fix(core): allow environment variable expansion and explicit overrides for MCP servers (#18837)

docs/tools/mcp-server.md

@@ -163,7 +163,8 @@ Each server configuration supports the following properties:
 - **`args`** (string[]): Command-line arguments for Stdio transport
 - **`headers`** (object): Custom HTTP headers when using `url` or `httpUrl`
 - **`env`** (object): Environment variables for the server process. Values can
-  reference environment variables using `$VAR_NAME` or `${VAR_NAME}` syntax
+  reference environment variables using `$VAR_NAME` or `${VAR_NAME}` syntax (all
+  platforms), or `%VAR_NAME%` (Windows only).
 - **`cwd`** (string): Working directory for Stdio transport
 - **`timeout`** (number): Request timeout in milliseconds (default: 600,000ms =
   10 minutes)
@@ -184,6 +185,63 @@ Each server configuration supports the following properties:
   Service Account to impersonate. Used with
   `authProviderType: 'service_account_impersonation'`.
 
+### Environment variable expansion
+
+Gemini CLI automatically expands environment variables in the `env` block of
+your MCP server configuration. This allows you to securely reference variables
+defined in your shell or environment without hardcoding sensitive information
+directly in your `settings.json` file.
+
+The expansion utility supports:
+
+- **POSIX/Bash syntax:** `$VARIABLE_NAME` or `${VARIABLE_NAME}` (supported on
+  all platforms)
+- **Windows syntax:** `%VARIABLE_NAME%` (supported only when running on Windows)
+
+If a variable is not defined in the current environment, it resolves to an empty
+string.
+
+**Example:**
+
+```json
+"env": {
+  "API_KEY": "$MY_EXTERNAL_TOKEN",
+  "LOG_LEVEL": "$LOG_LEVEL",
+  "TEMP_DIR": "%TEMP%"
+}
+```
+
+### Security and environment sanitization
+
+To protect your credentials, Gemini CLI performs environment sanitization when
+spawning MCP server processes.
+
+#### Automatic redaction
+
+By default, the CLI redacts sensitive environment variables from the base
+environment (inherited from the host process) to prevent unintended exposure to
+third-party MCP servers. This includes:
+
+- Core project keys: `GEMINI_API_KEY`, `GOOGLE_API_KEY`, etc.
+- Variables matching sensitive patterns: `*TOKEN*`, `*SECRET*`, `*PASSWORD*`,
+  `*KEY*`, `*AUTH*`, `*CREDENTIAL*`.
+- Certificates and private key patterns.
+
+#### Explicit overrides
+
+If an environment variable must be passed to an MCP server, you must explicitly
+state it in the `env` property of the server configuration in `settings.json`.
+Explicitly defined variables (including those from extensions) are trusted and
+are **not** subjected to the automatic redaction process.
+
+This follows the security principle that if a variable is explicitly configured
+by the user for a specific server, it constitutes informed consent to share that
+specific data with that server.
+
+> **Note:** Even when explicitly defined, you should avoid hardcoding secrets.
+> Instead, use environment variable expansion (e.g., `"MY_KEY": "$MY_KEY"`) to
+> securely pull the value from your host environment at runtime.
+
 ### OAuth support for remote MCP servers
 
 The Gemini CLI supports OAuth 2.0 authentication for remote MCP servers using
@@ -738,7 +796,9 @@ The MCP integration tracks several states:
 - **Trust settings:** The `trust` option bypasses all confirmation dialogs. Use
   cautiously and only for servers you completely control
 - **Access tokens:** Be security-aware when configuring environment variables
-  containing API keys or tokens
+  containing API keys or tokens. See
+  [Security and environment sanitization](#security-and-environment-sanitization)
+  for details on how Gemini CLI protects your credentials.
 - **Sandbox compatibility:** When using sandboxing, ensure MCP servers are
   available within the sandbox environment
 - **Private data:** Using broadly scoped personal access tokens can lead to

