# Environment file Compose supports declaring default environment variables in an environment file named `.env` placed in the folder `docker-compose` command is executed from *(current working directory)*. Compose expects each line in an env file to be in `VAR=VAL` format. Lines beginning with `#` (i.e. comments) are ignored, as are blank lines. > Note: Values present in the environment at runtime will always override > those defined inside the `.env` file. Similarly, values passed via > command-line arguments take precedence as well. Those environment variables will be used for [variable substitution](compose-file.md#variable-substitution) in your Compose file, but can also be used to define the following [CLI variables](reference/envvars.md): - `COMPOSE_API_VERSION` - `COMPOSE_FILE` - `COMPOSE_HTTP_TIMEOUT` - `COMPOSE_PROJECT_NAME` - `DOCKER_CERT_PATH` - `DOCKER_HOST` - `DOCKER_TLS_VERIFY` ## More Compose documentation - [User guide](index.md) - [Command line reference](./reference/index.md) - [Compose file reference](compose-file.md)