diff --git b/tests/example/example_1.php a/tests/example/example_1.php
index 7bf536d..a55cbf0 100644
--- b/tests/example/example_1.php
+++ a/tests/example/example_1.php
@@ -5,6 +5,7 @@
  * Test PHP file for Libraries loading.
  */
 
+// @see _libraries_require_once()
 $path = 'abc';
 
 /**
diff --git b/tests/example/example_2.php a/tests/example/example_2.php
index ddded40..4f06edf 100644
--- b/tests/example/example_2.php
+++ a/tests/example/example_2.php
@@ -5,6 +5,9 @@
  * Test PHP file for Libraries loading.
  */
 
+// @see _libraries_require_once()
+$path = 'abc';
+
 /**
  * Dummy function to see if this file was loaded.
  */
diff --git b/tests/libraries.test a/tests/libraries.test
index 1770162..eba4077 100644
--- b/tests/libraries.test
+++ a/tests/libraries.test
@@ -303,6 +303,12 @@ class LibrariesTestCase extends DrupalWebTestCase {
     $loaded = &drupal_static('libraries_load');
     $this->verbose('<pre>' . var_export($loaded, TRUE) . '</pre>');
     $this->assertEqual($loaded['example_dependency']['loaded'], 1, 'Dependency library is also loaded');
+
+    // Test that PHP files that have a local $path variable do not break library
+    // loading.
+    // @see _libraries_require_once()
+    $library = libraries_load('example_path_variable_override');
+    $this->assertEqual($library['loaded'], 2, 'PHP files cannot break library loading.');
   }
 
   /**
diff --git b/tests/libraries_test.module a/tests/libraries_test.module
index faae509..dfc13ff 100644
--- b/tests/libraries_test.module
+++ a/tests/libraries_test.module
@@ -287,6 +287,15 @@ function libraries_test_libraries_info() {
     'post-load callback' => 'not applied',
   );
 
+  $libraries['example_path_variable_override'] = array(
+    'name' => 'Example path variable override',
+    'library path' => drupal_get_path('module', 'libraries') . '/tests/example',
+    'version' => '1',
+    'files' => array(
+      'php' => array('example_1.php', 'example_2.php'),
+    ),
+  );
+
   return $libraries;
 }