package-lock.json

@@ -7432,9 +7432,36 @@
       }
     },
     "node_modules/dotenv": {
-      "version": "17.1.0",
+      "version": "17.2.4",
-      "resolved": "https://registry.npmjs.org/dotenv/-/dotenv-17.1.0.tgz",
+      "resolved": "https://registry.npmjs.org/dotenv/-/dotenv-17.2.4.tgz",
-      "integrity": "sha512-tG9VUTJTuju6GcXgbdsOuRhupE8cb4mRgY5JLRCh4MtGoVo3/gfGUtOMwmProM6d0ba2mCFvv+WrpYJV6qgJXQ==",
+      "integrity": "sha512-mudtfb4zRB4bVvdj0xRo+e6duH1csJRM8IukBqfTRvHotn9+LBXB8ynAidP9zHqoRC/fsllXgk4kCKlR21fIhw==",
+      "license": "BSD-2-Clause",
+      "engines": {
+        "node": ">=12"
+      },
+      "funding": {
+        "url": "https://dotenvx.com"
+      }
+    },
+    "node_modules/dotenv-expand": {
+      "version": "12.0.3",
+      "resolved": "https://registry.npmjs.org/dotenv-expand/-/dotenv-expand-12.0.3.tgz",
+      "integrity": "sha512-uc47g4b+4k/M/SeaW1y4OApx+mtLWl92l5LMPP0GNXctZqELk+YGgOPIIC5elYmUH4OuoK3JLhuRUYegeySiFA==",
+      "license": "BSD-2-Clause",
+      "dependencies": {
+        "dotenv": "^16.4.5"
+      },
+      "engines": {
+        "node": ">=12"
+      },
+      "funding": {
+        "url": "https://dotenvx.com"
+      }
+    },
+    "node_modules/dotenv-expand/node_modules/dotenv": {
+      "version": "16.6.1",
+      "resolved": "https://registry.npmjs.org/dotenv/-/dotenv-16.6.1.tgz",
+      "integrity": "sha512-uBq4egWHTcTt33a72vpSG0z3HnPuIl6NqYcTrKEg2azoEyl2hpW0zqlxysq2pK9HlDIHyHyakeYaYnSAwd8bow==",
       "license": "BSD-2-Clause",
       "engines": {
         "node": ">=12"
@@ -17400,6 +17427,8 @@
         "ajv-formats": "^3.0.0",
         "chardet": "^2.1.0",
         "diff": "^8.0.3",
+        "dotenv": "^17.2.4",
+        "dotenv-expand": "^12.0.3",
         "fast-levenshtein": "^2.0.6",
         "fdir": "^6.4.6",
         "fzf": "^0.5.2",

packages/core/package.json

@@ -53,6 +53,8 @@
     "ajv-formats": "^3.0.0",
     "chardet": "^2.1.0",
     "diff": "^8.0.3",
+    "dotenv": "^17.2.4",
+    "dotenv-expand": "^12.0.3",
     "fast-levenshtein": "^2.0.6",
     "fdir": "^6.4.6",
     "fzf": "^0.5.2",

packages/core/src/tools/mcp-client.test.ts

@@ -1704,6 +1704,40 @@ describe('mcp-client', () => {
       expect(callArgs.env!['GEMINI_CLI_EXT_VAR']).toBeUndefined();
     });
 
+    it('should expand environment variables in mcpServerConfig.env and not redact them', async () => {
+      const mockedTransport = vi
+        .spyOn(SdkClientStdioLib, 'StdioClientTransport')
+        .mockReturnValue({} as SdkClientStdioLib.StdioClientTransport);
+
+      const originalEnv = process.env;
+      process.env = {
+        ...originalEnv,
+        GEMINI_TEST_VAR: 'expanded-value',
+      };
+
+      try {
+        await createTransport(
+          'test-server',
+          {
+            command: 'test-command',
+            env: {
+              TEST_EXPANDED: 'Value is $GEMINI_TEST_VAR',
+              SECRET_KEY: 'intentional-secret-123',
+            },
+          },
+          false,
+          EMPTY_CONFIG,
+        );
+
+        const callArgs = mockedTransport.mock.calls[0][0];
+        expect(callArgs.env).toBeDefined();
+        expect(callArgs.env!['TEST_EXPANDED']).toBe('Value is expanded-value');
+        expect(callArgs.env!['SECRET_KEY']).toBe('intentional-secret-123');
+      } finally {
+        process.env = originalEnv;
+      }
+    });
+
     describe('useGoogleCredentialProvider', () => {
       beforeEach(() => {
         // Mock GoogleAuth client

