diff --git a/pkg/compose/extends_include_test.go b/pkg/compose/extends_include_test.go
new file mode 100644
index 0000000000..3e7c19a0f9
--- /dev/null
+++ b/pkg/compose/extends_include_test.go
@@ -0,0 +1,94 @@
+/*
+   Test to reproduce issue #13606:
+   service.extends doesn't resolve includes properly
+
+   When a service extends another service that's defined in an included file,
+   environment variables from the base service's includes aren't propagated
+   to the extending service.
+*/
+
+package compose
+
+import (
+	"context"
+	"os"
+	"path/filepath"
+	"testing"
+
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+
+	"github.com/docker/compose/v5/pkg/api"
+)
+
+func TestExtendsWithInclude_InheritsEnvironment(t *testing.T) {
+	// Create temporary directory for test files
+	tmpDir := t.TempDir()
+
+	// Create compose.a.yml with a service that has environment variable A
+	composeAFile := filepath.Join(tmpDir, "compose.a.yml")
+	composeAContent := `services:
+  web:
+    image: scratch
+    environment:
+      A: "A"
+`
+	err := os.WriteFile(composeAFile, []byte(composeAContent), 0o644)
+	require.NoError(t, err)
+
+	// Create compose.b.yml that includes compose.a.yml
+	// and has a worker service that extends web
+	composeBFile := filepath.Join(tmpDir, "compose.b.yml")
+	composeBContent := `include:
+  - compose.a.yml
+services:
+  web:
+    environment:
+      B: B
+
+  worker:
+    image: scratch
+    extends:
+      service: web
+    environment:
+      C: C
+`
+	err = os.WriteFile(composeBFile, []byte(composeBContent), 0o644)
+	require.NoError(t, err)
+
+	// Load the project
+	service, err := NewComposeService(nil)
+	require.NoError(t, err)
+
+	project, err := service.LoadProject(context.Background(), api.ProjectLoadOptions{
+		ConfigPaths: []string{composeBFile},
+	})
+	require.NoError(t, err)
+
+	// Verify web service has both A and B environment variables
+	webService := project.Services["web"]
+	assert.Contains(t, webService.Environment, "A", "web service should have A from include")
+	assert.Contains(t, webService.Environment, "B", "web service should have B")
+	if webService.Environment["A"] != nil {
+		assert.Equal(t, "A", *webService.Environment["A"])
+	}
+	if webService.Environment["B"] != nil {
+		assert.Equal(t, "B", *webService.Environment["B"])
+	}
+
+	// THIS IS THE BUG: worker should have A, B, and C
+	// But currently it only has B and C (missing A from the included file)
+	workerService := project.Services["worker"]
+	assert.Contains(t, workerService.Environment, "A", "worker should inherit A from web (via include)")
+	assert.Contains(t, workerService.Environment, "B", "worker should inherit B from web")
+	assert.Contains(t, workerService.Environment, "C", "worker should have C")
+	if workerService.Environment["A"] != nil {
+		assert.Equal(t, "A", *workerService.Environment["A"])
+	}
+	if workerService.Environment["B"] != nil {
+		assert.Equal(t, "B", *workerService.Environment["B"])
+	}
+	if workerService.Environment["C"] != nil {
+		assert.Equal(t, "C", *workerService.Environment["C"])
+	}
+}