diff --git a/test/e2e/expansion.go b/test/e2e/expansion.go
new file mode 100644
index 00000000000..597c2c24b79
--- /dev/null
+++ b/test/e2e/expansion.go
@@ -0,0 +1,150 @@
+/*
+Copyright 2015 The Kubernetes Authors All rights reserved.
+
+Licensed under the Apache License, Version 2.0 (the "License");
+you may not use this file except in compliance with the License.
+You may obtain a copy of the License at
+
+    http://www.apache.org/licenses/LICENSE-2.0
+
+Unless required by applicable law or agreed to in writing, software
+distributed under the License is distributed on an "AS IS" BASIS,
+WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+See the License for the specific language governing permissions and
+limitations under the License.
+*/
+
+package e2e
+
+import (
+	"github.com/GoogleCloudPlatform/kubernetes/pkg/api"
+	"github.com/GoogleCloudPlatform/kubernetes/pkg/client"
+	"github.com/GoogleCloudPlatform/kubernetes/pkg/util"
+
+	. "github.com/onsi/ginkgo"
+	. "github.com/onsi/gomega"
+)
+
+var _ = Describe("Variable Expansion", func() {
+	var c *client.Client
+	var ns string
+
+	BeforeEach(func() {
+		var err error
+		c, err = loadClient()
+		Expect(err).NotTo(HaveOccurred())
+		ns_, err := createTestingNS("var-expansion", c)
+		ns = ns_.Name
+		Expect(err).NotTo(HaveOccurred())
+	})
+
+	AfterEach(func() {
+		// Clean up the namespace if a non-default one was used
+		if ns != api.NamespaceDefault {
+			By("Cleaning up the namespace")
+			err := c.Namespaces().Delete(ns)
+			expectNoError(err)
+		}
+	})
+
+	It("should allow composing env vars into new env vars", func() {
+		podName := "var-expansion-" + string(util.NewUUID())
+		pod := &api.Pod{
+			ObjectMeta: api.ObjectMeta{
+				Name:   podName,
+				Labels: map[string]string{"name": podName},
+			},
+			Spec: api.PodSpec{
+				Containers: []api.Container{
+					{
+						Name:    "dapi-container",
+						Image:   "gcr.io/google_containers/busybox",
+						Command: []string{"sh", "-c", "env"},
+						Env: []api.EnvVar{
+							{
+								Name:  "FOO",
+								Value: "foo-value",
+							},
+							{
+								Name:  "BAR",
+								Value: "bar-value",
+							},
+							{
+								Name:  "FOOBAR",
+								Value: "$(FOO);;$(BAR)",
+							},
+						},
+					},
+				},
+				RestartPolicy: api.RestartPolicyNever,
+			},
+		}
+
+		testContainerOutputInNamespace("env composition", c, pod, 0, []string{
+			"FOO=foo-value",
+			"BAR=bar-value",
+			"FOOBAR=foo-value;;bar-value",
+		}, ns)
+	})
+
+	It("should allow substituting values in a container's command", func() {
+		podName := "var-expansion-" + string(util.NewUUID())
+		pod := &api.Pod{
+			ObjectMeta: api.ObjectMeta{
+				Name:   podName,
+				Labels: map[string]string{"name": podName},
+			},
+			Spec: api.PodSpec{
+				Containers: []api.Container{
+					{
+						Name:    "dapi-container",
+						Image:   "gcr.io/google_containers/busybox",
+						Command: []string{"sh", "-c", "TEST_VAR=wrong echo \"$(TEST_VAR)\""},
+						Env: []api.EnvVar{
+							{
+								Name:  "TEST_VAR",
+								Value: "test-value",
+							},
+						},
+					},
+				},
+				RestartPolicy: api.RestartPolicyNever,
+			},
+		}
+
+		testContainerOutputInNamespace("substitution in container's command", c, pod, 0, []string{
+			"test-value",
+		}, ns)
+	})
+
+	It("should allow substituting values in a container's args", func() {
+		podName := "var-expansion-" + string(util.NewUUID())
+		pod := &api.Pod{
+			ObjectMeta: api.ObjectMeta{
+				Name:   podName,
+				Labels: map[string]string{"name": podName},
+			},
+			Spec: api.PodSpec{
+				Containers: []api.Container{
+					{
+						Name:    "dapi-container",
+						Image:   "gcr.io/google_containers/busybox",
+						Command: []string{"sh", "-c"},
+						Args:    []string{"TEST_VAR=wrong echo \"$(TEST_VAR)\""},
+						Env: []api.EnvVar{
+							{
+								Name:  "TEST_VAR",
+								Value: "test-value",
+							},
+						},
+					},
+				},
+				RestartPolicy: api.RestartPolicyNever,
+			},
+		}
+
+		testContainerOutputInNamespace("substitution in container's args", c, pod, 0, []string{
+			"test-value",
+		}, ns)
+	})
+})