diff --git a/.cspell.json b/.cspell.json
index 156c2be7a33..74741b7a930 100644
--- a/.cspell.json
+++ b/.cspell.json
@@ -2,6 +2,7 @@
   "version": "0.2",
   "language": "en,en-gb",
   "words": [
+    "systemvars",
     "Atsumu",
     "autoprefixer",
     "barbaz",
diff --git a/.husky/commit-msg b/.husky/commit-msg
old mode 100755
new mode 100644
diff --git a/.husky/pre-commit b/.husky/pre-commit
old mode 100755
new mode 100644
diff --git a/SERVE-OPTIONS-v5.md b/SERVE-OPTIONS-v5.md
index 0dd6c384980..40eeab03c83 100644
--- a/SERVE-OPTIONS-v5.md
+++ b/SERVE-OPTIONS-v5.md
@@ -102,6 +102,7 @@ Options:
   --watch-files-reset                                 Clear all items provided in 'watchFiles' configuration. Allows to configure list of globs/directories/files to watch for file changes.
   --no-web-socket-server                              Disallows to set web socket server and options.
   --web-socket-server-type <value>                    Allows to set web socket server and options (by default 'ws').
+  --dot-env                                           Allows env support to webpack.
 
 Global options:
   --color                                             Enable colors on console.
diff --git a/package.json b/package.json
index 0077f648e6e..052210a115c 100644
--- a/package.json
+++ b/package.json
@@ -76,7 +76,7 @@
     "get-port": "^5.1.1",
     "husky": "^8.0.1",
     "internal-ip": "^6.2.0",
-    "jest": "^29.4.1",
+    "jest": "^29.7.0",
     "jest-watch-typeahead": "^2.2.2",
     "lerna": "^6.0.1",
     "lint-staged": "^13.0.3",
diff --git a/packages/webpack-cli/package.json b/packages/webpack-cli/package.json
index 027ff3ad6df..660714a4f83 100644
--- a/packages/webpack-cli/package.json
+++ b/packages/webpack-cli/package.json
@@ -41,6 +41,7 @@
     "colorette": "^2.0.14",
     "commander": "^10.0.1",
     "cross-spawn": "^7.0.3",
+    "dotenv": "^16.4.5",
     "envinfo": "^7.10.0",
     "fastest-levenshtein": "^1.0.12",
     "import-local": "^3.0.2",
diff --git a/packages/webpack-cli/src/plugins/dotenv-webpack-plugin.ts b/packages/webpack-cli/src/plugins/dotenv-webpack-plugin.ts
new file mode 100644
index 00000000000..9b1c559ff9c
--- /dev/null
+++ b/packages/webpack-cli/src/plugins/dotenv-webpack-plugin.ts
@@ -0,0 +1,220 @@
+import dotenv from "dotenv";
+import { Compiler, DefinePlugin, cache } from "webpack";
+
+interface EnvVariables {
+  [key: string]: string;
+}
+interface DotenvConfig {
+  paths?: string[];
+  prefixes?: string[];
+  systemvars?: boolean;
+  allowEmptyValues?: boolean;
+  expand?: boolean;
+  ignoreStub?: boolean;
+  safe?: boolean;
+}
+
+const interpolate = (env: string, vars: EnvVariables): string => {
+  const matches = env.match(/\$([a-zA-Z0-9_]+)|\${([a-zA-Z0-9_]+)}/g) || [];
+  matches.forEach((match) => {
+    env = env.replace(match, interpolate(vars[match.replace(/\$|{|}/g, "")] || "", vars));
+  });
+  return env;
+};
+
+const isMainThreadElectron = (target: string | undefined): boolean =>
+  !!target && target.startsWith("electron") && target.endsWith("main");
+
+export class Dotenv {
+  #options: DotenvConfig;
+  #inputFileSystem!: any;
+  #compiler!: Compiler;
+  #logger: any;
+  #cache!: any;
+  constructor(config: DotenvConfig) {
+    this.#options = {
+      prefixes: ["process.env.", "import.meta.env."],
+      allowEmptyValues: true,
+      expand: true,
+      safe: true,
+      paths: process.env.NODE_ENV
+        ? [
+            ".env",
+            ...(process.env.NODE_ENV === "test" ? [] : [".env.local"]),
+            `.env.[mode]`,
+            `.env.[mode].local`,
+          ]
+        : [],
+      ...config,
+    };
+  }
+
+  public apply(compiler: Compiler): void {
+    this.#inputFileSystem = compiler.inputFileSystem;
+    this.#logger = compiler.getInfrastructureLogger("dotenv-webpack-plugin");
+    this.#compiler = compiler;
