diff --git a/lib/compiler.js b/lib/compiler.js
index ef9aecc..b28bb20 100644
--- a/lib/compiler.js
+++ b/lib/compiler.js
@@ -95,6 +95,7 @@ module.exports = function compile(options) {
   // loopback modifies the data. Since we are loading the data using `require`,
   // such change affects also code that calls `require` for the same file.
   var instructions = {
+    env: env,
     config: appConfig,
     dataSources: dataSourcesConfig,
     models: modelInstructions,
diff --git a/lib/executor.js b/lib/executor.js
index c44ca75..844c237 100644
--- a/lib/executor.js
+++ b/lib/executor.js
@@ -23,6 +23,7 @@ module.exports = function execute(app, instructions, callback) {
   patchAppLoopback(app);
   assertLoopBackVersion(app);
 
+  setEnv(app, instructions);
   setHost(app, instructions);
   setPort(app, instructions);
   setApiRoot(app, instructions);
@@ -87,6 +88,12 @@ function assertLoopBackVersion(app) {
   }
 }
 
+function setEnv(app, instructions) {
+  var env = instructions.env;
+  if (env !== undefined)
+    app.set('env', env);
+}
+
 function setHost(app, instructions) {
   // jscs:disable requireCamelCaseOrUpperCaseIdentifiers
   var host =
diff --git a/test/executor.test.js b/test/executor.test.js
index 42d2ff6..52564af 100644
--- a/test/executor.test.js
+++ b/test/executor.test.js
@@ -362,6 +362,11 @@ describe('executor', function() {
       }));
     }
 
+    it('should apply env passed in option object', function() {
+      boot.execute(app, someInstructions({ env: 'custom_env' }));
+      expect(app.get('env')).to.equal('custom_env');
+    });
+
     it('should honor host and port', function() {
       function assertHonored(portKey, hostKey) {
         process.env[hostKey] = randomPort();
@@ -854,6 +859,9 @@ function someInstructions(values) {
     }
   };
 
+  if (values.env)
+    result.env = values.env;
+
   if (values.files) {
     for (var k in values.files)
       result.files[k] = values.files[k];