diff --git a/.github/workflows/test.yaml b/.github/workflows/test.yaml
index 14bfa73..fd602bc 100644
--- a/.github/workflows/test.yaml
+++ b/.github/workflows/test.yaml
@@ -46,3 +46,21 @@ jobs:
           compose-files: ""
           verbose: true
           command: "compose up --dry-run --project-name github-action-test"
+
+      - name: Deploy with env-file
+        id: env-file-test
+        uses: ./
+        continue-on-error: true # Ignore dry run error
+        with:
+          cwd: "./test"
+          compose-files: "compose.envfile.yaml"
+          env-file: "action.env"
+          command: "compose config --project-name github-action-test"
+
+      - name: Verify env-file interpolation
+        shell: bash
+        run: |
+          echo "${STDOUT}" | grep -q "hello-from-env-file" \
+            || { echo "expected env-file value not found in output"; exit 1; }
+        env:
+          STDOUT: ${{ steps.env-file-test.outputs.stdout }}
diff --git a/README.md b/README.md
index e89b935..662ce86 100644
--- a/README.md
+++ b/README.md
@@ -59,6 +59,24 @@ jobs:
           DB_CONNECTION_STRING: ${{ secrets.DB_CONNECTION_STRING }}
 ```
 
+### Using an Environment File
+
+By default, Defang loads a `.env` file next to your Compose file to resolve `${VARIABLE}` interpolation. To use a different environment file (or several), set the `env-file` input. This mirrors `docker compose --env-file` and, when set, replaces the default `.env`.
+
+```yaml
+jobs:
+  test:
+    # [...]
+    steps:
+      # [...]
+      - name: Deploy
+        uses: DefangLabs/defang-github-action@v2
+        with:
+          env-file: ".env.production"
+```
+
+Pass multiple files whitespace-delimited (`env-file: ".env .env.production"`); later files override earlier ones.
+
 ### Projects in a Subdirectory
 
 If your Compose file is in a different directory than your project root, you can specify the path to the project in the `cwd` input.
diff --git a/action.yaml b/action.yaml
index 4986854..b2975b2 100644
--- a/action.yaml
+++ b/action.yaml
@@ -30,6 +30,10 @@ inputs:
     description: "The compose files to deploy. Format 'file1 file2 file3'"
     required: false
     default: ""
+  env-file:
+    description: "Environment file(s) used for compose interpolation instead of the default .env. Format 'file1 file2 file3'"
+    required: false
+    default: ""
   cwd:
     description: "The directory containing the compose file to deploy."
     required: false
@@ -118,6 +122,8 @@ runs:
         [ -n "${{ inputs['provider'] }}" ] && echo "DEFANG_PROVIDER=${{ inputs['provider'] }}" >> $GITHUB_ENV || true
         [ -n "${{ inputs['stack'] }}" ] && echo "DEFANG_STACK=${{ inputs['stack'] }}" >> $GITHUB_ENV || true
         [ -n "${{ inputs['project'] }}" ] && echo "COMPOSE_PROJECT_NAME=${{ inputs['project'] }}" >> $GITHUB_ENV || true
+        # The CLI reads COMPOSE_ENV_FILES (comma-separated) like docker compose; convert the space-separated input.
+        [ -n "$ENV_FILE" ] && echo "COMPOSE_ENV_FILES=$(echo "$ENV_FILE" | tr ' ' ',')" >> $GITHUB_ENV || true
         # Docker Compose (and the Defang CLI) natively read the compose file
         # list from COMPOSE_FILE, so export that once instead of building a
         # repeated -f/-f/-f list in every step. The unquoted echo collapses
@@ -130,6 +136,7 @@ runs:
         fi
       env:
         COMPOSE_FILES: ${{ inputs['compose-files'] }}
+        ENV_FILE: ${{ inputs['env-file'] }}
 
     - name: Login to Defang
       shell: bash
diff --git a/test/action.env b/test/action.env
new file mode 100644
index 0000000..7fde724
--- /dev/null
+++ b/test/action.env
@@ -0,0 +1 @@
+GREETING=hello-from-env-file
diff --git a/test/compose.envfile.yaml b/test/compose.envfile.yaml
new file mode 100644
index 0000000..d13e8f0
--- /dev/null
+++ b/test/compose.envfile.yaml
@@ -0,0 +1,7 @@
+services:
+  web:
+    build: .
+    ports:
+      - "3000:3000"
+    environment:
+      GREETING: ${GREETING}