+    compiler.hooks.initialize.tap("dotenv-webpack-plugin", () => {
+      this.#execute();
+      // Not sure if this part is is a correct approach
+      compiler.hooks.compilation.tap("dotenv-webpack-plugin", async (compilation) => {
+        this.#cache = await compilation.getCache("dotenv-webpack-plugin-cache");
+        if (this.#cache) {
+          new DefinePlugin(this.#cache).apply(compiler);
+        } else {
+          this.#execute();
+        }
+      });
+    });
+  }
+
+  #execute() {
+    const variables = this.#gatherVariables();
+    const target: string =
+      typeof this.#compiler.options.target == "string" ? this.#compiler.options.target : "";
+    const data = this.#formatData({
+      variables,
+      target: target,
+    });
+    new DefinePlugin(data).apply(this.#compiler);
+  }
+
+  #gatherVariables(compilation?: any): EnvVariables {
+    const { allowEmptyValues, safe } = this.#options;
+    const vars: EnvVariables = this.#initializeVars();
+
+    const { env, blueprint } = this.#getEnvs(compilation);
+
+    Object.keys(blueprint).forEach((key) => {
+      const value = Object.prototype.hasOwnProperty.call(vars, key) ? vars[key] : env[key];
+
+      if (
+        (typeof value === "undefined" || value === null || (!allowEmptyValues && value === "")) &&
+        safe
+      ) {
+        compilation?.errors.push(new Error(`Missing environment variable: ${key}`));
+      } else {
+        vars[key] = value;
+      }
+      if (safe) {
+        Object.keys(env).forEach((key) => {
+          if (!Object.prototype.hasOwnProperty.call(vars, key)) {
+            vars[key] = env[key];
+          }
+        });
+      }
+    });
+
+    return vars;
+  }
+
+  #initializeVars(): EnvVariables {
+    return this.#options.systemvars
+      ? Object.fromEntries(Object.entries(process.env).map(([key, value]) => [key, value ?? ""]))
+      : {};
+  }
+
+  #getEnvs(compilation?: any): { env: EnvVariables; blueprint: EnvVariables } {
+    const { paths, safe } = this.#options;
+
+    const env: EnvVariables = {};
+    let blueprint: EnvVariables = {};
+
+    for (const path of paths || []) {
+      const fileContent = this.#loadFile(
+        path.replace("[mode]", `${process.env.NODE_ENV || this.#compiler.options.mode}`),
+        compilation,
+      );
+      Object.assign(env, dotenv.parse(fileContent));
+    }
+    blueprint = env;
+    if (safe) {
+      for (const path of paths || []) {
+        const exampleContent = this.#loadFile(
+          `${path.replace(
+            "[mode]",
+            `${process.env.NODE_ENV || this.#compiler.options.mode}`,
+          )}.example`,
+        );
+        blueprint = { ...blueprint, ...dotenv.parse(exampleContent) };
+      }
+    }
+    return { env, blueprint };
+  }
+
+  #formatData({
+    variables = {},
+    target,
+  }: {
+    variables: EnvVariables;
+    target: string;
+  }): Record<string, string> {
+    const { expand, prefixes } = this.#options;
+
+    const preprocessedVariables: EnvVariables = Object.keys(variables).reduce(
+      (obj: EnvVariables, key: string) => {
+        let value = variables[key];
+        if (expand) {
+          if (value.startsWith("\\$")) {
+            value = value.substring(1);
+          } else if (value.includes("\\$")) {
+            value = value.replace(/\\\$/g, "$");
+          } else {
+            value = interpolate(value, variables);
+          }
+        }
+        obj[key] = JSON.stringify(value);
+        return obj;
+      },
+      {},
+    );
+
+    const formatted: Record<string, string> = {};
+    if (prefixes) {
+      prefixes.forEach((prefix) => {
+        Object.entries(preprocessedVariables).forEach(([key, value]) => {
+          formatted[`${prefix}${key}`] = value;
+        });
+      });
+    }
+
+    const shouldStubEnv =
