diff --git a/.changeset/better-eagles-tickle.md b/.changeset/better-eagles-tickle.md
new file mode 100644
index 0000000000..b199ae21d7
--- /dev/null
+++ b/.changeset/better-eagles-tickle.md
@@ -0,0 +1,5 @@
+---
+'@backstage/config-loader': patch
+---
+
+Allow using `BACKSTAGE_ENVIRONMENT` for loading environment specific config files
diff --git a/docs/conf/index.md b/docs/conf/index.md
index 659ffccfe3..7c5be174e5 100644
--- a/docs/conf/index.md
+++ b/docs/conf/index.md
@@ -16,10 +16,23 @@ allowing for customization.
 ## Supplying Configuration
 
 Configuration is stored in YAML files where the defaults are `app-config.yaml`
-and `app-config.local.yaml` for local overrides. Other sets of files can by
-loaded by passing `--config <path>` flags. The configuration files themselves
-contain plain YAML, but with support for loading in data and secrets from
-various sources using for example `$env` and `$file` keys.
+and `app-config.local.yaml` for local overrides. Additionally, it is possible
+to define environment based configuration files with `BACKSTAGE_ENVIRONMENT`
+environment variable, which will load `app-config.<BACKSTAGE_ENVIRONMENT>.yaml`.
+
+Loading order of these files is as follows:
+
+1. `app-config.yaml`
+2. `app-config.<BACKSTAGE_ENVIRONMENT>.yaml`
+3. `app-config.local.yaml`
+
+Other sets of files can by loaded by passing `--config <path>` flags.
+Read more about the configuration loading order in the
+[Configuration Files](./writing.md#configuration-files) section.
+
+The configuration files themselves contain plain YAML, but with support for
+loading in data and secrets from various sources using for example
+`$env` and `$file` keys.
 
 It is also possible to supply configuration through environment variables, for
 example `APP_CONFIG_app_baseUrl=https://staging.example.com`. However these
diff --git a/packages/config-loader/src/sources/ConfigSources.test.ts b/packages/config-loader/src/sources/ConfigSources.test.ts
index e19ac1d51f..9b2932e439 100644
--- a/packages/config-loader/src/sources/ConfigSources.test.ts
+++ b/packages/config-loader/src/sources/ConfigSources.test.ts
@@ -89,6 +89,18 @@ describe('ConfigSources', () => {
       { name: 'FileConfigSource', path: `${root}app-config.yaml` },
       { name: 'FileConfigSource', path: `${root}app-config.local.yaml` },
     ]);
+
+    process.env = Object.assign(process.env, { BACKSTAGE_ENVIRONMENT: 'test' });
+    expect(
+      mergeSources(
+        ConfigSources.defaultForTargets({ rootDir: '/', targets: [] }),
+      ),
+    ).toEqual([
+      { name: 'FileConfigSource', path: `${root}app-config.yaml` },
+      { name: 'FileConfigSource', path: `${root}app-config.test.yaml` },
+      { name: 'FileConfigSource', path: `${root}app-config.local.yaml` },
+    ]);
+
     fsSpy.mockRestore();
 
     expect(
diff --git a/packages/config-loader/src/sources/ConfigSources.ts b/packages/config-loader/src/sources/ConfigSources.ts
index 37c1c6b087..0d958bb81d 100644
--- a/packages/config-loader/src/sources/ConfigSources.ts
+++ b/packages/config-loader/src/sources/ConfigSources.ts
@@ -182,6 +182,10 @@ export class ConfigSources {
     if (argSources.length === 0) {
       const defaultPath = resolvePath(rootDir, 'app-config.yaml');
       const localPath = resolvePath(rootDir, 'app-config.local.yaml');
+      const envPath = resolvePath(
+        rootDir,
+        `app-config.${process.env.BACKSTAGE_ENVIRONMENT}.yaml`,
+      );
       const alwaysIncludeDefaultConfigSource =
         !options.allowMissingDefaultConfig;
 
@@ -195,6 +199,16 @@ export class ConfigSources {
         );
       }
 
+      if (process.env.BACKSTAGE_ENVIRONMENT && fs.pathExistsSync(envPath)) {
+        argSources.push(
+          FileConfigSource.create({
+            watch: options.watch,
+            path: envPath,
+            substitutionFunc: options.substitutionFunc,
+          }),
+        );
+      }
+
       if (fs.pathExistsSync(localPath)) {
         argSources.push(
           FileConfigSource.create({