diff --git a/backend/local/backend.go b/backend/local/backend.go
index 7c715d67a..f5eb4ed61 100644
--- a/backend/local/backend.go
+++ b/backend/local/backend.go
@@ -8,7 +8,6 @@ import (
 	"os"
 	"path/filepath"
 	"sort"
-	"strings"
 	"sync"
 
 	"github.com/hashicorp/terraform/backend"
@@ -391,22 +390,3 @@ func (b *Local) stateEnvDir() string {
 
 	return DefaultEnvDir
 }
-
-// currentStateName returns the name of the current named state as set in the
-// configuration files.
-// If there are no configured environments, currentStateName returns "default"
-func (b *Local) currentStateName() (string, error) {
-	contents, err := ioutil.ReadFile(filepath.Join(DefaultDataDir, DefaultEnvFile))
-	if os.IsNotExist(err) {
-		return backend.DefaultStateName, nil
-	}
-	if err != nil {
-		return "", err
-	}
-
-	if fromFile := strings.TrimSpace(string(contents)); fromFile != "" {
-		return fromFile, nil
-	}
-
-	return backend.DefaultStateName, nil
-}
diff --git a/command/env_command.go b/command/env_command.go
index f29c9456f..f32e1cb20 100644
--- a/command/env_command.go
+++ b/command/env_command.go
@@ -96,5 +96,28 @@ to another environment and try again.
 	envInvalidName = `
 The environment name %q is not allowed. The name must contain only URL safe
 characters, and no path separators.
+`
+
+	envIsOverriddenNote = `
+
+The active environment is being overridden using the TF_ENVIRONMENT environment
+variable.
+`
+
+	envIsOverriddenSelectError = `
+The environment is currently overridden using the TF_ENVIRONMENT environment
+variable.
+
+To select a new environment, either update this environment variable or unset
+it and then run this command again.
+`
+
+	envIsOverriddenNewError = `
+The environment is currently overridden using the TF_ENVIRONMENT environment
+variable.  You cannot create a different environment when using this setting.
+
+To create a new environment, either unset this environment variable or update it
+to match the environment name you are trying to create, and then run this command
+again.
 `
 )
diff --git a/command/env_list.go b/command/env_list.go
index 56d448d29..793afe9ba 100644
--- a/command/env_list.go
+++ b/command/env_list.go
@@ -48,7 +48,7 @@ func (c *EnvListCommand) Run(args []string) int {
 		return 1
 	}
 
-	env := c.Env()
+	env, isOverridden := c.EnvOverridden()
 
 	var out bytes.Buffer
 	for _, s := range states {
@@ -61,6 +61,11 @@ func (c *EnvListCommand) Run(args []string) int {
 	}
 
 	c.Ui.Output(out.String())
+
+	if isOverridden {
+		c.Ui.Output(envIsOverriddenNote)
+	}
+
 	return 0
 }
 
diff --git a/command/env_new.go b/command/env_new.go
index 1b2c13a67..6c6f9cdd8 100644
--- a/command/env_new.go
+++ b/command/env_new.go
@@ -40,6 +40,13 @@ func (c *EnvNewCommand) Run(args []string) int {
 		return 1
 	}
 
+	// You can't ask to create an environment when you're overriding the
+	// environment name to be something different.
+	if current, isOverridden := c.EnvOverridden(); current != newEnv && isOverridden {
+		c.Ui.Error(envIsOverriddenNewError)
+		return 1
+	}
+
 	configPath, err := ModulePath(args[1:])
 	if err != nil {
 		c.Ui.Error(err.Error())
diff --git a/command/env_select.go b/command/env_select.go
index d65660fb8..c2f69dc18 100644
--- a/command/env_select.go
+++ b/command/env_select.go
@@ -34,6 +34,11 @@ func (c *EnvSelectCommand) Run(args []string) int {
 	conf, err := c.Config(configPath)
 	if err != nil {
 		c.Ui.Error(fmt.Sprintf("Failed to load root config module: %s", err))
+	}
+
+	current, isOverridden := c.EnvOverridden()
+	if isOverridden {
+		c.Ui.Error(envIsOverriddenSelectError)
 		return 1
 	}
 
@@ -59,7 +64,7 @@ func (c *EnvSelectCommand) Run(args []string) int {
 		return 1
 	}
 
-	if name == c.Env() {
+	if name == current {
 		// already using this env
 		return 0
 	}
diff --git a/command/meta.go b/command/meta.go
index dc581d4a3..acf37e516 100644
--- a/command/meta.go
+++ b/command/meta.go
@@ -454,9 +454,28 @@ func (m *Meta) outputShadowError(err error, output bool) bool {
 	return true
 }
 
+// EnvironmentNameEnvVar is the name of the environment variable (ie, the POSIX
+// feature) that can be used to set the name of the Terraform environment
+// (overriding the environment chosen by `terraform env select`).  Note that
+// this environment variable is ignored by `terraform env new` and `terraform
+// env delete`.
+const EnvironmentNameEnvVar = "TF_ENVIRONMENT"
+
 // Env returns the name of the currently configured environment, corresponding
 // to the desired named state.
 func (m *Meta) Env() string {
+	current, _ := m.EnvOverridden()
+	return current
+}
+
+// EnvOverridden returns the name of the currently configured environment,
+// corresponding to the desired named state, as well as a bool saying whether
+// this was set via the TF_ENVIRONMENT environment variable.
+func (m *Meta) EnvOverridden() (string, bool) {
+	if envVar := os.Getenv(EnvironmentNameEnvVar); envVar != "" {
+		return envVar, true
+	}
+
 	dataDir := m.dataDir
 	if m.dataDir == "" {
 		dataDir = DefaultDataDir
@@ -473,7 +492,7 @@ func (m *Meta) Env() string {
 		log.Printf("[ERROR] failed to read current environment: %s", err)
 	}
 
-	return current
+	return current, false
 }
 
 // SetEnv saves the named environment to the local filesystem.