diff --git a/packages/core/parcel-bundler/src/Bundler.js b/packages/core/parcel-bundler/src/Bundler.js
index d577f4654fe..072c97d1fbf 100644
--- a/packages/core/parcel-bundler/src/Bundler.js
+++ b/packages/core/parcel-bundler/src/Bundler.js
@@ -101,6 +101,16 @@ class Bundler extends EventEmitter {
         : typeof options.hmr === 'boolean'
           ? options.hmr
           : watch;
+    const setAutoInstall = () => {
+      const {PARCEL_AUTOINSTALL} = process.env;
+      if (typeof options.autoInstall === 'boolean') {
+        return options.autoinstall;
+      }
+      if (PARCEL_AUTOINSTALL === 'false') {
+        return false;
+      }
+      return !isProduction;
+    };
     const scopeHoist =
       options.scopeHoist !== undefined ? options.scopeHoist : false;
     return {
@@ -135,10 +145,7 @@ class Bundler extends EventEmitter {
         (options.target === 'electron' ? 'localhost' : ''),
       detailedReport: options.detailedReport || false,
       global: options.global,
-      autoinstall:
-        typeof options.autoinstall === 'boolean'
-          ? options.autoinstall
-          : !isProduction,
+      autoinstall: setAutoInstall(),
       scopeHoist: scopeHoist,
       contentHash:
         typeof options.contentHash === 'boolean'
diff --git a/packages/core/parcel-bundler/test/integration/dont-autoinstall-if-env-var-is-false/.env b/packages/core/parcel-bundler/test/integration/dont-autoinstall-if-env-var-is-false/.env
new file mode 100644
index 00000000000..ae52a618025
--- /dev/null
+++ b/packages/core/parcel-bundler/test/integration/dont-autoinstall-if-env-var-is-false/.env
@@ -0,0 +1 @@
+PARCEL_AUTOINSTALL=false
diff --git a/packages/core/parcel-bundler/test/integration/dont-autoinstall-if-env-var-is-false/index.js b/packages/core/parcel-bundler/test/integration/dont-autoinstall-if-env-var-is-false/index.js
new file mode 100644
index 00000000000..0eb870aa590
--- /dev/null
+++ b/packages/core/parcel-bundler/test/integration/dont-autoinstall-if-env-var-is-false/index.js
@@ -0,0 +1,4 @@
+const _ = require('lodash');
+module.exports = function() {
+  return 'hello world';
+}
diff --git a/packages/core/parcel-bundler/test/integration/dont-autoinstall-if-env-var-is-false/package.json b/packages/core/parcel-bundler/test/integration/dont-autoinstall-if-env-var-is-false/package.json
new file mode 100644
index 00000000000..70f7cadc900
--- /dev/null
+++ b/packages/core/parcel-bundler/test/integration/dont-autoinstall-if-env-var-is-false/package.json
@@ -0,0 +1,4 @@
+{
+  "name": "dont-autoinstall-if-env-var-is-false",
+  "dependencies": {}
+}
diff --git a/packages/core/parcel-bundler/test/javascript.js b/packages/core/parcel-bundler/test/javascript.js
index a19a6a31f13..48c5af75178 100644
--- a/packages/core/parcel-bundler/test/javascript.js
+++ b/packages/core/parcel-bundler/test/javascript.js
@@ -49,6 +49,26 @@ describe('javascript', function() {
     assert.equal(output.default(), 3);
   });
 
+  it('should not autoinstall if PARCEL_AUTOINSTALL is set to false', async function() {
+    const inputDir = path.join(
+      __dirname,
+      '/integration/dont-autoinstall-if-env-var-is-false/'
+    );
+    try {
+      let a = await bundle(path.resolve(inputDir, './index.js'));
+      await run(a);
+    } catch (e) {
+      let pkg = await fs.readFile(
+        path.resolve(inputDir, 'package.json'),
+        'utf8'
+      );
+      const pkgName = 'lodash';
+      pkg = JSON.parse(pkg);
+      assert(pkgName in pkg.dependencies === false);
+      assert(e.message.includes("Cannot resolve dependency 'lodash'"));
+    }
+  });
+
   it('should auto install babel-core v6', async function() {
     let originalPkg = await fs.readFile(
       __dirname + '/integration/babel-6-autoinstall/package.json'