diff --git a/.changeset/gentle-mails-smoke.md b/.changeset/gentle-mails-smoke.md
new file mode 100644
index 0000000000..650f80faea
--- /dev/null
+++ b/.changeset/gentle-mails-smoke.md
@@ -0,0 +1,5 @@
+---
+"trigger.dev": patch
+---
+
+Local env files like `.env` will now correctly override dev env vars configured in the dashboard
diff --git a/packages/cli-v3/src/dev/backgroundWorker.ts b/packages/cli-v3/src/dev/backgroundWorker.ts
index 24ae8942f8..50a13304ee 100644
--- a/packages/cli-v3/src/dev/backgroundWorker.ts
+++ b/packages/cli-v3/src/dev/backgroundWorker.ts
@@ -319,9 +319,9 @@ export class BackgroundWorker {
     const processOptions: TaskRunProcessOptions = {
       payload,
       env: {
-        ...sanitizeEnvVars(this.params.env),
         // TODO: this needs the stripEmptyValues stuff too
         ...sanitizeEnvVars(payload.environment ?? {}),
+        ...sanitizeEnvVars(this.params.env),
         TRIGGER_WORKER_MANIFEST_PATH: this.workerManifestPath,
       },
       serverWorker: this.serverWorker,
diff --git a/references/v3-catalog/src/trigger/other.ts b/references/v3-catalog/src/trigger/other.ts
index c68af1d399..1aee8136a4 100644
--- a/references/v3-catalog/src/trigger/other.ts
+++ b/references/v3-catalog/src/trigger/other.ts
@@ -156,3 +156,11 @@ export const returnZeroCharacters = task({
     };
   },
 });
+
+export const testEnvVars = task({
+  id: "test-env-vars",
+  run: async (payload: any) => {
+    console.log(`env.FOO: ${process.env.FOO}`);
+    console.log(`env.BAR: ${process.env.BAR}`);
+  },
+});