diff --git a/outputview/outputexecutejob.cpp b/outputview/outputexecutejob.cpp
--- a/outputview/outputexecutejob.cpp
+++ b/outputview/outputexecutejob.cpp
@@ -438,7 +438,9 @@
     if( environmentProfile.isEmpty() ) {
         environmentProfile = environmentGroup.defaultGroup();
     }
-    OutputExecuteJobPrivate::mergeEnvironment( environment, environmentGroup.variables( environmentProfile ) );
+    QMap <QString, QString> userEnv = environmentGroup.variables( environmentProfile );
+    expandVariables ( userEnv, environment );
+    OutputExecuteJobPrivate::mergeEnvironment( environment, userEnv );
     OutputExecuteJobPrivate::mergeEnvironment( environment, m_environmentOverrides );
     if( m_properties.testFlag( OutputExecuteJob::PortableMessages ) ) {
         environment.remove( "LC_ALL" );
diff --git a/util/environmentgrouplist.h b/util/environmentgrouplist.h
--- a/util/environmentgrouplist.h
+++ b/util/environmentgrouplist.h
@@ -23,8 +23,8 @@
 #include "utilexport.h"
 
 #include <KSharedConfig>
-
-class KConfig;
+#include <QProcessEnvironment>
+ class KConfig;
 template <typename T1, typename T2> class QMap;
 class QString;
 class QStringList;
@@ -139,7 +139,7 @@
     class EnvironmentGroupListPrivate* const d;
 
 };
-
+KDEVPLATFORMUTIL_EXPORT void expandVariables ( QMap<QString, QString>& variables, QProcessEnvironment& environment );
 }
 
 #endif
diff --git a/util/environmentgrouplist.cpp b/util/environmentgrouplist.cpp
--- a/util/environmentgrouplist.cpp
+++ b/util/environmentgrouplist.cpp
@@ -25,6 +25,7 @@
 
 #include <KConfigGroup>
 
+#include <QRegularExpression>
 
 namespace KDevelop {
 class EnvironmentGroupListPrivate
@@ -201,3 +202,21 @@
 
     return env;
 }
+
+void KDevelop::expandVariables ( QMap<QString, QString>& variables, QProcessEnvironment& environment )
+{
+    QRegularExpression rVar("(?<!\\\\)(\\$\\w+)");
+    QRegularExpression rNotVar("\\\\\\$");
+    for (auto it = variables.begin(); it != variables.end(); ++it) {
+        QRegularExpressionMatch m;
+        while ((m=rVar.match(it.value())).hasMatch()) {
+            if (environment.contains(m.captured(1).midRef(1).toString())) {
+                it.value().replace(m.capturedStart(0), m.capturedLength(0), environment.value(m.captured(0).midRef(1).toString()));
+            } else {
+                //TODO: an warning
+                it.value().replace(m.capturedStart(0), m.capturedLength(0), "");
+            }
+        }
+        it.value().replace(rNotVar,"$");
+    }
+}
diff --git a/util/tests/CMakeLists.txt b/util/tests/CMakeLists.txt
--- a/util/tests/CMakeLists.txt
+++ b/util/tests/CMakeLists.txt
@@ -18,3 +18,6 @@
 
