diff --git a/client/config/config_test.go b/client/config/config_test.go
new file mode 100644
index 00000000000..c058edf8301
--- /dev/null
+++ b/client/config/config_test.go
@@ -0,0 +1,107 @@
+package config_test
+
+import (
+	"bytes"
+	"fmt"
+	"io/ioutil"
+	"os"
+	"testing"
+
+	"github.com/stretchr/testify/require"
+
+	"github.com/cosmos/cosmos-sdk/client"
+	"github.com/cosmos/cosmos-sdk/client/config"
+	"github.com/cosmos/cosmos-sdk/client/flags"
+	clitestutil "github.com/cosmos/cosmos-sdk/testutil/cli"
+	"github.com/cosmos/cosmos-sdk/x/staking/client/cli"
+)
+
+const (
+	nodeEnv   = "NODE"
+	testNode1 = "http://localhost:1"
+	testNode2 = "http://localhost:2"
+)
+
+// initClientContext initiates client Context for tests
+func initClientContext(t *testing.T, envVar string) (client.Context, func()) {
+	home := t.TempDir()
+	clientCtx := client.Context{}.
+		WithHomeDir(home).
+		WithViper("")
+
+	clientCtx.Viper.BindEnv(nodeEnv)
+	if envVar != "" {
+		os.Setenv(nodeEnv, envVar)
+	}
+
+	clientCtx, err := config.ReadFromClientConfig(clientCtx)
+	require.NoError(t, err)
+
+	return clientCtx, func() { _ = os.RemoveAll(home) }
+}
+
+func TestConfigCmd(t *testing.T) {
+	clientCtx, cleanup := initClientContext(t, testNode1)
+	defer func() {
+		os.Unsetenv(nodeEnv)
+		cleanup()
+	}()
+
+	// NODE=http://localhost:1 ./build/simd config node http://localhost:2
+	cmd := config.Cmd()
+	args := []string{"node", testNode2}
+	_, err := clitestutil.ExecTestCLICmd(clientCtx, cmd, args)
+	require.NoError(t, err)
+
+	//./build/simd config node //http://localhost:1
+	b := bytes.NewBufferString("")
+	cmd.SetOut(b)
+	cmd.SetArgs([]string{"node"})
+	cmd.Execute()
+	out, err := ioutil.ReadAll(b)
+	require.NoError(t, err)
+	require.Equal(t, string(out), testNode1+"\n")
+}
+
+func TestConfigCmdEnvFlag(t *testing.T) {
+	const (
+		defaultNode = "http://localhost:26657"
+	)
+
+	tt := []struct {
+		name    string
+		envVar  string
+		args    []string
+		expNode string
+	}{
+		{"env var is set with no flag", testNode1, []string{"validators"}, testNode1},
+		{"env var is set with a flag", testNode1, []string{"validators", fmt.Sprintf("--%s=%s", flags.FlagNode, testNode2)}, testNode2},
+		{"env var is not set with no flag", "", []string{"validators"}, defaultNode},
+		{"env var is not set with a flag", "", []string{"validators", fmt.Sprintf("--%s=%s", flags.FlagNode, testNode2)}, testNode2},
+	}
+
+	for _, tc := range tt {
+		tc := tc
+		t.Run(tc.name, func(t *testing.T) {
+			clientCtx, cleanup := initClientContext(t, tc.envVar)
+			defer func() {
+				if tc.envVar != "" {
+					os.Unsetenv(nodeEnv)
+				}
+				cleanup()
+			}()
+			/*
+				env var is set with a flag
+
+				NODE=http://localhost:1 ./build/simd q staking validators --node http://localhost:2
+				Error: post failed: Post "http://localhost:2": dial tcp 127.0.0.1:2: connect: connection refused
+
+				We dial http://localhost:2 cause a flag has the higher priority than env variable.
+			*/
+			cmd := cli.GetQueryCmd()
+			_, err := clitestutil.ExecTestCLICmd(clientCtx, cmd, tc.args)
+			require.Error(t, err)
+			require.Contains(t, err.Error(), tc.expNode, "Output does not contain expected Node")
+		})
+	}
+}
diff --git a/client/context.go b/client/context.go
index 4dbdb97f02a..844b434bd5f 100644
--- a/client/context.go
+++ b/client/context.go
@@ -227,8 +227,10 @@ func (ctx Context) WithInterfaceRegistry(interfaceRegistry codectypes.InterfaceR
 
 // WithViper returns the context with Viper field. This Viper instance is used to read
 // client-side config from the config file.
-func (ctx Context) WithViper() Context {
+func (ctx Context) WithViper(prefix string) Context {
 	v := viper.New()
+	v.SetEnvPrefix(prefix)
+	v.AutomaticEnv()
 	ctx.Viper = v
 	return ctx
 }
diff --git a/simapp/simd/cmd/root.go b/simapp/simd/cmd/root.go
index 30356d3ed53..ebb69b47c54 100644
--- a/simapp/simd/cmd/root.go
+++ b/simapp/simd/cmd/root.go
@@ -47,7 +47,7 @@ func NewRootCmd() (*cobra.Command, params.EncodingConfig) {
 		WithAccountRetriever(types.AccountRetriever{}).
 		WithBroadcastMode(flags.BroadcastBlock).
 		WithHomeDir(simapp.DefaultNodeHome).
-		WithViper()
+		WithViper("") // In simapp, we don't use any prefix for env variables.
 
 	rootCmd := &cobra.Command{
 		Use:   "simd",