diff --git a/internal/exec/shell_utils.go b/internal/exec/shell_utils.go
index fbf14a6f9..58d4b093b 100644
--- a/internal/exec/shell_utils.go
+++ b/internal/exec/shell_utils.go
@@ -185,13 +185,24 @@ func execTerraformShellCommand(
 		}
 	}()
 
-	// Set the Terraform environment variables to reference the var file
-	componentEnvList = append(componentEnvList, fmt.Sprintf("TF_CLI_ARGS_plan=-var-file=%s", varFile))
-	componentEnvList = append(componentEnvList, fmt.Sprintf("TF_CLI_ARGS_apply=-var-file=%s", varFile))
-	componentEnvList = append(componentEnvList, fmt.Sprintf("TF_CLI_ARGS_refresh=-var-file=%s", varFile))
-	componentEnvList = append(componentEnvList, fmt.Sprintf("TF_CLI_ARGS_import=-var-file=%s", varFile))
-	componentEnvList = append(componentEnvList, fmt.Sprintf("TF_CLI_ARGS_destroy=-var-file=%s", varFile))
-	componentEnvList = append(componentEnvList, fmt.Sprintf("TF_CLI_ARGS_console=-var-file=%s", varFile))
+	// Define the Terraform commands that may use var-file configuration
+	tfCommands := []string{"plan", "apply", "refresh", "import", "destroy", "console"}
+
+	// Check for existing var-file arguments in TF_CLI environment variables
+	for _, cmd := range tfCommands {
+		envVar := fmt.Sprintf("TF_CLI_ARGS_%s", cmd)
+		existing := os.Getenv(envVar)
+		if existing != "" {
+			u.LogWarning(atmosConfig, fmt.Sprintf("Found Terraform environment variable '%s' which may conflict with or be overwritten by Atmos", envVar))
+			// Remove any surrounding quotes from existing value
+			existing = strings.Trim(existing, "\"")
+			// Create new value by combining existing and new var-file argument
+			newValue := fmt.Sprintf("\"%s -var-file=%s\"", existing, varFile)
+			componentEnvList = append(componentEnvList, fmt.Sprintf("%s=%s", envVar, newValue))
+		} else {
+			componentEnvList = append(componentEnvList, fmt.Sprintf("%s=-var-file=%s", envVar, varFile))
+		}
+	}
 
 	// Set environment variables to indicate the details of the Atmos shell configuration
 	componentEnvList = append(componentEnvList, fmt.Sprintf("ATMOS_STACK=%s", stack))
@@ -235,7 +246,7 @@ func execTerraformShellCommand(
 	pa := os.ProcAttr{
 		Files: []*os.File{os.Stdin, os.Stdout, os.Stderr},
 		Dir:   componentPath,
-		Env:   append(os.Environ(), componentEnvList...),
+		Env:   append(componentEnvList, os.Environ()...), // Give priority to Atmos defined env vars
 	}
 
 	// Start a new shell
diff --git a/internal/exec/terraform.go b/internal/exec/terraform.go
index fcf65bdb3..768d0346e 100644
--- a/internal/exec/terraform.go
+++ b/internal/exec/terraform.go
@@ -231,6 +231,14 @@ func ExecuteTerraform(info schema.ConfigAndStacksInfo) error {
 		}
 	}
 
+	// Check for any Terraform environment variables that might conflict with Atmos
+	for _, envVar := range os.Environ() {
+		if strings.HasPrefix(envVar, "TF_") {
+			varName := strings.Split(envVar, "=")[0]
+			u.LogWarning(atmosConfig, fmt.Sprintf("Found Terraform environment variable '%s' which may conflict with or be overwritten by Atmos", varName))
+		}
+	}
+
 	// Set `TF_IN_AUTOMATION` ENV var to `true` to suppress verbose instructions after terraform commands
 	// https://developer.hashicorp.com/terraform/cli/config/environment-variables#tf_in_automation
 	info.ComponentEnvList = append(info.ComponentEnvList, "TF_IN_AUTOMATION=true")