diff --git a/src/cthulhu.py b/src/cthulhu.py
index 7943f31..07eb7af 100644
--- a/src/cthulhu.py
+++ b/src/cthulhu.py
@@ -42,19 +42,25 @@ def setup_paths():
         # Running from source directory
         sys.path.insert(0, os.path.dirname(currentDir))
         pythondir = currentDir
+        datadir = currentDir
     else:
-        # Running installed
-        sys.prefix = '/usr'
-        pythondir = os.path.join(sys.prefix, 'lib', f'python{sys.version_info.major}.{sys.version_info.minor}', 'site-packages')
+        # Running installed - determine if local or system based on actual path
+        if currentDir.startswith(os.path.expanduser('~/.local')):
+            # Local installation (~/.local/bin/cthulhu)
+            prefix = os.path.expanduser('~/.local')
+            pythondir = os.path.join(prefix, 'lib', f'python{sys.version_info.major}.{sys.version_info.minor}', 'site-packages')
+            datadir = os.path.join(prefix, 'share', 'cthulhu')
+        else:
+            # System installation (/usr/bin/cthulhu)
+            prefix = '/usr'
+            pythondir = os.path.join(prefix, 'lib', f'python{sys.version_info.major}.{sys.version_info.minor}', 'site-packages')
+            datadir = os.path.join(prefix, 'share', 'cthulhu')
     
     sys.path.insert(1, pythondir)
     
     # Set environment variables for resource paths
     if 'CTHULHU_DATA_DIR' not in os.environ:
-        if os.path.exists(os.path.join(currentDir, 'plugins')):
-            os.environ['CTHULHU_DATA_DIR'] = currentDir
-        else:
-            os.environ['CTHULHU_DATA_DIR'] = os.path.join(sys.prefix, 'share', 'cthulhu')
+        os.environ['CTHULHU_DATA_DIR'] = datadir
 
 # Set up paths before importing Cthulhu modules
 setup_paths()