diff --git a/src/database.rs b/src/database.rs
index 993780a..27bc236 100644
--- a/src/database.rs
+++ b/src/database.rs
@@ -5,7 +5,7 @@ use crate::cli::ConnectionSource;
 use adbc_core::options::{AdbcVersion, OptionDatabase, OptionValue};
 use adbc_core::{Database, Driver, LOAD_FLAG_DEFAULT, Statement};
 use adbc_driver_manager::profile::{
-    ConnectionProfile, ConnectionProfileProvider, FilesystemProfileProvider,
+    ConnectionProfile, ConnectionProfileProvider, FilesystemProfileProvider, process_profile_value,
 };
 use adbc_driver_manager::{ManagedConnection, ManagedDriver};
 use arrow_array::RecordBatch;
@@ -104,8 +104,9 @@ fn initialize_profile_connection(
         .map_err(|e| format!("Failed to load driver '{}': {}", driver_name, e))?
     };
 
-    // Collect profile options
-    let profile_options: Vec<_> = profile
+    // Collect profile options, applying ADBC `{{ env_var(NAME) }}` substitution
+    // on string values (matches the driver manager's `DriverLocator::Profile` path).
+    let profile_options: Vec<(OptionDatabase, OptionValue)> = profile
         .get_options()
         .map_err(|e| {
             format!(
@@ -114,7 +115,20 @@ fn initialize_profile_connection(
             )
         })?
         .into_iter()
-        .collect();
+        .map(|(k, v)| -> Result<(OptionDatabase, OptionValue), String> {
+            if let OptionValue::String(s) = v {
+                let result = process_profile_value(&s).map_err(|e| {
+                    format!(
+                        "Failed to substitute env vars in profile '{}': {}",
+                        profile_name, e
+                    )
+                })?;
+                Ok((k, result))
+            } else {
+                Ok((k, v))
+            }
+        })
+        .collect::<Result<Vec<_>, _>>()?;
 
     // Build override options from CLI (these take precedence)
     let override_options = build_database_options(
diff --git a/tests/integration_test.rs b/tests/integration_test.rs
index 808f5ed..4ac04ea 100644
--- a/tests/integration_test.rs
+++ b/tests/integration_test.rs
@@ -326,6 +326,62 @@ uri = ":memory:"
     assert!(stdout.contains("profile_options_test"));
 }
 
+#[test]
+fn test_profile_env_var_substitution() {
+    use std::io::Write;
+
+    // Profile options containing `{{ env_var(NAME) }}` must be expanded against
+    // the process environment when the profile is loaded (per the ADBC connection-profile spec).
+    let tmp_dir = tempfile::tempdir().expect("create tempdir");
+    let canary = "databow_env_var_substitution_canary";
+    let expanded_db_path = tmp_dir.path().join(format!("{canary}.duckdb"));
+    let literal_db_path = tmp_dir
+        .path()
+        .join("{{ env_var(DATABOW_TEST_CANARY) }}.duckdb");
+
+    let mut profile_file = NamedTempFile::with_suffix(".toml").expect("create profile temp file");
+    let profile_path = profile_file.path().to_string_lossy().to_string();
+    let uri_template = format!(
+        "{}/{{{{ env_var(DATABOW_TEST_CANARY) }}}}.duckdb",
+        tmp_dir.path().display()
+    );
+    let profile_contents = format!(
+        "profile_version = 1\ndriver = \"duckdb\"\n\n[Options]\nuri = \"{uri_template}\"\n"
+    );
+    profile_file
+        .write_all(profile_contents.as_bytes())
+        .expect("write profile");
+
+    let output = Command::new("cargo")
+        .args([
+            "run",
+            "--",
+            "--profile",
+            &profile_path,
+            "--query",
+            "SELECT 'env_var_substituted' AS result",
+        ])
+        .env("DATABOW_TEST_CANARY", canary)
+        .output()
+        .expect("Failed to execute command");
+
+    assert!(
+        output.status.success(),
+        "expected query to succeed after env_var substitution. stderr: {}",
+        String::from_utf8_lossy(&output.stderr)
+    );
+    assert!(
+        expanded_db_path.exists(),
+        "expected DuckDB to have created the substituted path {:?}, but it does not exist; profile substitution did not occur",
+        expanded_db_path
+    );
+    assert!(
+        !literal_db_path.exists(),
+        "unexpected: DuckDB created the literal-template path {:?}, which means env_var substitution did not happen",
+        literal_db_path
+    );
+}
+
 #[test]
 fn test_timestamp_with_time_zone() {
     let output = Command::new("cargo")