diff --git a/packages/vite/src/node/env.ts b/packages/vite/src/node/env.ts
index 10e570713188da..431409c2d8b942 100644
--- a/packages/vite/src/node/env.ts
+++ b/packages/vite/src/node/env.ts
@@ -35,15 +35,29 @@ export function loadEnv(
     }),
   )
 
-  // let environment variables use each other
-  const expandParsed = expand({
+  const expandOptions = {
     parsed: {
       ...(process.env as any),
       ...parsed,
     },
     // prevent process.env mutation
     ignoreProcessEnv: true,
-  }).parsed!
+  }
+
+  let expandParsed: NonNullable<ReturnType<typeof expand>['parsed']>
+  try {
+    // let environment variables use each other
+    expandParsed = expand(expandOptions).parsed!
+  } catch (e) {
+    // custom error handling until https://github.com/motdotla/dotenv-expand/issues/65 is fixed upstream
+    // check for message "TypeError: Cannot read properties of undefined (reading 'split')"
+    if (e.message.includes('split')) {
+      throw new Error(
+        'dotenv-expand failed to expand env vars. Maybe you need to escape `$`?',
+      )
+    }
+    throw e
+  }
 
   Object.keys(parsed).forEach((key) => {
     parsed[key] = expandParsed[key]