diff --git a/lib/executor.js b/lib/executor.js
index dfc7379..72f917f 100644
--- a/lib/executor.js
+++ b/lib/executor.js
@@ -171,6 +171,10 @@ function applyAppConfig(app, instructions) {
 
 function setupDataSources(app, instructions) {
   forEachKeyedObject(instructions.dataSources, function(key, obj) {
+    var opts = {
+      useEnvVars: true,
+    };
+    obj = getUpdatedConfigObject(app, obj, opts);
     app.dataSource(key, obj);
   });
 }
@@ -330,24 +334,42 @@ function setupMiddleware(app, instructions) {
     }
     assert(typeof factory === 'function',
       'Middleware factory must be a function');
-    data.config = getUpdatedConfigObject(app, data.config);
+    var opts = {
+      useEnvVars: true,
+    };
+    data.config = getUpdatedConfigObject(app, data.config, opts);
     app.middlewareFromConfig(factory, data.config);
   });
 }
 
-function getUpdatedConfigObject(app, config) {
+function getUpdatedConfigObject(app, config, opts) {
   var DYNAMIC_CONFIG_PARAM = /\$\{(\w+)\}$/;
+  var useEnvVars = opts && opts.useEnvVars;
 
   function getConfigVariable(param) {
     var configVariable = param;
     var match = configVariable.match(DYNAMIC_CONFIG_PARAM);
     if (match) {
-      var appValue = app.get(match[1]);
-      if (appValue !== undefined) {
+      var varName = match[1];
+      if (useEnvVars && process.env[varName] !== undefined) {
+        debug('Dynamic Configuration: Resolved via process.env: %s as %s',
+          process.env[varName], param);
+        configVariable = process.env[varName];
+      } else if (app.get(varName) !== undefined) {
+        debug('Dynamic Configuration: Resolved via app.get(): %s as %s',
+          app.get(varName), param);
+        var appValue = app.get(varName);
         configVariable = appValue;
       } else {
-        console.warn('%s does not resolve to a valid value. ' +
-        '"%s" must be resolvable by app.get().', param, match[1]);
+        // previously it returns the original string such as "${restApiRoot}"
+        // it will now return `undefined`, for the use case of
+        // dynamic datasources url:`undefined` to fallback to other parameters
+        configVariable = undefined;
+        console.warn('%s does not resolve to a valid value, returned as %s. ' +
+        '"%s" must be resolvable in Environment variable or by app.get().',
+          param, configVariable, varName);
+        debug('Dynamic Configuration: Cannot resolve variable for `%s`, ' +
+          'returned as %s', varName, configVariable);
       }
     }
     return configVariable;
@@ -394,7 +416,10 @@ function setupComponents(app, instructions) {
   instructions.components.forEach(function(data) {
     debug('Configuring component %j', data.sourceFile);
     var configFn = require(data.sourceFile);
-    data.config = getUpdatedConfigObject(app, data.config);
+    var opts = {
+      useEnvVars: true,
+    };
+    data.config = getUpdatedConfigObject(app, data.config, opts);
     configFn(app, data.config);
   });
 }
diff --git a/test/executor.test.js b/test/executor.test.js
index 867000b..dde248e 100644
--- a/test/executor.test.js
+++ b/test/executor.test.js
@@ -442,6 +442,10 @@ describe('executor', function() {
   });
 
   describe('with middleware.json', function() {
+    beforeEach(function() {
+      delete process.env.restApiRoot;
+    });
+
     it('should parse a simple config variable', function(done) {
       boot.execute(app, simpleMiddlewareConfig('routes',
         { path: '${restApiRoot}' }
@@ -454,6 +458,36 @@ describe('executor', function() {
       });
     });
 
+    it('should parse simple config variable from env var', function(done) {
+      process.env.restApiRoot = '/url-from-env-var';
+      boot.execute(app, simpleMiddlewareConfig('routes',
+        { path: '${restApiRoot}' }
+      ));
+
+      supertest(app).get('/url-from-env-var').end(function(err, res) {
+        if (err) return done(err);
+        expect(res.body.path).to.equal('/url-from-env-var');
+        done();
+      });
+    });
+
+    it('dynamic variable from `env var` should have' +
+    ' precedence over app.get()', function(done) {
+      process.env.restApiRoot = '/url-from-env-var';
+      var bootInstructions;
+      bootInstructions = simpleMiddlewareConfig('routes',
+        { path: '${restApiRoot}' });
+      bootInstructions.config = { restApiRoot: '/url-from-config' };
+      boot.execute(app, someInstructions(bootInstructions));
+
+      supertest(app).get('/url-from-env-var').end(function(err, res) {
+        if (err) return done(err);
+        expect(app.get('restApiRoot')).to.equal('/url-from-config');
+        expect(res.body.path).to.equal('/url-from-env-var');
+        done();
+      });
+    });
+
     it('should parse multiple config variables', function(done) {
       boot.execute(app, simpleMiddlewareConfig('routes',
         { path: '${restApiRoot}', env: '${env}' }
@@ -556,6 +590,11 @@ describe('executor', function() {
   });
 
   describe('with component-config.json', function() {
+    beforeEach(function() {
+      delete process.env.DYNAMIC_ENVVAR;
+      delete process.env.DYNAMIC_VARIABLE;
+    });
+
     it('should parse a simple config variable', function(done) {
       boot.execute(app, simpleComponentConfig(
         { path: '${restApiRoot}' }
@@ -568,6 +607,46 @@ describe('executor', function() {
       });
     });
 
