diff --git a/examples/env-substitution b/examples/env-substitution
new file mode 100644
index 0000000..cefe6f0
--- /dev/null
+++ b/examples/env-substitution
@@ -0,0 +1,22 @@
+BASE_URL=http://localhost
+PORT=8080
+
+# ${VAR} syntax works for all variable names
+API_URL=${BASE_URL}:${PORT}/api
+HEALTH_URL=${BASE_URL}:${PORT}/health
+
+# $VAR syntax works when the name contains only alphanumeric characters
+GREETING=hello
+MESSAGE=$GREETING world
+
+# Variables defined earlier in the file can be referenced
+DB_HOST=db.local
+DB_PORT=5432
+DB_NAME=myapp
+DATABASE_URL=postgres://${DB_HOST}:${DB_PORT}/${DB_NAME}
+
+# Single quotes prevent substitution
+LITERAL='${BASE_URL} is not expanded here'
+
+# Escaped dollar sign is treated literally
+ESCAPED=\$BASE_URL
diff --git a/examples/substitution/Cargo.toml b/examples/substitution/Cargo.toml
new file mode 100644
index 0000000..180fba1
--- /dev/null
+++ b/examples/substitution/Cargo.toml
@@ -0,0 +1,8 @@
+[package]
+name = "substitution-example"
+version = "0.1.0"
+edition = "2021"
+publish = false
+
+[dependencies]
+dotenvy = { path = "../../dotenvy" }
diff --git a/examples/substitution/src/main.rs b/examples/substitution/src/main.rs
new file mode 100644
index 0000000..92e4d27
--- /dev/null
+++ b/examples/substitution/src/main.rs
@@ -0,0 +1,40 @@
+//! Demonstrates variable substitution in `.env` files.
+//!
+//! dotenvy supports referencing previously defined variables using `$VAR` or
+//! `${VAR}` syntax. Use `${VAR}` when the variable name contains underscores.
+//! Single-quoted values and escaped dollar signs (`\$`) are treated literally.
+//!
+//! Run with: `cargo run`
+
+use dotenvy::{EnvLoader, EnvSequence};
+use std::error;
+
+fn main() -> Result<(), Box<dyn error::Error>> {
+    let env_map = EnvLoader::with_path("../env-substitution")
+        .sequence(EnvSequence::InputOnly)
+        .load()?;
+
+    println!("--- Variable Substitution Demo ---\n");
+
+    println!("Base values:");
+    println!("  BASE_URL = {}", env_map.var("BASE_URL")?);
+    println!("  PORT     = {}", env_map.var("PORT")?);
+
+    println!("\nSubstituted with ${{VAR}} syntax:");
+    println!("  API_URL    = {}", env_map.var("API_URL")?);
+    println!("  HEALTH_URL = {}", env_map.var("HEALTH_URL")?);
+
+    println!("\nSubstituted with $VAR syntax:");
+    println!("  MESSAGE = {}", env_map.var("MESSAGE")?);
+
+    println!("\nComposed DATABASE_URL:");
+    println!("  DATABASE_URL = {}", env_map.var("DATABASE_URL")?);
+
+    println!("\nSingle quotes prevent substitution:");
+    println!("  LITERAL = {}", env_map.var("LITERAL")?);
+
+    println!("\nEscaped dollar sign:");
+    println!("  ESCAPED = {}", env_map.var("ESCAPED")?);
+
+    Ok(())
+}