+      prefixes?.includes("process.env.") && this.#shouldStub({ target, prefix: "process.env." });
+    if (shouldStubEnv) {
+      formatted["process.env"] = '"MISSING_ENV_VAR"';
+    }
+
+    return formatted;
+  }
+
+  #shouldStub({
+    target: targetInput,
+    prefix,
+  }: {
+    target: string | string[] | undefined;
+    prefix: string;
+  }): boolean {
+    const targets: string[] = Array.isArray(targetInput) ? targetInput : [targetInput || ""];
+
+    return targets.every(
+      (target) =>
+        prefix === "process.env." &&
+        this.#options.ignoreStub !== true &&
+        (this.#options.ignoreStub === false ||
+          (!target.includes("node") && !isMainThreadElectron(target))),
+    );
+  }
+
+  #loadFile(filePath: string, compilation?: any): Buffer | string {
+    try {
+      const fileContent = this.#inputFileSystem.readFileSync(filePath);
+      compilation?.buildDependencies.add(filePath);
+      return fileContent;
+    } catch (err: any) {
+      compilation?.missingDependencies.add(filePath);
+      this.#logger.log(`Unable to upload ${filePath} file due:\n ${err.toString()}`);
+      return "{}";
+    }
+  }
+}
+
+module.exports = Dotenv;
diff --git a/packages/webpack-cli/src/types.ts b/packages/webpack-cli/src/types.ts
index edbc901b7f3..931a1a39f9e 100644
--- a/packages/webpack-cli/src/types.ts
+++ b/packages/webpack-cli/src/types.ts
@@ -29,6 +29,7 @@ import { type stringifyStream } from "@discoveryjs/json-ext";
  */
 
 interface IWebpackCLI {
+  dotEnv: boolean;
   colors: WebpackCLIColors;
   logger: WebpackCLILogger;
   isColorSupportChanged: boolean | undefined;
diff --git a/packages/webpack-cli/src/webpack-cli.ts b/packages/webpack-cli/src/webpack-cli.ts
index 7106410c6a7..51bfadc3b3b 100644
--- a/packages/webpack-cli/src/webpack-cli.ts
+++ b/packages/webpack-cli/src/webpack-cli.ts
@@ -87,13 +87,14 @@ class WebpackCLI implements IWebpackCLI {
   colors: WebpackCLIColors;
   logger: WebpackCLILogger;
   isColorSupportChanged: boolean | undefined;
+  dotEnv: boolean;
   builtInOptionsCache: WebpackCLIBuiltInOption[] | undefined;
   webpack!: typeof webpack;
   program: WebpackCLICommand;
   constructor() {
     this.colors = this.createColors();
     this.logger = this.getLogger();
-
+    this.dotEnv = false;
     // Initialize program
     this.program = program;
     this.program.name("webpack");
@@ -1381,6 +1382,17 @@ class WebpackCLI implements IWebpackCLI {
       "Output the version number of 'webpack', 'webpack-cli' and 'webpack-dev-server' and commands.",
     );
 
+    // webpack-cli add dot-env plugin
+
+    this.program.option(
+      "--dot-env",
+      "Integrates dotenv configuration into your webpack configuration.",
+    );
+
+    this.program.on("option:dot-env", function () {
+      cli.dotEnv = true;
+    });
+
     // webpack-cli has it's own logic for showing suggestions
     this.program.showSuggestionAfterError(false);
 
@@ -2359,6 +2371,12 @@ class WebpackCLI implements IWebpackCLI {
           isMultiCompiler: Array.isArray(config.options),
         }),
       );
+
+      // Add dotenv plugin to the config
+      if (this.dotEnv) {
+        const Dotenv = require("./plugins/dotenv-webpack-plugin");
+        item.plugins.unshift(new Dotenv());
+      }
     };
 
     if (Array.isArray(config.options)) {
diff --git a/test/api/capitalizeFirstLetter.test.js b/test/api/capitalizeFirstLetter.test.js
old mode 100755
new mode 100644
diff --git a/test/api/generators/scaffold-utils.test.js b/test/api/generators/scaffold-utils.test.js
old mode 100755
new mode 100644
diff --git a/test/dotenv/dotenv-empty.test.js b/test/dotenv/dotenv-empty.test.js
new file mode 100644
index 00000000000..3328623a6f3
--- /dev/null
+++ b/test/dotenv/dotenv-empty.test.js
@@ -0,0 +1,50 @@
+"use strict";
+
+const { run } = require("../utils/test-utils");
