What happened?

The Gemini CLI fails to expand environment variables using the ${VARIABLE_NAME} syntax when they are used within the args array of an MCP server configuration in settings.json.

Instead of injecting the actual value from the environment, the CLI passes the literal string (e.g., "${DISCORD_TOKEN}") directly to the execution command. In the case of Docker-based MCPs, this causes the container to receive a 16-character string (the literal text ${DISCORD_TOKEN}) rather than the actual credential, leading to authentication failures (e.g., Error [TokenInvalid]).

What did you expect to happen?

I expected the ${VARIABLE_NAME} placeholders in the mcpServers configuration to be replaced with the corresponding values from the host's environment before the server process is spawned.

Client information

Client information

• Platform: Linux (WSL2 / Ubuntu 24.04)
• CLI Version: 0.39.1
• Git Commit: 4d73f3413
• Session ID: 81bb18df-c7f6-4cf2-bdbe-7eeafca07688
• Operating System: linux v20.20.2
• Sandbox Environment: no sandbox
• Model Version: auto-gemini-3
• Auth Type: oauth-personal
• Memory Usage: 245.3 MB
• Terminal Name: Unknown
• Terminal Background: #300a24
• Kitty Keyboard Protocol: Unsupported

Login information

Logging in via Google Account using OAuth Personal authentication.

Anything else we need to know?

Direct Evidence: In Docker logs for the Discord MCP server, the reported "Token length" was exactly 16, which is the character count of the literal string ${DISCORD_TOKEN}. This confirmed that no expansion took place. 2. Scope: The issue appears to affect any key within the mcpServers[name].args array. 3. Workaround: We successfully bypassed the issue for Docker by changing the argument from -e DISCORD_TOKEN=${DISCORD_TOKEN} to just -e DISCORD_TOKEN, which allows Docker to inherit the variable directly from the parent process environment. However, the expansion logic within Gemini CLI itself remains broken. 4. Impact: This makes it impossible to use environment variables for any MCP server that doesn't support direct environment inheritance (e.g., npx based servers where tokens must be passed as CLI arguments).