diff --git a/README.md b/README.md
index 3534dba..367e562 100644
--- a/README.md
+++ b/README.md
@@ -118,7 +118,7 @@ Following the formatting used in the examples is a good idea.
 
 Link commands specify how files and directories should be symbolically linked.
 If desired, items can be specified to be forcibly linked, overwriting existing
-files if necessary.
+files if necessary. Environment variables in paths are automatically expanded.
 
 #### Format
 
diff --git a/dotbot/executor/linker.py b/dotbot/executor/linker.py
index f0e94bc..5c12ea0 100644
--- a/dotbot/executor/linker.py
+++ b/dotbot/executor/linker.py
@@ -19,6 +19,8 @@ class Linker(Executor):
     def _process_links(self, links):
         success = True
         for destination, source in links.items():
+            source = os.path.expandvars(source)
+            destination = os.path.expandvars(destination)
             if isinstance(source, dict):
                 # extended config
                 path = source['path']
diff --git a/test/tests/link-environment-variable-expansion-source.bash b/test/tests/link-environment-variable-expansion-source.bash
new file mode 100644
index 0000000..50456d6
--- /dev/null
+++ b/test/tests/link-environment-variable-expansion-source.bash
@@ -0,0 +1,18 @@
+test_description='link expands environment variables in source'
+. '../test-lib.bash'
+
+test_expect_success 'setup' '
+echo "grape" > ${DOTFILES}/h
+'
+
+test_expect_success 'run' '
+export APPLE="h" &&
+run_dotbot <<EOF
+- link:
+    ~/.i: \$APPLE
+EOF
+'
+
+test_expect_success 'test' '
+grep "grape" ~/.i
+'
diff --git a/test/tests/link-environment-variable-expansion-target.bash b/test/tests/link-environment-variable-expansion-target.bash
new file mode 100644
index 0000000..3a2e4dd
--- /dev/null
+++ b/test/tests/link-environment-variable-expansion-target.bash
@@ -0,0 +1,25 @@
+test_description='link expands environment variables in target'
+. '../test-lib.bash'
+
+test_expect_success 'setup' '
+echo "apple" > ${DOTFILES}/f &&
+echo "grape" > ${DOTFILES}/h
+'
+
+test_expect_success 'run' '
+export ORANGE=".config" &&
+export BANANA="g" &&
+unset PEAR &&
+run_dotbot <<EOF
+- link:
+    ~/\${ORANGE}/\$BANANA:
+      path: f
+      create: true
+    ~/\$PEAR: h
+EOF
+'
+
+test_expect_success 'test' '
+grep "apple" ~/.config/g &&
+grep "grape" ~/\$PEAR
+'
diff --git a/test/tests/link-environment-variable-unset.bash b/test/tests/link-environment-variable-unset.bash
new file mode 100644
index 0000000..8673729
--- /dev/null
+++ b/test/tests/link-environment-variable-unset.bash
@@ -0,0 +1,18 @@
+test_description='link leaves unset environment variables'
+. '../test-lib.bash'
+
+test_expect_success 'setup' '
+echo "apple" > ${DOTFILES}/\$ORANGE
+'
+
+test_expect_success 'run' '
+unset ORANGE &&
+run_dotbot <<EOF
+- link:
+    ~/.f: \$ORANGE
+EOF
+'
+
+test_expect_success 'test' '
+grep "apple" ~/.f
+'