diff --git a/tabby-local/src/components/environmentEditor.component.pug b/tabby-local/src/components/environmentEditor.component.pug
index cd804c8a39b8d44c7c2803e9c4aa96f89a5d80b6..222c546262a20f7661c363bd8ef73297dd13bd95 100644
--- a/tabby-local/src/components/environmentEditor.component.pug
+++ b/tabby-local/src/components/environmentEditor.component.pug
@@ -8,6 +8,13 @@
             button.btn.btn-secondary((click)='removeEnvironmentVar(pair.key)')
                 i.fas.fa-fw.fa-trash
 
-button.btn.btn-secondary((click)='addEnvironmentVar()')
-    i.fas.fa-plus.mr-2
-    span Add
+.d-flex
+    button.btn.btn-secondary((click)='addEnvironmentVar()')
+        i.fas.fa-plus.mr-2
+        span Add
+
+    .ml-auto
+    .text-muted Substitutions allowed.
+    .d-flex.ml-1(*ngIf='shouldShowExample()')
+        .text-muted Example:
+        a.ml-1((click)='addExample()', href='#') extend PATH
diff --git a/tabby-local/src/components/environmentEditor.component.ts b/tabby-local/src/components/environmentEditor.component.ts
index 7eeea06b27da38fc55bd8b72c4616b8ddcf9001e..ed4fe365f207fb50b1eecff2b223db47b41610f4 100644
--- a/tabby-local/src/components/environmentEditor.component.ts
+++ b/tabby-local/src/components/environmentEditor.component.ts
@@ -44,4 +44,13 @@ export class EnvironmentEditorComponent {
         this.emitUpdate()
     }
 
+    shouldShowExample (): boolean {
+        return !this.vars.find(v => v.key.toLowerCase() === 'path')
+    }
+
+    addExample (): void {
+        const value = process.platform === 'win32' ? 'C:\\Program Files\\Custom:%PATH%' : '/opt/custom:$PATH'
+        this.vars.push({ key: 'PATH', value })
+        this.emitUpdate()
+    }
 }
diff --git a/tabby-local/src/session.ts b/tabby-local/src/session.ts
index 5b4639bdef902c3b5d49ed052f0c3b316faa77fc..19fb76180cbf543f4d0354b7791e88cf828d479d 100644
--- a/tabby-local/src/session.ts
+++ b/tabby-local/src/session.ts
@@ -95,6 +95,21 @@ function mergeEnv (...envs) {
     return result
 }
 
+function substituteEnv (env: Record<string, string>) {
+    env = { ...env }
+    const pattern = process.platform === 'win32' ? /%(\w+)%/g : /\$(\w+)\b/g
+    for (const [key, value] of Object.entries(env)) {
+        env[key] = value.replace(pattern, function (substring, p1) {
+            if (process.platform === 'win32') {
+                return Object.entries(process.env).find(x => x[0].toLowerCase() === p1.toLowerCase())?.[1] ?? ''
+            } else {
+                return process.env[p1] ?? ''
+            }
+        })
+    }
+    return env
+}
+
 /** @hidden */
 export class Session extends BaseSession {
     private pty: PTYProxy|null = null
@@ -128,7 +143,7 @@ export class Session extends BaseSession {
                     TERM: 'xterm-256color',
                     TERM_PROGRAM: 'Tabby',
                 },
-                options.env,
+                substituteEnv(options.env ?? {}),
                 this.config.store.terminal.environment || {},
             )