diff --git a/packages/config-loader/src/lib/transform/include.test.ts b/packages/config-loader/src/lib/transform/include.test.ts
index 81c6cfb63b..12f59feb84 100644
--- a/packages/config-loader/src/lib/transform/include.test.ts
+++ b/packages/config-loader/src/lib/transform/include.test.ts
@@ -29,23 +29,21 @@ const env = jest.fn(async (name: string) => {
   } as { [name: string]: string })[name];
 });
 
-const substitute = jest.fn(
-  async (
-    value: JsonValue,
-  ): Promise<{ applied: boolean; value?: JsonValue }> => {
-    if (typeof value !== 'string') {
-      return { applied: false };
-    }
-    if (value.includes(substituteMe)) {
-      return {
-        applied: true,
-        value: value.replace(substituteMe, mySubstitution),
-      };
-    }
-
+const substitute = async (
+  value: JsonValue,
+): Promise<{ applied: boolean; value?: JsonValue }> => {
+  if (typeof value !== 'string') {
     return { applied: false };
-  },
-);
+  }
+  if (value.includes(substituteMe)) {
+    return {
+      applied: true,
+      value: value.replace(substituteMe, mySubstitution),
+    };
+  }
+
+  return { applied: false };
+};
 
 const readFile = jest.fn(async (path: string) => {
   const content = ({
diff --git a/packages/config-loader/src/lib/transform/include.ts b/packages/config-loader/src/lib/transform/include.ts
index bffc2e0184..2b5ccf23b6 100644
--- a/packages/config-loader/src/lib/transform/include.ts
+++ b/packages/config-loader/src/lib/transform/include.ts
@@ -55,12 +55,18 @@ export function createIncludeTransform(
     }
 
     const rawIncludedValue = input[includeKey];
-    const substituteResults = await substitute(rawIncludedValue!, baseDir);
+    if (typeof rawIncludedValue !== 'string') {
+      throw new Error(`${includeKey} include value is not a string`);
+    }
+
+    const substituteResults = await substitute(rawIncludedValue, baseDir);
     const includeValue = substituteResults.applied
       ? substituteResults.value
       : rawIncludedValue;
-    if (typeof includeValue !== 'string') {
-      throw new Error(`${includeKey} include value is not a string`);
+
+    // The second string check is needed for Typescript to know this is a string.
+    if (includeValue === undefined || typeof includeValue !== 'string') {
+      throw new Error(`${includeKey} substitution value was undefined`);
     }
 
     switch (includeKey) {
diff --git a/packages/config-loader/src/lib/transform/substitution.test.ts b/packages/config-loader/src/lib/transform/substitution.test.ts
index ef557431dd..d07e88cfdd 100644
--- a/packages/config-loader/src/lib/transform/substitution.test.ts
+++ b/packages/config-loader/src/lib/transform/substitution.test.ts
@@ -56,6 +56,12 @@ describe('substituteTransform', () => {
       applied: true,
       value: undefined,
     });
+    await expect(
+      substituteTransform('empty substitute ${}', '/'),
+    ).resolves.toEqual({
+      applied: true,
+      value: undefined,
+    });
     await expect(
       substituteTransform('foo ${MISSING} ${SECRET}', '/'),
     ).resolves.toEqual({ applied: true, value: undefined });
@@ -65,5 +71,11 @@ describe('substituteTransform', () => {
     await expect(
       substituteTransform('foo ${SECRET} $$${ESCAPE_ME}', '/'),
     ).resolves.toEqual({ applied: true, value: 'foo my-secret $${ESCAPE_ME}' });
+    await expect(
+      substituteTransform('foo $${ESCAPE_ME} $$${ESCAPE_ME_TOO} $${}', '/'),
+    ).resolves.toEqual({
+      applied: true,
+      value: 'foo ${ESCAPE_ME} $${ESCAPE_ME_TOO} ${}',
+    });
   });
 });
diff --git a/packages/config-loader/src/lib/transform/substitution.ts b/packages/config-loader/src/lib/transform/substitution.ts
index 482f1221a9..56695fa431 100644
--- a/packages/config-loader/src/lib/transform/substitution.ts
+++ b/packages/config-loader/src/lib/transform/substitution.ts
@@ -28,15 +28,16 @@ export function createSubstitutionTransform(env: EnvFunc): TransformFunc {
       return { applied: false };
     }
 
-    const parts: (string | undefined)[] = input.split(/(?<!\$)\$\{([^{}]+)\}/);
-    for (let i = 0; i < parts.length; i++) {
-      if (i % 2 === 0) {
-        parts[i] = parts[i]!.replace(/\$\${(.*?)\}/, '${$1}');
-      }
-      if (i % 2 === 1) {
-        parts[i] = await env(parts[i]!.trim());
+    const parts: (string | undefined)[] = input.split(/(\$?\$\{[^{}]*\})/);
+    for (let i = 1; i < parts.length; i += 2) {
+      const part = parts[i]!;
+      if (part.startsWith('$$')) {
+        parts[i] = part.slice(1);
+      } else {
+        parts[i] = await env(part.slice(2, -1).trim());
       }
     }
+
     if (parts.some(part => part === undefined)) {
       return { applied: true, value: undefined };
     }