diff --git a/src/shared/file-reference-resolver.test.ts b/src/shared/file-reference-resolver.test.ts
index 3684b340a..5e24ecf4d 100644
--- a/src/shared/file-reference-resolver.test.ts
+++ b/src/shared/file-reference-resolver.test.ts
@@ -1,8 +1,62 @@
 import { afterAll, beforeAll, describe, expect, test } from "bun:test"
 import { mkdirSync, rmSync, symlinkSync, writeFileSync } from "node:fs"
 import { tmpdir } from "node:os"
-import { join } from "node:path"
-import { resolveFileReferencesInText } from "./file-reference-resolver"
+import { join, resolve } from "node:path"
+import { resolveFilePath, resolveFileReferencesInText } from "./file-reference-resolver"
+
+describe("resolveFilePath", () => {
+  const cwd = "/skills/gsd"
+
+  test("expands bare environment variables before resolving absolute paths", () => {
+    //#given
+    const homeDir = process.env.HOME
+    if (!homeDir) {
+      throw new Error("HOME must be set for file reference resolver tests")
+    }
+
+    //#when
+    const resolved = resolveFilePath("$HOME/foo.md", cwd)
+
+    //#then
+    expect(resolved).toBe(resolve(homeDir, "foo.md"))
+  })
+
+  test("expands braced environment variables before resolving absolute paths", () => {
+    //#given
+    const homeDir = process.env.HOME
+    if (!homeDir) {
+      throw new Error("HOME must be set for file reference resolver tests")
+    }
+
+    //#when
+    const resolved = resolveFilePath("${HOME}/foo.md", cwd)
+
+    //#then
+    expect(resolved).toBe(resolve(homeDir, "foo.md"))
+  })
+
+  test("keeps absolute paths absolute", () => {
+    //#given
+    const absolutePath = "/abs/path.md"
+
+    //#when
+    const resolved = resolveFilePath(absolutePath, cwd)
+
+    //#then
+    expect(resolved).toBe(resolve(absolutePath))
+  })
+
+  test("resolves relative paths from cwd", () => {
+    //#given
+    const relativePath = "relative/path.md"
+
+    //#when
+    const resolved = resolveFilePath(relativePath, cwd)
+
+    //#then
+    expect(resolved).toBe(resolve(cwd, relativePath))
+  })
+})
 
 describe("resolveFileReferencesInText", () => {
   const fixtureRoot = join(tmpdir(), `file-reference-resolver-${Date.now()}`)
diff --git a/src/shared/file-reference-resolver.ts b/src/shared/file-reference-resolver.ts
index d5f0eafb6..9bfede41e 100644
--- a/src/shared/file-reference-resolver.ts
+++ b/src/shared/file-reference-resolver.ts
@@ -30,12 +30,20 @@ function findFileReferences(text: string): FileMatch[] {
   return matches
 }
 
-function resolveFilePath(filePath: string, cwd: string): string {
-  if (isAbsolute(filePath)) {
-    return resolve(filePath)
+export function resolveFilePath(filePath: string, cwd: string): string {
+  const expanded = filePath.replace(/\$\{(\w+)\}|\$(\w+)/g, (match, braced: string | undefined, bare: string | undefined) => {
+    const variableName = braced ?? bare
+    if (!variableName) {
+      return match
+    }
+    return process.env[variableName] ?? match
+  })
+
+  if (isAbsolute(expanded)) {
+    return resolve(expanded)
   }
 
-  return resolve(cwd, filePath)
+  return resolve(cwd, expanded)
 }
 
 function readFileContent(resolvedPath: string): string {