diff --git a/Sources/ContainerClient/Flags.swift b/Sources/ContainerClient/Flags.swift
index 4a5cfd27..28e210fa 100644
--- a/Sources/ContainerClient/Flags.swift
+++ b/Sources/ContainerClient/Flags.swift
@@ -1,5 +1,5 @@
 //===----------------------------------------------------------------------===//
-// Copyright © 2025 Apple Inc. and the container project authors.
+// Copyright © 2025-2026 Apple Inc. and the container project authors.
 //
 // Licensed under the Apache License, Version 2.0 (the "License");
 // you may not use this file except in compliance with the License.
@@ -29,7 +29,7 @@ public struct Flags {
     public struct Process: ParsableArguments {
         public init() {}
 
-        @Option(name: .shortAndLong, help: "Set environment variables (format: key=value)")
+        @Option(name: .shortAndLong, help: "Set environment variables (key=value, or just key to inherit from host)")
         public var env: [String] = []
 
         @Option(
diff --git a/Sources/ContainerClient/Parser.swift b/Sources/ContainerClient/Parser.swift
index 5397c06a..3613b60a 100644
--- a/Sources/ContainerClient/Parser.swift
+++ b/Sources/ContainerClient/Parser.swift
@@ -1,5 +1,5 @@
 //===----------------------------------------------------------------------===//
-// Copyright © 2025 Apple Inc. and the container project authors.
+// Copyright © 2025-2026 Apple Inc. and the container project authors.
 //
 // Licensed under the Apache License, Version 2.0 (the "License");
 // you may not use this file except in compliance with the License.
@@ -192,8 +192,9 @@ public struct Parser {
         var envVar: [String] = []
         for env in envList {
             var env = env
-            let parts = env.split(separator: "=", maxSplits: 2)
-            if parts.count == 1 {
+            // Only inherit from host if no "=" is present (e.g., "--env VAR")
+            // "VAR=" should set an explicit empty value, not inherit.
+            if !env.contains("=") {
                 guard let val = ProcessInfo.processInfo.environment[env] else {
                     continue
                 }
diff --git a/Tests/ContainerClientTests/ParserTest.swift b/Tests/ContainerClientTests/ParserTest.swift
index 961ae6fb..334a2f64 100644
--- a/Tests/ContainerClientTests/ParserTest.swift
+++ b/Tests/ContainerClientTests/ParserTest.swift
@@ -1,5 +1,5 @@
 //===----------------------------------------------------------------------===//
-// Copyright © 2025 Apple Inc. and the container project authors.
+// Copyright © 2025-2026 Apple Inc. and the container project authors.
 //
 // Licensed under the Apache License, Version 2.0 (the "License");
 // you may not use this file except in compliance with the License.
@@ -423,6 +423,50 @@ struct ParserTest {
         }
     }
 
+    // MARK: - Environment Variable Tests
+
+    @Test
+    func testEnvExplicitValue() throws {
+        let result = Parser.env(envList: ["FOO=bar", "BAZ=qux"])
+        #expect(result == ["FOO=bar", "BAZ=qux"])
+    }
+
+    @Test
+    func testEnvImplicitInheritance() throws {
+        guard let homeValue = ProcessInfo.processInfo.environment["PATH"] else {
+            Issue.record("PATH environment variable not set")
+            return
+        }
+
+        let result = Parser.env(envList: ["PATH"])
+        #expect(result == ["PATH=\(homeValue)"])
+    }
+
+    @Test
+    func testEnvImplicitUndefinedVariable() throws {
+        // A variable that doesn't exist should be silently skipped
+        let result = Parser.env(envList: ["THIS_VAR_DEFINITELY_DOES_NOT_EXIST_12345"])
+        #expect(result.isEmpty)
+    }
+
+    @Test
+    func testEnvMixedExplicitAndImplicit() throws {
+        guard let homeValue = ProcessInfo.processInfo.environment["HOME"] else {
+            Issue.record("HOME environment variable not set")
+            return
+        }
+
+        let result = Parser.env(envList: ["FOO=bar", "HOME", "BAZ=qux"])
+        #expect(result == ["FOO=bar", "HOME=\(homeValue)", "BAZ=qux"])
+    }
+
+    @Test
+    func testEnvEmptyValue() throws {
+        // Explicit empty value should be preserved
+        let result = Parser.env(envList: ["EMPTY="])
+        #expect(result == ["EMPTY="])
+    }
+
     private func tmpFileWithContent(_ content: String) throws -> URL {
         let tempDir = FileManager.default.temporaryDirectory
         let tempFile = tempDir.appendingPathComponent("envfile-test-\(UUID().uuidString)")