diff --git a/stack_orchestrator/data/compose/docker-compose-test.yml b/stack_orchestrator/data/compose/docker-compose-test.yml
index 50151f65..5c9e7f9b 100644
--- a/stack_orchestrator/data/compose/docker-compose-test.yml
+++ b/stack_orchestrator/data/compose/docker-compose-test.yml
@@ -5,6 +5,7 @@ services:
     environment:
       CERC_SCRIPT_DEBUG: ${CERC_SCRIPT_DEBUG}
       CERC_TEST_PARAM_1: ${CERC_TEST_PARAM_1:-FAILED}
+      CERC_TEST_PARAM_2: "CERC_TEST_PARAM_2_VALUE"
     volumes:
       - test-data:/data
       - test-config:/config:ro
diff --git a/stack_orchestrator/data/container-build/cerc-test-container/run.sh b/stack_orchestrator/data/container-build/cerc-test-container/run.sh
index 01fb874b..fa860951 100755
--- a/stack_orchestrator/data/container-build/cerc-test-container/run.sh
+++ b/stack_orchestrator/data/container-build/cerc-test-container/run.sh
@@ -17,6 +17,9 @@ fi
 if [ -n "$CERC_TEST_PARAM_1" ]; then
   echo "Test-param-1: ${CERC_TEST_PARAM_1}"
 fi
+if [ -n "$CERC_TEST_PARAM_2" ]; then
+  echo "Test-param-2: ${CERC_TEST_PARAM_2}"
+fi
 
 if [ -d "/config" ]; then
   echo "/config: EXISTS"
diff --git a/stack_orchestrator/deploy/k8s/cluster_info.py b/stack_orchestrator/deploy/k8s/cluster_info.py
index 35b2b9da..8ff5e8ca 100644
--- a/stack_orchestrator/deploy/k8s/cluster_info.py
+++ b/stack_orchestrator/deploy/k8s/cluster_info.py
@@ -22,7 +22,7 @@ from stack_orchestrator.opts import opts
 from stack_orchestrator.util import env_var_map_from_file
 from stack_orchestrator.deploy.k8s.helpers import named_volumes_from_pod_files, volume_mounts_for_service, volumes_for_pod_files
 from stack_orchestrator.deploy.k8s.helpers import get_node_pv_mount_path
-from stack_orchestrator.deploy.k8s.helpers import envs_from_environment_variables_map
+from stack_orchestrator.deploy.k8s.helpers import envs_from_environment_variables_map, envs_from_compose_file, merge_envs
 from stack_orchestrator.deploy.deploy_util import parsed_pod_files_map_from_file_names, images_for_deployment
 from stack_orchestrator.deploy.deploy_types import DeployEnvVars
 from stack_orchestrator.deploy.spec import Spec
@@ -226,6 +226,12 @@ class ClusterInfo:
                     if opts.o.debug:
                         print(f"image: {image}")
                         print(f"service port: {port}")
+                merged_envs = merge_envs(
+                    envs_from_compose_file(
+                        service_info["environment"]), self.environment_variables.map
+                        ) if "environment" in service_info else self.environment_variables.map
+                envs = envs_from_environment_variables_map(merged_envs)
+                print(f"Merged envs: {envs}")
                 # Re-write the image tag for remote deployment
                 image_to_use = remote_tag_for_image(
                     image, self.spec.get_image_registry()) if self.spec.get_image_registry() is not None else image
@@ -234,7 +240,7 @@ class ClusterInfo:
                     name=container_name,
                     image=image_to_use,
                     image_pull_policy=image_pull_policy,
-                    env=envs_from_environment_variables_map(self.environment_variables.map),
+                    env=envs,
                     ports=[client.V1ContainerPort(container_port=port)],
                     volume_mounts=volume_mounts,
                     resources=client.V1ResourceRequirements(
diff --git a/stack_orchestrator/deploy/k8s/helpers.py b/stack_orchestrator/deploy/k8s/helpers.py
index e386b353..814848d4 100644
--- a/stack_orchestrator/deploy/k8s/helpers.py
+++ b/stack_orchestrator/deploy/k8s/helpers.py
@@ -214,6 +214,26 @@ def _generate_kind_port_mappings(parsed_pod_files):
     )
 
 
+# Note: this makes any duplicate definition in b overwrite a
+def merge_envs(a: Mapping[str, str], b: Mapping[str, str]) -> Mapping[str, str]:
+    result = {**a, **b}
+    return result
+
+
+# DANGER: implement me
+def _expand_shell_vars(raw_val: str) -> str:
+    return raw_val
+
+
+# TODO: handle the case where the same env var is defined in multiple places
+def envs_from_compose_file(compose_file_envs: Mapping[str, str]) -> Mapping[str, str]:
+    result = {}
+    for env_var, env_val in compose_file_envs.items():
+        expanded_env_val = _expand_shell_vars(env_val)
+        result.update({env_var: expanded_env_val})
+    return result
+
+
 def envs_from_environment_variables_map(map: Mapping[str, str]) -> List[client.V1EnvVar]:
     result = []
     for env_var, env_val in map.items():
diff --git a/tests/deploy/run-deploy-test.sh b/tests/deploy/run-deploy-test.sh
index 4456c28d..763cde8b 100755
--- a/tests/deploy/run-deploy-test.sh
+++ b/tests/deploy/run-deploy-test.sh
@@ -124,6 +124,13 @@ else
     echo "deployment config test: FAILED"
     exit 1
 fi
+# Check the config variable CERC_TEST_PARAM_2 was passed correctly from the compose file
+if [[ "$log_output_3" == *"Test-param-2: CERC_TEST_PARAM_2_VALUE"* ]]; then
+    echo "deployment compose config test: passed"
+else
+    echo "deployment compose config test: FAILED"
+    exit 1
+fi
 # Stop and clean up
 $TEST_TARGET_SO deployment --dir $test_deployment_dir stop --delete-volumes
 echo "Test passed"