root, get_software_root_env_var_name
 from easybuild.tools.run import run_cmd
 from easybuild.tools.systemtools import AARCH64, POWER, X86_64, det_parallelism, get_cpu_architecture, get_cpu_features, get_gpu_info
@@ -501,6 +501,9 @@ def pre_prepare_hook(self, *args, **kwargs):
     # Always trigger this, regardless of ec.name
     pre_prepare_hook_cuda_dependant(self, *args, **kwargs)
 
+    # Always trigger this, regardless of ec.name
+    pre_prepare_hook_remove_install_dir_for_rebuilds(self, *args, **kwargs)
+
 
 def post_prepare_hook_gcc_prefixed_ld_rpath_wrapper(self, *args, **kwargs):
     """
@@ -1164,6 +1167,27 @@ def pre_prepare_hook_llvm_a64fx(self, *args, **kwargs):
             update_build_option('optarch', 'march=armv8.2-a')
 
 
+def pre_prepare_hook_remove_install_dir_for_rebuilds(self, *args, **kwargs):
+    """
+    Rebuilds of an existing installation may pick up files from the original installation in e.g. the test step,
+    because the installation directory only gets removed/wiped at the install step.
+    To prevent such issues, we do a hard removal early on, unless this is explicitly disabled.
+    Also see https://github.com/easybuilders/easybuild-framework/issues/5362.
+    """
+    if build_option('rebuild') and os.path.exists(self.installdir) and len(os.listdir(self.installdir)) > 0:
+        if os.getenv('EESSI_FORCE_EARLY_REMOVAL_OF_INSTALL_DIR'):
+            print_msg(f'Removing existing installation directory {self.installdir}...')
+            remove_dir(self.installdir)
+        else:
+            warning_msg = 'You are rebuilding software, and the installation directory already exists and is non-empty. '
+            warning_msg += 'Be aware that the build may pick up files from the existing installation, because RPATH is enabled and '
+            warning_msg += 'the existing installation only gets wiped at the install step. Set EESSI_FORCE_EARLY_REMOVAL_OF_INSTALL_DIR '
+            warning_msg += 'to a non-zero value to make sure that the existing installation is wiped at the start of the rebuild. '
+            warning_msg += 'Do note that it may mean that the installation is gone for a while if you are building on a '
+            warning_msg += 'writable shared filesystem without e.g. an overlay or bubblewrap!'
+            print_warning(warning_msg)
+
+
 def pre_prepare_hook_coordgenlibs_a64fx(self, *args, **kwargs):
     """
     Solve issues with compiling coordgenlibs on a64fx with the 2026.1 stack. The specific error is: