diff --git a/e2e/workspace/src/create-nx-workspace.test.ts b/e2e/workspace/src/create-nx-workspace.test.ts
index 1cc53cc03c..9450238106 100644
--- a/e2e/workspace/src/create-nx-workspace.test.ts
+++ b/e2e/workspace/src/create-nx-workspace.test.ts
@@ -94,7 +94,7 @@ describe('create-nx-workspace', () => {
     const wsName = uniq('gatsby');
     const appName = uniq('app');
     runCreateWorkspace(wsName, {
-      preset: 'next',
+      preset: 'gatsby',
       style: 'css',
       appName,
       packageManager,
diff --git a/packages/create-nx-workspace/bin/create-nx-workspace.ts b/packages/create-nx-workspace/bin/create-nx-workspace.ts
index 84197a923a..6a3d29995a 100644
--- a/packages/create-nx-workspace/bin/create-nx-workspace.ts
+++ b/packages/create-nx-workspace/bin/create-nx-workspace.ts
@@ -486,10 +486,6 @@ async function createApp(
       nxWorkspaceRoot = `\\"${nxWorkspaceRoot.slice(1, -1)}\\"`;
     }
   }
-  // For gatsby, when doing npm install, it does not require the flag --legacy-peer-deps
-  if (parsedArgs.preset === Preset.Gatsby && packageManager === 'npm') {
-    process.env.npm_config_legacy_peer_deps = 'false';
-  }
   const fullCommandWithoutWorkspaceRoot = `${pmc.exec} tao ${command}/generators.json --cli=${cli}`;
 
   let workspaceSetupSpinner = ora('Creating your workspace').start();
diff --git a/packages/gatsby/src/generators/init/init.ts b/packages/gatsby/src/generators/init/init.ts
index b23657b84c..9fde512505 100644
--- a/packages/gatsby/src/generators/init/init.ts
+++ b/packages/gatsby/src/generators/init/init.ts
@@ -42,7 +42,6 @@ function updateDependencies(host: Tree) {
   });
 
   const isPnpm = host.exists('pnpm-lock.yaml');
-  process.env.npm_config_legacy_peer_deps = 'false';
   return addDependenciesToPackageJson(
     host,
     {