The JAVA_HOME variable should point to the JDK’s bin folder in order for Java applications (jar, war, etc) to know where Java lives.

To setup a JAVA_HOME environment variable on Windows.

• Right click on the My Computer icon in the start menu or on the desktop and select properties
• Click the Advanced Tab
• Click the Environment Variables button
• Under System Variable, click New
• Enter the variable name as JAVA_HOME
• Enter the variable value as the install path for the Development Kit
• Click OK
• Click Apply Changes

Word of caution, Java is not fond of spaces, so I use pathnames without spaces.

Note: You will need to click OK, apply changes AND reload cmd to see the changes there.