diff --git a/src/internal/contextFile.go b/src/internal/contextFile.go
index 3be8fe9..d8da92a 100644
--- a/src/internal/contextFile.go
+++ b/src/internal/contextFile.go
@@ -107,6 +107,8 @@ func parseContextFile(dir string, data []byte) (Contexts, error) {
 		contexts = parent.Merge(contexts)
 	}
 
+	contexts = resolveEnvironmentVariables(contexts)
+
 	return contexts, nil
 }
 
@@ -216,3 +218,23 @@ func resolvePath(dir, path string) (string, error) {
 
 	return filepath.Join(dir, path), nil
 }
+
+func resolveEnvironmentVariables(contexts Contexts) Contexts {
+	clone := contexts
+	clone.Context = clone.Context.Clone()
+	clone.Layers = clone.Layers.Clone()
+
+	for key, value := range clone.Env {
+		clone.Context.Env[key] = os.ExpandEnv(value)
+	}
+
+	for _, layer := range clone.Layers {
+		for _, ctx := range layer.Contexts {
+			for key, value := range ctx.Env {
+				ctx.Env[key] = os.ExpandEnv(value)
+			}
+		}
+	}
+
+	return clone
+}
diff --git a/src/internal/docker/cli.go b/src/internal/docker/cli.go
index b415cc2..2e17582 100644
--- a/src/internal/docker/cli.go
+++ b/src/internal/docker/cli.go
@@ -145,11 +145,7 @@ func runContainer(ctx context.Context, yeyCtx yey.Context, containerName string,
 
 	// Context env vars
 	for name, value := range yeyCtx.Env {
-		arg := name
-		if value != "" {
-			arg = fmt.Sprintf("%s=%s", name, value)
-		}
-		args = append(args, "--env", arg)
+		args = append(args, "--env", fmt.Sprintf("%s=%s", name, value))
 	}
 
 	// Mount binds