Abstract We study the phenomena of suppression and revival of oscillations in a system of limit cycle oscillators coupled indirectly via a dynamic local environment. The dynamics of the environment is assumed to decay exponentially with time. We show that for appropriate coupling strength, the decay parameter of the environment plays a crucial role in the emergent dynamics such as amplitude death (AD) and oscillation death (OD). We also show that introducing a feedback factor in the diffusion term revives the oscillations in this system. The critical curves for the regions of different emergent states as a function of coupling strength, decay parameter of the environment and feedback factor in the coupling are obtained analytically using linear stability analysis. These results are found to be consistent with the numerics and are also observed experimentally.