diff --git a/packages/orchestrator/pkg/server/env_merge.go b/packages/orchestrator/pkg/server/env_merge.go
new file mode 100644
index 0000000000..dd0ba32ded
--- /dev/null
+++ b/packages/orchestrator/pkg/server/env_merge.go
@@ -0,0 +1,22 @@
+//go:build linux
+
+package server
+
+import "maps"
+
+// mergeTemplateEnvVars layers env vars for a sandbox start: the template's
+// Docker image ENV vars are the base, and user-provided env vars (from the SDK
+// create call) override them on conflict. Per-command env vars from
+// process.start override both, applied later in envd. A nil/empty template map
+// returns userVars unchanged (preserving nil), so the common no-image-ENV case
+// adds nothing.
+func mergeTemplateEnvVars(templateVars, userVars map[string]string) map[string]string {
+	if len(templateVars) == 0 {
+		return userVars
+	}
+
+	merged := maps.Clone(templateVars)
+	maps.Copy(merged, userVars)
+
+	return merged
+}
diff --git a/packages/orchestrator/pkg/server/env_merge_test.go b/packages/orchestrator/pkg/server/env_merge_test.go
new file mode 100644
index 0000000000..01afd23db9
--- /dev/null
+++ b/packages/orchestrator/pkg/server/env_merge_test.go
@@ -0,0 +1,38 @@
+//go:build linux
+
+package server
+
+import (
+	"testing"
+
+	"github.com/stretchr/testify/assert"
+)
+
+func TestMergeTemplateEnvVars(t *testing.T) {
+	t.Parallel()
+
+	for name, tc := range map[string]struct {
+		tmpl map[string]string
+		user map[string]string
+		want map[string]string
+	}{
+		"no template, no user":    {nil, nil, nil},
+		"no template, user only":  {nil, map[string]string{"A": "1"}, map[string]string{"A": "1"}},
+		"template only":           {map[string]string{"PYTHONPATH": "/lib"}, nil, map[string]string{"PYTHONPATH": "/lib"}},
+		"disjoint merged":         {map[string]string{"P": "/lib"}, map[string]string{"K": "v"}, map[string]string{"P": "/lib", "K": "v"}},
+		"user overrides template": {map[string]string{"L": "info", "P": "/lib"}, map[string]string{"L": "debug"}, map[string]string{"L": "debug", "P": "/lib"}},
+	} {
+		t.Run(name, func(t *testing.T) {
+			t.Parallel()
+			assert.Equal(t, tc.want, mergeTemplateEnvVars(tc.tmpl, tc.user))
+		})
+	}
+}
+
+// the template map must not be mutated (it is shared template metadata).
+func TestMergeTemplateEnvVars_DoesNotMutateTemplate(t *testing.T) {
+	t.Parallel()
+	tmpl := map[string]string{"P": "/lib"}
+	_ = mergeTemplateEnvVars(tmpl, map[string]string{"P": "/override", "K": "v"})
+	assert.Equal(t, map[string]string{"P": "/lib"}, tmpl, "template metadata map must be left unchanged")
+}
diff --git a/packages/orchestrator/pkg/server/sandboxes.go b/packages/orchestrator/pkg/server/sandboxes.go
index 6abe238390..f36a088164 100644
--- a/packages/orchestrator/pkg/server/sandboxes.go
+++ b/packages/orchestrator/pkg/server/sandboxes.go
@@ -381,6 +381,14 @@ func (s *Server) Create(ctx context.Context, req *orchestrator.SandboxCreateRequ
 		return nil, fmt.Errorf("failed to read template metadata: %w", err)
 	}
 
+	// Propagate the template's Docker image ENV vars to the sandbox runtime.
+	// They form the base layer; user-provided env vars (already in config from
+	// the SDK create call) override them, and per-command env vars from
+	// process.start override both. Mutating config here reaches both the resume
+	// and the filesystem-only cold-boot branch below, since each sends
+	// config.Envd.Vars to envd via POST /init (newEnvdInitRequest).
+	config.Envd.Vars = mergeTemplateEnvVars(meta.Context.EnvVars, config.Envd.Vars)
+
 	fsOnly = meta.IsFilesystemOnly()
 	filesystemBooted = filesystemBoot(meta, req)
 	if filesystemBooted {