packages/core/src/tools/mcp-client.ts

@@ -70,6 +70,7 @@ import {
   sanitizeEnvironment,
   type EnvironmentSanitizationConfig,
 } from '../services/environmentSanitization.js';
+import { expandEnvVars } from '../utils/envExpansion.js';
 import {
   GEMINI_CLI_IDENTIFICATION_ENV_VAR,
   GEMINI_CLI_IDENTIFICATION_ENV_VAR_VALUE,
@@ -783,9 +784,16 @@ function createTransportRequestInit(
   mcpServerConfig: MCPServerConfig,
   headers: Record<string, string>,
 ): RequestInit {
+  const expandedHeaders: Record<string, string> = {};
+  if (mcpServerConfig.headers) {
+    for (const [key, value] of Object.entries(mcpServerConfig.headers)) {
+      expandedHeaders[key] = expandEnvVars(value, process.env);
+    }
+  }
+
   return {
     headers: {
-      ...mcpServerConfig.headers,
+      ...expandedHeaders,
       ...headers,
     },
   };
@@ -1970,15 +1978,33 @@ export async function createTransport(
   }
 
   if (mcpServerConfig.command) {
+    // 1. Sanitize the base process environment to prevent unintended leaks of system-wide secrets.
+    const sanitizedEnv = sanitizeEnvironment(process.env, {
+      ...sanitizationConfig,
+      enableEnvironmentVariableRedaction: true,
+    });
+
+    const finalEnv: Record<string, string> = {
+      [GEMINI_CLI_IDENTIFICATION_ENV_VAR]:
+        GEMINI_CLI_IDENTIFICATION_ENV_VAR_VALUE,
+    };
+    for (const [key, value] of Object.entries(sanitizedEnv)) {
+      if (value !== undefined) {
+        finalEnv[key] = value;
+      }
+    }
+
+    // Expand and merge explicit environment variables from the MCP configuration.
+    if (mcpServerConfig.env) {
+      for (const [key, value] of Object.entries(mcpServerConfig.env)) {
+        finalEnv[key] = expandEnvVars(value, process.env);
+      }
+    }
+
     let transport: Transport = new StdioClientTransport({
       command: mcpServerConfig.command,
       args: mcpServerConfig.args || [],
-      env: {
+      env: finalEnv,
-        ...sanitizeEnvironment(process.env, sanitizationConfig),
-        ...(mcpServerConfig.env || {}),
-        [GEMINI_CLI_IDENTIFICATION_ENV_VAR]:
-          GEMINI_CLI_IDENTIFICATION_ENV_VAR_VALUE,
-      } as Record<string, string>,
       cwd: mcpServerConfig.cwd,
       stderr: 'pipe',
     });