 ecm_add_test(test_executecompositejob.cpp
     LINK_LIBRARIES Qt5::Test KDev::Util)
+
+ecm_add_test(test_environment.cpp
+    LINK_LIBRARIES Qt5::Test KDev::Util)
diff --git a/util/tests/test_environment.h b/util/tests/test_environment.h
new file mode 100644
--- /dev/null
+++ b/util/tests/test_environment.h
@@ -0,0 +1,33 @@
+/* This file is part of KDevelop
+Copyright 2015 Artur Puzio <cytadela8@gmail.com>
+
+This library is free software; you can redistribute it and/or
+modify it under the terms of the GNU Library General Public
+License as published by the Free Software Foundation; either
+version 2 of the License, or (at your option) any later version.
+
+This library is distributed in the hope that it will be useful,
+but WITHOUT ANY WARRANTY; without even the implied warranty of
+MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the GNU
+Library General Public License for more details.
+
+You should have received a copy of the GNU Library General Public License
+along with this library; see the file COPYING.LIB.  If not, write to
+the Free Software Foundation, Inc., 51 Franklin Street, Fifth Floor,
+Boston, MA 02110-1301, USA.
+*/
+
+#ifndef TESTENVIRONMENT_H
+#define TESTENVIRONMENT_H
+#include <QObject>
+
+class TestEnvironment : public QObject
+{
+    Q_OBJECT
+    
+private Q_SLOTS:
+    void testBasic_data();
+    void testBasic();
+};
+
+#endif // TESTENVIRONMENT_H
diff --git a/util/tests/test_environment.cpp b/util/tests/test_environment.cpp
new file mode 100644
--- /dev/null
+++ b/util/tests/test_environment.cpp
@@ -0,0 +1,56 @@
+/* This file is part of KDevelop
+Copyright 2015 Artur Puzio <cytadela88@gmail.com>
+
+This library is free software; you can redistribute it and/or
+modify it under the terms of the GNU Library General Public
+License as published by the Free Software Foundation; either
+version 2 of the License, or (at your option) any later version.
+
+This library is distributed in the hope that it will be useful,
+but WITHOUT ANY WARRANTY; without even the implied warranty of
+MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the GNU
+Library General Public License for more details.
+
+You should have received a copy of the GNU Library General Public License
+along with this library; see the file COPYING.LIB.  If not, write to
+the Free Software Foundation, Inc., 51 Franklin Street, Fifth Floor,
+Boston, MA 02110-1301, USA.
+*/
+
+#include "test_environment.h"
+
+#include "util/environmentgrouplist.h"
+
+#include <QtTest>
+
+QTEST_MAIN(TestEnvironment);
+
+using ProcEnv = QMap<QString,QString>;
+
+void TestEnvironment::testBasic_data()
+{
+    QTest::addColumn<ProcEnv>("test");
+    QTest::addColumn<ProcEnv>("goodAns");
+
+    QTest::newRow("simple variables")          << ProcEnv({{"VAR1","data"},{"Var2","some other data"}}) << ProcEnv({{"VAR1","data"},{"Var2","some other data"}});
+    QTest::newRow("no variables")              << ProcEnv({}) << ProcEnv({});
+    QTest::newRow("PATH append and prepend")   << ProcEnv({{"PATH","/home/usr/bin:$PATH:/home/user/folder"}}) << ProcEnv({{"PATH", "/home/usr/bin:/bin:/usr/bin:/home/user/folder"}});
+    QTest::newRow("\\$VAR")                    << ProcEnv({{"MY_VAR","\\$PATH something \\$HOME"}}) << ProcEnv({{"MY_VAR","$PATH something $HOME"}});
+    QTest::newRow("spaces, \\$VAR after $VAR") << ProcEnv({{"MY_VAR","$PATH:$HOME something \\$HOME"}}) << ProcEnv({{"MY_VAR","/bin:/usr/bin:/home/tom something $HOME"}});
+    QTest::newRow("VAR2=$VAR1")                << ProcEnv({{"VAR1","/some/path"},{"VAR2","$VAR1"}}) << ProcEnv({{"VAR1","/some/path"},{"VAR2",""}});
+}
+
+void TestEnvironment::testBasic()
+{
+    QProcessEnvironment environment;
+    environment.insert("PATH","/bin:/usr/bin");
+    environment.insert("HOME","/home/tom");
+    QFETCH(ProcEnv, test);
+    QFETCH(ProcEnv, goodAns);
+    
+    KDevelop::expandVariables( test, environment );
+    for (auto it = goodAns.cbegin(); it!= goodAns.cend(); ++it)
+    {
+        QCOMPARE(test.value(it.key()), it.value());
+    }
+}