diff --git a/cli/options.go b/cli/options.go
index f42c67aa0..e457b4343 100644
--- a/cli/options.go
+++ b/cli/options.go
@@ -242,7 +242,6 @@ func GetEnvFromFile(currentEnv map[string]string, workingDir string, filename st
 	env, err := dotenv.ParseWithLookup(file, func(k string) (string, bool) {
 		v, ok := currentEnv[k]
 		if !ok {
-
 			return "", false
 		}
 		return v, true
@@ -251,9 +250,6 @@ func GetEnvFromFile(currentEnv map[string]string, workingDir string, filename st
 		return envMap, err
 	}
 	for k, v := range env {
-		if _, set := currentEnv[k]; set {
-			continue
-		}
 		envMap[k] = v
 	}
 
diff --git a/dotenv/godotenv_test.go b/dotenv/godotenv_test.go
index e0dde43f2..e4dbc39d4 100644
--- a/dotenv/godotenv_test.go
+++ b/dotenv/godotenv_test.go
@@ -623,10 +623,10 @@ func TestSubstitutionsWithShellEnvPrecedence(t *testing.T) {
 
 	envFileName := "fixtures/substitutions.env"
 	expectedValues := map[string]string{
-		"OPTION_A": "5",
-		"OPTION_B": "5",
-		"OPTION_C": "5",
-		"OPTION_D": "55",
+		"OPTION_A": "1",
+		"OPTION_B": "1",
+		"OPTION_C": "1",
+		"OPTION_D": "11",
 		"OPTION_E": "",
 	}
 
diff --git a/dotenv/parser.go b/dotenv/parser.go
index e049123da..ecb94ee99 100644
--- a/dotenv/parser.go
+++ b/dotenv/parser.go
@@ -37,7 +37,6 @@ func parseBytes(src []byte, out map[string]string, lookupFn LookupFn) error {
 		}
 
 		if inherited {
-
 			value, ok := lookupFn(key)
 			if ok {
 				out[key] = value
@@ -50,9 +49,6 @@ func parseBytes(src []byte, out map[string]string, lookupFn LookupFn) error {
 		if err != nil {
 			return err
 		}
-		if lookUpValue, ok := lookupFn(key); ok {
-			value = lookUpValue
-		}
 
 		out[key] = value
 		cutset = left
diff --git a/loader/full-struct_test.go b/loader/full-struct_test.go
index b606e4467..c3c7260e5 100644
--- a/loader/full-struct_test.go
+++ b/loader/full-struct_test.go
@@ -165,7 +165,7 @@ func services(workingDir, homeDir string) []types.ServiceConfig {
 			Entrypoint: []string{"/code/entrypoint.sh", "-p", "3000"},
 			Environment: map[string]*string{
 				"FOO":                 strPtr("foo_from_env_file"),
-				"BAR":                 strPtr("this is a secret"),
+				"BAR":                 strPtr("bar_from_env_file_2"),
 				"BAZ":                 strPtr("baz_from_service_def"),
 				"QUX":                 strPtr("qux_from_environment"),
 				"ENV.WITH.DOT":        strPtr("ok"),
@@ -692,7 +692,7 @@ services:
     - -p
     - "3000"
     environment:
-      BAR: this is a secret
+      BAR: bar_from_env_file_2
       BAZ: baz_from_service_def
       ENV.WITH.DOT: ok
       ENV_WITH_UNDERSCORE: ok
@@ -1265,7 +1265,7 @@ func fullExampleJSON(workingDir, homeDir string) string {
         "3000"
       ],
       "environment": {
-        "BAR": "this is a secret",
+        "BAR": "bar_from_env_file_2",
         "BAZ": "baz_from_service_def",
         "ENV.WITH.DOT": "ok",
         "ENV_WITH_UNDERSCORE": "ok",
diff --git a/loader/loader.go b/loader/loader.go
index 2394ed15c..acf11a954 100644
--- a/loader/loader.go
+++ b/loader/loader.go
@@ -624,6 +624,9 @@ func resolveEnvironment(serviceConfig *types.ServiceConfig, workingDir string, l
 	environment := types.MappingWithEquals{}
 
 	if len(serviceConfig.EnvFile) > 0 {
+		if serviceConfig.Environment == nil {
+			serviceConfig.Environment = types.MappingWithEquals{}
+		}
 		for _, envFile := range serviceConfig.EnvFile {
 			filePath := absPath(workingDir, envFile)
 			file, err := os.Open(filePath)