+const path = require("path");
+const fs = require("fs");
+
+describe("dotenv", () => {
+  const testDirectory = path.join(__dirname, "test-dot-env");
+  const outputFile = path.join(testDirectory, "output.js");
+
+  beforeAll(async () => {
+    if (!fs.existsSync(testDirectory)) {
+      fs.mkdirSync(testDirectory);
+    }
+    await fs.promises.writeFile(
+      path.join(testDirectory, "webpack.config.js"),
+      `
+          const path = require('path');
+          module.exports = {
+            entry: './index.js',
+            output: {
+              path: path.resolve(__dirname),
+              filename: 'output.js'
+            },
+          };
+        `,
+    );
+    await fs.promises.writeFile(
+      path.join(testDirectory, "index.js"),
+      "module.exports = import.meta.env.TEST_VARIABLE;",
+    );
+    await fs.promises.writeFile(path.join(testDirectory, ".env"), "TEST_VARIABLE=");
+  });
+
+  afterAll(() => {
+    fs.unlinkSync(path.join(testDirectory, "webpack.config.js"));
+    fs.unlinkSync(path.join(testDirectory, "index.js"));
+    fs.unlinkSync(path.join(testDirectory, ".env"));
+    if (fs.existsSync(outputFile)) {
+      fs.unlinkSync(outputFile);
+    }
+    fs.rmdirSync(testDirectory);
+  });
+
+  it("should refer to the example file", async () => {
+    await run(testDirectory, ["--dot-env"]);
+    const output = fs.readFileSync(outputFile, "utf-8");
+    expect(output).toContain('exports=""');
+  });
+});
diff --git a/test/dotenv/dotenv-expand.test.js b/test/dotenv/dotenv-expand.test.js
new file mode 100644
index 00000000000..827b0ec4c63
--- /dev/null
+++ b/test/dotenv/dotenv-expand.test.js
@@ -0,0 +1,50 @@
+"use strict";
+
+const { run } = require("../utils/test-utils");
+const path = require("path");
+const fs = require("fs");
+
+describe("dotenv", () => {
+  const testDirectory = path.join(__dirname, "test-dot-env");
+  const outputFile = path.join(testDirectory, "output.js");
+
+  beforeAll(async () => {
+    if (!fs.existsSync(testDirectory)) {
+      fs.mkdirSync(testDirectory);
+    }
+    await fs.promises.writeFile(
+      path.join(testDirectory, "webpack.config.js"),
+      `
+          const path = require('path');
+          module.exports = {
+            entry: './index.js',
+            output: {
+              path: path.resolve(__dirname),
+              filename: 'output.js'
+            },
+          };
+        `,
+    );
+    await fs.promises.writeFile(
+      path.join(testDirectory, "index.js"),
+      "module.exports = import.meta.env.TEST_VARIABLE;",
+    );
+    await fs.promises.writeFile(path.join(testDirectory, ".env"), "TEST_VARIABLE=\\$12345");
+  });
+
+  afterAll(() => {
+    fs.unlinkSync(path.join(testDirectory, "webpack.config.js"));
+    fs.unlinkSync(path.join(testDirectory, "index.js"));
+    fs.unlinkSync(path.join(testDirectory, ".env"));
+    if (fs.existsSync(outputFile)) {
+      fs.unlinkSync(outputFile);
+    }
+    fs.rmdirSync(testDirectory);
+  });
+
+  it("should refer to the example file", async () => {
+    await run(testDirectory, ["--dot-env"]);
+    const output = fs.readFileSync(outputFile, "utf-8");
+    expect(output).toContain("$12345");
+  });
+});
diff --git a/test/dotenv/dotenv-safe.test.js b/test/dotenv/dotenv-safe.test.js
new file mode 100644
index 00000000000..b603158c18a
--- /dev/null
+++ b/test/dotenv/dotenv-safe.test.js
@@ -0,0 +1,55 @@
+"use strict";
+
+const { run } = require("../utils/test-utils");
+const path = require("path");
+const fs = require("fs");
+
+describe("dotenv", () => {
+  const testDirectory = path.join(__dirname, "test-dot-env");
+  const outputFile = path.join(testDirectory, "output.js");
+
+  beforeAll(async () => {
+    if (!fs.existsSync(testDirectory)) {
+      fs.mkdirSync(testDirectory);
+    }
+    await fs.promises.writeFile(
