diff --git a/README.md b/README.md
index 569a1827..1ba31b57 100644
--- a/README.md
+++ b/README.md
@@ -76,6 +76,10 @@ By default, it will have **auto-reload** enabled, so it will automatically reloa
 
 By default it will listen on the IP address `127.0.0.1`, which is the IP for your machine to communicate with itself alone (`localhost`).
 
+Before importing your app, `fastapi dev` sets the `FASTAPI_ENV` environment variable to `development`. If `FASTAPI_ENV` is already set, its existing value is preserved. This lets app startup code choose development-friendly behavior while allowing you to provide an app-specific environment such as `staging`.
+
+The conventional `FASTAPI_ENV` values are `development` and `production`. `fastapi run` currently leaves `FASTAPI_ENV` unchanged, so set it explicitly if your app needs to detect production mode.
+
 ## `fastapi run`
 
 When you run `fastapi run`, it will run on production mode by default.
diff --git a/src/fastapi_cli/cli.py b/src/fastapi_cli/cli.py
index 1f1b6064..5c71c829 100644
--- a/src/fastapi_cli/cli.py
+++ b/src/fastapi_cli/cli.py
@@ -399,6 +399,8 @@ def dev(
 
     Otherwise, it uses the first [bold]FastAPI[/bold] app found in the imported module or package.
     """
+    os.environ.setdefault("FASTAPI_ENV", "development")
+
     _run(
         path=path,
         host=host,
diff --git a/tests/assets/environment_app.py b/tests/assets/environment_app.py
new file mode 100644
index 00000000..02080ec2
--- /dev/null
+++ b/tests/assets/environment_app.py
@@ -0,0 +1,12 @@
+import os
+
+from fastapi import FastAPI
+
+app = FastAPI()
+
+fastapi_env_at_import = os.environ.get("FASTAPI_ENV")
+
+
+@app.get("/fastapi-env")
+def get_fastapi_env() -> dict[str, str | None]:
+    return {"fastapi_env": fastapi_env_at_import}
diff --git a/tests/test_cli.py b/tests/test_cli.py
index 8f8ee5b4..818155de 100644
--- a/tests/test_cli.py
+++ b/tests/test_cli.py
@@ -6,7 +6,10 @@
 
 import pytest
 import uvicorn
+from fastapi.testclient import TestClient
+from httpx import Response
 from typer.testing import CliRunner
+from uvicorn.importer import import_from_string
 
 from fastapi_cli.cli import app
 from fastapi_cli.utils.cli import get_uvicorn_log_config
@@ -18,7 +21,8 @@
 
 
 @pytest.fixture(autouse=True)
-def force_rich_logs(monkeypatch: pytest.MonkeyPatch) -> None:
+def isolate_cli_environment(monkeypatch: pytest.MonkeyPatch) -> None:
+    monkeypatch.delenv("FASTAPI_ENV", raising=False)
     monkeypatch.setattr("fastapi_cli.cli.should_use_rich_logs", lambda: True)
 
 
@@ -53,6 +57,49 @@ def test_dev() -> None:
         assert "Configuration sources:" not in result.output
 
 
+def _get_fastapi_env_response(*, command: str, fastapi_env: str | None) -> Response:
+    module_name = "environment_app"
+    sys.modules.pop(module_name, None)
+
+    try:
+        with changing_dir(assets_path):
+            with patch.object(uvicorn, "run") as mock_run:
+                result = runner.invoke(
+                    app,
+                    [command, f"{module_name}.py"],
+                    env={"FASTAPI_ENV": fastapi_env},
+                )
+
+        assert result.exit_code == 0, result.output
+        assert mock_run.call_args
+        imported_app = import_from_string(mock_run.call_args.kwargs["app"])
+        with TestClient(imported_app) as test_client:
+            return test_client.get("/fastapi-env")
+    finally:
+        sys.modules.pop(module_name, None)
+
+
+def test_dev_sets_fastapi_env_before_app_import() -> None:
+    response = _get_fastapi_env_response(command="dev", fastapi_env=None)
+
+    assert response.status_code == 200
+    assert response.json() == {"fastapi_env": "development"}
+
+
+def test_dev_does_not_override_existing_fastapi_env() -> None:
+    response = _get_fastapi_env_response(command="dev", fastapi_env="chicken")
+
+    assert response.status_code == 200
+    assert response.json() == {"fastapi_env": "chicken"}
+
+
+def test_run_does_not_set_fastapi_env() -> None:
+    response = _get_fastapi_env_response(command="run", fastapi_env=None)
+
+    assert response.status_code == 200
+    assert response.json() == {"fastapi_env": None}
+
+
 def test_run_uses_uvicorn_default_log_config_without_rich_logs(
     monkeypatch: pytest.MonkeyPatch,
 ) -> None: