diff --git a/local/compose/exec.go b/local/compose/exec.go
index 068b5b3c6..cce085f10 100644
--- a/local/compose/exec.go
+++ b/local/compose/exec.go
@@ -50,11 +50,12 @@ func (s *composeService) Exec(ctx context.Context, project *types.Project, opts
 	container := containers[0]
 
 	var env []string
-	projectEnv := types.NewMappingWithEquals(opts.Environment).Resolve(func(s string) (string, bool) {
-		v, ok := project.Environment[s]
-		return v, ok
-	})
-	for k, v := range service.Environment.OverrideBy(projectEnv) {
+	for k, v := range service.Environment.OverrideBy(types.NewMappingWithEquals(opts.Environment)).
+		Resolve(func(s string) (string, bool) {
+			v, ok := project.Environment[s]
+			return v, ok
+		}).
+		RemoveEmpty() {
 		env = append(env, fmt.Sprintf("%s=%s", k, *v))
 	}
 
diff --git a/local/e2e/compose/compose_exec_test.go b/local/e2e/compose/compose_exec_test.go
index e25810bf3..4ef4bf877 100644
--- a/local/e2e/compose/compose_exec_test.go
+++ b/local/e2e/compose/compose_exec_test.go
@@ -17,8 +17,10 @@
 package e2e
 
 import (
+	"strings"
 	"testing"
 
+	"gotest.tools/v3/assert"
 	"gotest.tools/v3/icmd"
 
 	. "github.com/docker/compose-cli/utils/e2e"
@@ -40,4 +42,18 @@ func TestLocalComposeExec(t *testing.T) {
 		res := c.RunDockerOrExitError("exec", "compose-e2e-exec_simple_1", "/bin/false")
 		res.Assert(t, icmd.Expected{ExitCode: 1})
 	})
+
+	t.Run("exec with env set", func(t *testing.T) {
+		res := icmd.RunCmd(c.NewDockerCmd("exec", "-e", "FOO", "compose-e2e-exec_simple_1", "/usr/bin/env"),
+			func(cmd *icmd.Cmd) {
+				cmd.Env = append(cmd.Env, "FOO=BAR")
+			})
+		res.Assert(t, icmd.Expected{Out: "FOO=BAR"})
+	})
+
+	t.Run("exec without env set", func(t *testing.T) {
+		res := c.RunDockerOrExitError("exec", "-e", "FOO", "compose-e2e-exec_simple_1", "/usr/bin/env")
+		res.Assert(t, icmd.Expected{ExitCode: 0})
+		assert.Check(t, !strings.Contains(res.Stdout(), "FOO="))
+	})
 }