diff --git a/packages/opencode/src/config/markdown.ts b/packages/opencode/src/config/markdown.ts
index f20842c41a9..6698435343b 100644
--- a/packages/opencode/src/config/markdown.ts
+++ b/packages/opencode/src/config/markdown.ts
@@ -14,11 +14,30 @@ export namespace ConfigMarkdown {
     return Array.from(template.matchAll(SHELL_REGEX))
   }
 
+  // Perform {env:VAR} interpolation on frontmatter data only
+  function interpolateEnvironmentVariables(obj: any): any {
+    if (typeof obj === "string") {
+      return obj.replace(/\{env:([^}]+)\}/g, (_, varName) => {
+        return process.env[varName] || ""
+      })
+    } else if (Array.isArray(obj)) {
+      return obj.map(interpolateEnvironmentVariables)
+    } else if (obj && typeof obj === "object") {
+      const result: any = {}
+      for (const [key, value] of Object.entries(obj)) {
+        result[key] = interpolateEnvironmentVariables(value)
+      }
+      return result
+    }
+    return obj
+  }
+
   export async function parse(filePath: string) {
     const template = await Bun.file(filePath).text()
 
     try {
       const md = matter(template)
+      md.data = interpolateEnvironmentVariables(md.data)
       return md
     } catch (err) {
       throw new FrontmatterError(
diff --git a/packages/opencode/test/config/markdown.test.ts b/packages/opencode/test/config/markdown.test.ts
index 392ca3911be..bd1fc88fe3c 100644
--- a/packages/opencode/test/config/markdown.test.ts
+++ b/packages/opencode/test/config/markdown.test.ts
@@ -87,3 +87,88 @@ test("should not match email addresses", () => {
   const emailMatches = ConfigMarkdown.files(emailTest)
   expect(emailMatches.length).toBe(0)
 })
+
+// Helper function to reduce test code duplication
+async function parseMarkdownWithEnv(markdown: string) {
+  const tempFile = `/tmp/test-agent-${Date.now()}.md`
+  await Bun.write(tempFile, markdown)
+  try {
+    return await ConfigMarkdown.parse(tempFile)
+  } finally {
+    await Bun.file(tempFile).delete()
+  }
+}
+
+// Tests for {env:VAR} interpolation in frontmatter
+test("should interpolate {env:VAR} in frontmatter", async () => {
+  process.env.TEST_MODEL = "gpt-4"
+  process.env.TEST_DESCRIPTION = "Test agent description"
+
+  const markdownWithEnv = `---
+description: "{env:TEST_DESCRIPTION}"
+model: "{env:TEST_MODEL}"
+mode: primary
+---
+
+# Agent Content
+
+This is the agent content.`
+
+  const result = await parseMarkdownWithEnv(markdownWithEnv)
+
+  expect(result.data.description).toBe("Test agent description")
+  expect(result.data.model).toBe("gpt-4")
+  expect(result.data.mode).toBe("primary")
+  expect(result.content).toContain("Agent Content")
+})
+
+test("should handle missing environment variables gracefully", async () => {
+  delete process.env.NONEXISTENT_VAR
+
+  const markdownWithMissingEnv = `---
+description: "Description with {env:NONEXISTENT_VAR} missing"
+model: "gpt-3.5-turbo"
+---
+
+# Agent Content`
+
+  const result = await parseMarkdownWithEnv(markdownWithMissingEnv)
+
+  expect(result.data.description).toBe("Description with  missing")
+  expect(result.data.model).toBe("gpt-3.5-turbo")
+})
+
+test("should interpolate multiple environment variables in same field", async () => {
+  process.env.PREFIX = "AI"
+  process.env.SUFFIX = "Assistant"
+
+  const markdownWithMultipleEnv = `---
+description: "{env:PREFIX} {env:SUFFIX}"
+model: "gpt-4"
+---
+
+# Agent Content`
+
+  const result = await parseMarkdownWithEnv(markdownWithMultipleEnv)
+
+  expect(result.data.description).toBe("AI Assistant")
+  expect(result.data.model).toBe("gpt-4")
+})
+
+test("should not interpolate {env:VAR} in markdown body content", async () => {
+  process.env.BODY_VAR = "should not appear"
+
+  const markdownWithEnvInBody = `---
+description: "Test agent"
+model: "gpt-4"
+---
+
+# Agent Content
+
+This should not interpolate: {env:BODY_VAR}`
+
+  const result = await parseMarkdownWithEnv(markdownWithEnvInBody)
+
+  expect(result.data.description).toBe("Test agent")
+  expect(result.content).toContain("{env:BODY_VAR}")
+})