An environment variable is a setting for the WIndows Operating system that tells it (or certain programs) to behave in certain ways. Changing these environment variables are fairly simple. There are two types of environment variables, SYSTEM, and USER. If you change a USER variable you most likely will only have to restart the application you are working with. If you change a SYSTEM variable, then the computer will need to be restarted in order for the new setting to take effect.
This varies based on the version of windows you are using.
For all versions of windows except Windows Vista
For windows Vista
Go to: Control Panel\System and Maintenance\System. Click “Advanced System Settings”. Click Environment variables button, at bottom.