packages/core/src/utils/envExpansion.test.ts

@@ -0,0 +1,117 @@
+/**
+ * @license
+ * Copyright 2026 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import { describe, it, expect, vi, beforeEach, afterEach } from 'vitest';
+import { expandEnvVars } from './envExpansion.js';
+
+describe('expandEnvVars', () => {
+  const defaultEnv = {
+    USER: 'morty',
+    HOME: '/home/morty',
+    TEMP: 'C:\\Temp',
+    EMPTY: '',
+  };
+
+  describe('POSIX behavior (non-Windows)', () => {
+    beforeEach(() => {
+      vi.spyOn(process, 'platform', 'get').mockReturnValue('darwin');
+    });
+
+    afterEach(() => {
+      vi.restoreAllMocks();
+    });
+
+    it.each([
+      ['$VAR (POSIX)', 'Hello $USER', defaultEnv, 'Hello morty'],
+      [
+        '${VAR} (POSIX)',
+        'Welcome to ${HOME}',
+        defaultEnv,
+        'Welcome to /home/morty',
+      ],
+      [
+        'should NOT expand %VAR% on non-Windows',
+        'Data in %TEMP%',
+        defaultEnv,
+        'Data in %TEMP%',
+      ],
+      [
+        'mixed formats (only POSIX expanded)',
+        '$USER lives in ${HOME} on %TEMP%',
+        defaultEnv,
+        'morty lives in /home/morty on %TEMP%',
+      ],
+      [
+        'missing variables (POSIX only)',
+        'Missing $UNDEFINED and ${NONE} and %MISSING%',
+        defaultEnv,
+        'Missing  and  and %MISSING%',
+      ],
+      [
+        'empty or undefined values',
+        'Value is "$EMPTY"',
+        defaultEnv,
+        'Value is ""',
+      ],
+      [
+        'original string if no variables',
+        'No vars here',
+        defaultEnv,
+        'No vars here',
+      ],
+      ['literal values like "1234"', '1234', defaultEnv, '1234'],
+      ['empty input string', '', defaultEnv, ''],
+      [
+        'complex paths',
+        '${HOME}/bin:$PATH',
+        { ...defaultEnv, PATH: '/usr/bin' },
+        '/home/morty/bin:/usr/bin',
+      ],
+    ])('should handle %s', (_, input, env, expected) => {
+      expect(expandEnvVars(input, env)).toBe(expected);
+    });
+  });
+
+  describe('Windows behavior', () => {
+    beforeEach(() => {
+      vi.spyOn(process, 'platform', 'get').mockReturnValue('win32');
+    });
+
+    afterEach(() => {
+      vi.restoreAllMocks();
+    });
+
+    it.each([
+      ['$VAR (POSIX)', 'Hello $USER', defaultEnv, 'Hello morty'],
+      [
+        '${VAR} (POSIX)',
+        'Welcome to ${HOME}',
+        defaultEnv,
+        'Welcome to /home/morty',
+      ],
+      [
+        'should expand %VAR% on Windows',
+        'Data in %TEMP%',
+        defaultEnv,
+        'Data in C:\\Temp',
+      ],
+      [
+        'mixed formats (both expanded)',
+        '$USER lives in ${HOME} on %TEMP%',
+        defaultEnv,
+        'morty lives in /home/morty on C:\\Temp',
+      ],
+      [
+        'missing variables (all expanded to empty)',
+        'Missing $UNDEFINED and ${NONE} and %MISSING%',
+        defaultEnv,
+        'Missing  and  and ',
+      ],
+    ])('should handle %s', (_, input, env, expected) => {
+      expect(expandEnvVars(input, env)).toBe(expected);
+    });
+  });
+});

packages/core/src/utils/envExpansion.ts

@@ -0,0 +1,54 @@
+/**
+ * @license
+ * Copyright 2026 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import { expand } from 'dotenv-expand';
+
+/**
+ * Expands environment variables in a string using the provided environment record.
+ * Uses the standard `dotenv-expand` library to handle expansion consistently with
+ * other tools.
+ *
+ * Supports POSIX/Bash syntax ($VAR, ${VAR}).
+ * Note: Windows syntax (%VAR%) is not natively supported by dotenv-expand.
+ *
+ * @param str - The string containing environment variable placeholders.
+ * @param env - A record of environment variable names and their values.
+ * @returns The string with environment variables expanded. Missing variables resolve to an empty string.
+ */
+export function expandEnvVars(
+  str: string,
+  env: Record<string, string | undefined>,
+): string {
+  if (!str) return str;
+
+  // 1. Pre-process Windows-style variables (%VAR%) since dotenv-expand only handles POSIX ($VAR).
+  // We only do this on Windows to limit the blast radius and avoid conflicts with other
+  // systems where % might be a literal character (e.g. in URLs or shell commands).
+  const isWindows = process.platform === 'win32';
+  const processedStr = isWindows
+    ? str.replace(/%(\w+)%/g, (_, name) => env[name] ?? '')
+    : str;
+
+  // 2. Use dotenv-expand for POSIX/Bash syntax ($VAR, ${VAR}).
+  // dotenv-expand is designed to process an object of key-value pairs (like a .env file).
+  // To expand a single string, we wrap it in an object with a temporary key.
+  const dummyKey = '__GCLI_EXPAND_TARGET__';
+
+  // Filter out undefined values to satisfy the Record<string, string> requirement safely
+  const processEnv: Record<string, string> = {};
+  for (const [key, value] of Object.entries(env)) {
+    if (value !== undefined) {
+      processEnv[key] = value;
+    }
+  }
+
+  const result = expand({
+    parsed: { [dummyKey]: processedStr },
+    processEnv,
+  });
+
+  return result.parsed?.[dummyKey] ?? '';
+}