For anyone trying to achieve this with Python 3.3+, the Windows installer now includes an option to add python.exe to the system search path. Read more in the docs.

Windows 7 Professional I Modified @mongoose_za's answer to make it easier to change the python version:

1. [Right Click]Computer > Properties >Advanced System Settings > Environment Variables
2. Click [New] under "System Variable"
3. Variable Name: PY_HOME, Variable Value:C:\path\to\python\version
4. Click [OK]
5. Locate the "Path" System variable and click [Edit]

6. Add the following to the existing variable:

   %PY_HOME%;%PY_HOME%\Lib;%PY_HOME%\DLLs;%PY_HOME%\Lib\lib-tk;

7. Click [OK] to close all of the windows.

As a final sanity check open a command prompt and enter python. You should see

>python [whatever version you are using]

If you need to switch between versions, you only need to modify the PY_HOME variable to point to the proper directory. This is bit easier to manage if you need multiple python versions installed.

When setting Environmental Variables in Windows, I have gone wrong on many, many occasions. I thought I should share a few of my past mistakes here hoping that it might help someone. (These apply to all Environmental Variables, not just when setting Python Path)

Watch out for these possible mistakes:

1. Kill and reopen your shell window: Once you make a change to the ENVIRONMENTAL Variables, you have to restart the window you are testing it on.
2. NO SPACES when setting the Variables. Make sure that you are adding the ;C:\Python27 WITHOUT any spaces. (It is common to try C:\SomeOther; C:\Python27 That space (␣) after the semicolon is not okay.)
3. USE A BACKWARD SLASH when spelling out your full path. You will see forward slashes when you try echo $PATH but only backward slashes have worked for me.
4. DO NOT ADD a final backslash. Only C:\Python27 NOT C:\Python27\