diff --git a/icu4c/source/python/icutools/databuilder/__main__.py b/icu4c/source/python/icutools/databuilder/__main__.py
index a6a387d9ad2..2ff960f544d 100644
--- a/icu4c/source/python/icutools/databuilder/__main__.py
+++ b/icu4c/source/python/icutools/databuilder/__main__.py
@@ -271,7 +271,7 @@ def main(argv):
             "IN_DIR": "$(srcdir)",
             "INDEX_NAME": "res_index"
         }
-        makefile_env = ["ICUDATA_CHAR", "OUT_DIR", "TMP_DIR"]
+        makefile_env = ["ICUDATA_CHAR", "OUT_DIR", "TMP_DIR", "LIBRARY_DATA_DIR"]
         common = {
             key: "$(%s)" % key
             for key in list(makefile_vars.keys()) + makefile_env
@@ -289,7 +289,8 @@ def main(argv):
             "CWD_DIR": os.getcwd(),
             "INDEX_NAME": "res_index",
             # TODO: Pull this from configure script:
-            "ICUDATA_CHAR": "l"
+            "ICUDATA_CHAR": "l",
+            "LIBRARY_DATA_DIR": os.path.join(args.out_dir, "build"),
         }
 
     # Automatically load BUILDRULES from the src_dir
diff --git a/icu4c/source/test/testdata/BUILDRULES.py b/icu4c/source/test/testdata/BUILDRULES.py
index aea08478337..a93a3816a1f 100644
--- a/icu4c/source/test/testdata/BUILDRULES.py
+++ b/icu4c/source/test/testdata/BUILDRULES.py
@@ -63,7 +63,7 @@ def generate_rb(config, io, common_vars):
             input_files = [InFile("%s.txt" % bn) for bn in basenames],
             output_files = [OutFile("%s.res" % bn) for bn in basenames],
             tool = IcuTool("genrb"),
-            args = "-q -i {OUT_DIR}/../../../../data/out/build -s {IN_DIR} -d {OUT_DIR} {INPUT_FILE}",
+            args = "-q -i {LIBRARY_DATA_DIR} -s {IN_DIR} -d {OUT_DIR} {INPUT_FILE}",
             format_with = {},
             repeat_with = {}
         ),
diff --git a/icu4c/source/test/testdata/Makefile.in b/icu4c/source/test/testdata/Makefile.in
index 04bc1c1afad..21dcfcbd2df 100644
--- a/icu4c/source/test/testdata/Makefile.in
+++ b/icu4c/source/test/testdata/Makefile.in
@@ -92,6 +92,7 @@ TESTSRCDATADIR=$(top_srcdir)/test/testdata
 TESTOUTDIR=$(top_builddir)/test/testdata/out
 BUILD_DIRS = $(TESTOUTDIR) $(TESTBUILDDIR) $(TESTOUTDIR)/$(TESTDT)
 GENTEST=$(TOOLDIR)/gentest/gentest$(TOOLEXEEXT)
+LIBRARY_DATA_DIR=$(OUTDIR)/build
 
 ifeq ($(PKGDATA_MODE),common)
 ICU_DATA_OPT = -i $(OUTDIR)