diff --git a/examples/sample_dotenv b/examples/sample_dotenv
new file mode 100644
index 00000000000..ac56cc1c950
--- /dev/null
+++ b/examples/sample_dotenv
@@ -0,0 +1 @@
+TEST_ENV2="success" 
diff --git a/sky/cli.py b/sky/cli.py
index 3136a16678a..1e27275d4f9 100644
--- a/sky/cli.py
+++ b/sky/cli.py
@@ -40,6 +40,7 @@
 
 import click
 import colorama
+import dotenv
 from rich import progress as rich_progress
 import yaml
 
@@ -331,6 +332,16 @@ def _parse_env_var(env_var: str) -> Tuple[str, str]:
     return ret[0], ret[1]
 
 
+def _merge_env_vars(env_dict: Optional[Dict[str, str]],
+                    env_list: List[Tuple[str, str]]) -> List[Tuple[str, str]]:
+    """Merges all values from env_list into env_dict."""
+    if not env_dict:
+        return env_list
+    for (key, value) in env_list:
+        env_dict[key] = value
+    return list(env_dict.items())
+
+
 _TASK_OPTIONS = [
     click.option('--name',
                  '-n',
@@ -382,6 +393,15 @@ def _parse_env_var(env_var: str) -> Tuple[str, str]:
                  default=None,
                  help=('Custom image id for launching the instances. '
                        'Passing "none" resets the config.')),
+    click.option('--env-file',
+                 required=False,
+                 type=dotenv.dotenv_values,
+                 help="""\
+        Path to a dotenv file with environment variables to set on the remote
+        node.
+
+        If any values from ``--env-file`` conflict with values set by
+        ``--env``, the ``--env`` value will be preferred."""),
     click.option(
         '--env',
         required=False,
@@ -1307,6 +1327,7 @@ def launch(
     num_nodes: Optional[int],
     use_spot: Optional[bool],
     image_id: Optional[str],
+    env_file: Optional[Dict[str, str]],
     env: List[Tuple[str, str]],
     disk_size: Optional[int],
     disk_tier: Optional[str],
@@ -1326,6 +1347,7 @@ def launch(
     In both cases, the commands are run under the task's workdir (if specified)
     and they undergo job queue scheduling.
     """
+    env = _merge_env_vars(env_file, env)
     backend_utils.check_cluster_name_not_reserved(
         cluster, operation_str='Launching tasks on it')
     if backend_name is None:
@@ -1423,6 +1445,7 @@ def exec(
     num_nodes: Optional[int],
     use_spot: Optional[bool],
     image_id: Optional[str],
+    env_file: Optional[Dict[str, str]],
     env: List[Tuple[str, str]],
 ):
     # NOTE(dev): Keep the docstring consistent between the Python API and CLI.
@@ -1483,6 +1506,7 @@ def exec(
       sky exec mycluster --env WANDB_API_KEY python train_gpu.py
 
     """
+    env = _merge_env_vars(env_file, env)
     backend_utils.check_cluster_name_not_reserved(
         cluster, operation_str='Executing task on it')
     handle = global_user_state.get_handle_from_cluster_name(cluster)
@@ -3459,6 +3483,7 @@ def spot_launch(
     use_spot: Optional[bool],
     image_id: Optional[str],
     spot_recovery: Optional[str],
+    env_file: Optional[Dict[str, str]],
     env: List[Tuple[str, str]],
     disk_size: Optional[int],
     disk_tier: Optional[str],
@@ -3480,6 +3505,7 @@ def spot_launch(
 
       sky spot launch 'echo hello!'
     """
+    env = _merge_env_vars(env_file, env)
     task_or_dag = _make_task_or_dag_from_entrypoint_with_overrides(
         entrypoint,
         name=name,
@@ -3907,6 +3933,7 @@ def benchmark_launch(
     num_nodes: Optional[int],
     use_spot: Optional[bool],
     image_id: Optional[str],
+    env_file: Optional[Dict[str, str]],
     env: List[Tuple[str, str]],
     disk_size: Optional[int],
     disk_tier: Optional[str],
@@ -3920,6 +3947,7 @@ def benchmark_launch(
     Alternatively, specify the benchmarking resources in your YAML (see doc),
     which allows benchmarking on many more resource fields.
     """
+    env = _merge_env_vars(env_file, env)
     record = benchmark_state.get_benchmark_from_name(benchmark)
     if record is not None:
         raise click.BadParameter(f'Benchmark {benchmark} already exists. '
diff --git a/sky/setup_files/setup.py b/sky/setup_files/setup.py
index 6a738bdad38..562910d94d2 100644
--- a/sky/setup_files/setup.py
+++ b/sky/setup_files/setup.py
@@ -86,6 +86,7 @@ def parse_readme(readme: str) -> str:
     # PrettyTable with version >=2.0.0 is required for the support of
     # `add_rows` method.
     'PrettyTable>=2.0.0',
+    'python-dotenv',
     # Lower version of ray will cause dependency conflict for
     # click/grpcio/protobuf.
     'ray[default]>=2.2.0,<=2.4.0',
diff --git a/tests/test_smoke.py b/tests/test_smoke.py
index 3c54ef26f41..ecb313872a7 100644
--- a/tests/test_smoke.py
+++ b/tests/test_smoke.py
@@ -2195,6 +2195,23 @@ def test_inline_env(generic_cloud: str):
     run_one_test(test)
 
 
+# ---------- Testing env file ----------
+def test_inline_env_file(generic_cloud: str):
+    """Test env"""
+    name = _get_cluster_name()
+    test = Test(
+        'test-inline-env-file',
+        [
+            f'sky launch -c {name} -y --cloud {generic_cloud} --env TEST_ENV="hello world" -- "([[ ! -z \\"\$TEST_ENV\\" ]] && [[ ! -z \\"\$SKYPILOT_NODE_IPS\\" ]] && [[ ! -z \\"\$SKYPILOT_NODE_RANK\\" ]]) || exit 1"',
+            f'sky logs {name} 1 --status',
+            f'sky exec {name} --env-file examples/sample_dotenv "([[ ! -z \\"\$TEST_ENV2\\" ]] && [[ ! -z \\"\$SKYPILOT_NODE_IPS\\" ]] && [[ ! -z \\"\$SKYPILOT_NODE_RANK\\" ]]) || exit 1"',
+            f'sky logs {name} 2 --status',
+        ],
+        f'sky down -y {name}',
+    )
+    run_one_test(test)
+
+
 # ---------- Testing custom image ----------
 @pytest.mark.aws
 def test_custom_image():