+      path.join(testDirectory, "webpack.config.js"),
+      `
+          const path = require('path');
+          module.exports = {
+            entry: './index.js',
+            output: {
+              path: path.resolve(__dirname),
+              filename: 'output.js'
+            },
+          };
+        `,
+    );
+    await fs.promises.writeFile(
+      path.join(testDirectory, "index.js"),
+      "module.exports = import.meta.env.TEST_VARIABLE;",
+    );
+    await fs.promises.writeFile(path.join(testDirectory, ".env"), "TEST_VARIABLE=12345");
+    await fs.promises.writeFile(
+      path.join(testDirectory, ".env.example"),
+      "TEST_VARIABLE=\nUN_DECLARED_VARIABLE=",
+    );
+  });
+
+  afterAll(() => {
+    fs.unlinkSync(path.join(testDirectory, "webpack.config.js"));
+    fs.unlinkSync(path.join(testDirectory, "index.js"));
+    fs.unlinkSync(path.join(testDirectory, ".env"));
+    fs.unlinkSync(path.join(testDirectory, ".env.example"));
+    if (fs.existsSync(outputFile)) {
+      fs.unlinkSync(outputFile);
+    }
+    fs.rmdirSync(testDirectory);
+  });
+
+  it("should refer to the example file", async () => {
+    await expect(run(testDirectory, ["--dot-env"])).resolves.toThrow(
+      "Missing environment variable: UN_DECLARED_VARIABLE",
+    );
+  });
+});
diff --git a/test/dotenv/dotenv.test.js b/test/dotenv/dotenv.test.js
new file mode 100644
index 00000000000..11d83176b27
--- /dev/null
+++ b/test/dotenv/dotenv.test.js
@@ -0,0 +1,50 @@
+"use strict";
+
+const { run } = require("../utils/test-utils");
+const path = require("path");
+const fs = require("fs");
+
+describe("dotenv", () => {
+  const testDirectory = path.join(__dirname, "test-dot-env");
+  const outputFile = path.join(testDirectory, "output.js");
+
+  beforeAll(async () => {
+    if (!fs.existsSync(testDirectory)) {
+      fs.mkdirSync(testDirectory);
+    }
+    await fs.promises.writeFile(
+      path.join(testDirectory, "webpack.config.js"),
+      `
+          const path = require('path');
+          module.exports = {
+            entry: './index.js',
+            output: {
+              path: path.resolve(__dirname),
+              filename: 'output.js'
+            },
+          };
+        `,
+    );
+    await fs.promises.writeFile(
+      path.join(testDirectory, "index.js"),
+      "module.exports = import.meta.env.TEST_VARIABLE;",
+    );
+    await fs.promises.writeFile(path.join(testDirectory, ".env"), "TEST_VARIABLE=12345");
+  });
+
+  afterAll(() => {
+    fs.unlinkSync(path.join(testDirectory, "webpack.config.js"));
+    fs.unlinkSync(path.join(testDirectory, "index.js"));
+    fs.unlinkSync(path.join(testDirectory, ".env"));
+    if (fs.existsSync(outputFile)) {
+      fs.unlinkSync(outputFile);
+    }
+    fs.rmdirSync(testDirectory);
+  });
+
+  it("should find and replace values from .env when --dot-env arg passed", async () => {
+    await run(testDirectory, ["--dot-env"]);
+    const output = fs.readFileSync(outputFile, "utf-8");
+    expect(output).toContain("12345");
+  });
+});
diff --git a/test/watch/basic/src/entry.js b/test/watch/basic/src/entry.js
index 923312d065f..1d8734ee1c8 100644
--- a/test/watch/basic/src/entry.js
+++ b/test/watch/basic/src/entry.js
@@ -1 +1 @@
-console.log("watch flag test");
+console.log('watch flag test');
diff --git a/yarn.lock b/yarn.lock
index e91f60f9514..b70c1248951 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -11763,4 +11763,4 @@ yn@3.1.1:
 yocto-queue@^0.1.0:
   version "0.1.0"
   resolved "https://registry.yarnpkg.com/yocto-queue/-/yocto-queue-0.1.0.tgz#0294eb3dee05028d31ee1a5fa2c556a6aaf10a1b"
-  integrity sha512-rVksvsnNCdJ/ohGc6xgPwyN8eheCxsiLM8mxuE/t/mOVqJewPuO1miLpTHQiRgTKCLexL4MeAFVagts7HmNZ2Q==
+  integrity sha512-rVksvsnNCdJ/ohGc6xgPwyN8eheCxsiLM8mxuE/t/mOVqJewPuO1miLpTHQiRgTKCLexL4MeAFVagts7HmNZ2Q==
\ No newline at end of file