+    it('should parse config from `env-var` and `config`', function(done) {
+      var bootInstructions = simpleComponentConfig(
+        {
+          path: '${restApiRoot}',
+          fromConfig: '${DYNAMIC_CONFIG}',
+          fromEnvVar: '${DYNAMIC_ENVVAR}',
+        }
+      );
+
+      // result should get value from config.json
+      bootInstructions.config['DYNAMIC_CONFIG'] = 'FOOBAR-CONFIG';
+      // result should get value from env var
+      process.env.DYNAMIC_ENVVAR = 'FOOBAR-ENVVAR';
+
+      boot.execute(app, bootInstructions);
+      supertest(app).get('/component').end(function(err, res) {
+        if (err) return done(err);
+        expect(res.body.fromConfig).to.equal('FOOBAR-CONFIG');
+        expect(res.body.fromEnvVar).to.equal('FOOBAR-ENVVAR');
+        done();
+      });
+    });
+
+    it('`env-var` should have precedence over `config`', function(done) {
+      var key = 'DYNAMIC_VARIABLE';
+      var bootInstructions = simpleComponentConfig({
+        path: '${restApiRoot}',
+        isDynamic: '${' + key + '}',
+      });
+      bootInstructions.config[key] = 'should be overwritten';
+      process.env[key] = 'successfully overwritten';
+
+      boot.execute(app, bootInstructions);
+      supertest(app).get('/component').end(function(err, res) {
+        if (err) return done(err);
+        expect(res.body.isDynamic).to.equal('successfully overwritten');
+        done();
+      });
+    });
+
     it('should parse multiple config variables', function(done) {
       boot.execute(app, simpleComponentConfig(
         { path: '${restApiRoot}', env: '${env}' }
@@ -809,6 +888,77 @@ describe('executor', function() {
       });
     });
   });
+
+  describe('dynamic configuration for datasources.json', function() {
+    beforeEach(function() {
+      delete process.env.DYNAMIC_HOST;
+      delete process.env.DYNAMIC_PORT;
+    });
+
+    it('should convert dynamic variable for datasource', function(done) {
+      var datasource = {
+        mydb: {
+          host: '${DYNAMIC_HOST}',
+          port: '${DYNAMIC_PORT}',
+        },
+      };
+      var bootInstructions = { dataSources: datasource };
+
+      process.env.DYNAMIC_PORT = '10007';
+      process.env.DYNAMIC_HOST = '123.321.123.132';
+
+      boot.execute(app, someInstructions(bootInstructions), function() {
+        expect(app.datasources.mydb.settings.host).to.equal('123.321.123.132');
+        expect(app.datasources.mydb.settings.port).to.equal('10007');
+        done();
+      });
+    });
+
+    it('should resolve dynamic config via app.get()', function(done) {
+      var datasource = {
+        mydb: { host: '${DYNAMIC_HOST}' },
+      };
+      var bootInstructions = {
+        config: { DYNAMIC_HOST: '127.0.0.4' },
+        dataSources: datasource,
+      };
+      boot.execute(app, someInstructions(bootInstructions), function() {
+        expect(app.get('DYNAMIC_HOST')).to.equal('127.0.0.4');
+        expect(app.datasources.mydb.settings.host).to.equal(
+          '127.0.0.4');
+        done();
+      });
+    });
+
+    it('should take ENV precedence over config.json', function(done) {
+      process.env.DYNAMIC_HOST = '127.0.0.2';
+      var datasource = {
+        mydb: { host: '${DYNAMIC_HOST}' },
+      };
+      var bootInstructions = {
+        config: { DYNAMIC_HOST: '127.0.0.3' },
+        dataSources: datasource,
+      };
+      boot.execute(app, someInstructions(bootInstructions), function() {
+        expect(app.get('DYNAMIC_HOST')).to.equal('127.0.0.3');
+        expect(app.datasources.mydb.settings.host).to.equal('127.0.0.2');
+        done();
+      });
+    });
+
+    it('empty dynamic conf should resolve as `undefined`', function(done) {
+      var datasource = {
+        mydb: { host: '${DYNAMIC_HOST}' },
+      };
+      var bootInstructions = { dataSources: datasource };
+
+      boot.execute(app, someInstructions(bootInstructions), function() {
+        expect(app.get('DYNAMIC_HOST')).to.be.undefined();
+        expect(app.datasources.mydb.settings.host).to.be.undefined();
+        done();
+      });
+    });
+  });
 });
 
 function simpleMiddlewareConfig(phase, paths, params) {