diff --git a/src/Microsoft.Tye.Core/ApplicationFactory.cs b/src/Microsoft.Tye.Core/ApplicationFactory.cs
index 64c70008..37377495 100644
--- a/src/Microsoft.Tye.Core/ApplicationFactory.cs
+++ b/src/Microsoft.Tye.Core/ApplicationFactory.cs
@@ -403,6 +403,10 @@ namespace Microsoft.Tye
                         {
                             executable.EnvironmentVariables.Add(envVar);
                         }
+                        else if (service is AzureFunctionServiceBuilder azureFunction)
+                        {
+                            azureFunction.EnvironmentVariables.Add(envVar);
+                        }
                         else if (service is ExternalServiceBuilder)
                         {
                             throw new CommandException("External services do not support environment variables.");
diff --git a/src/Microsoft.Tye.Core/AzureFunctionServiceBuilder.cs b/src/Microsoft.Tye.Core/AzureFunctionServiceBuilder.cs
index 48487793..7cf764bd 100644
--- a/src/Microsoft.Tye.Core/AzureFunctionServiceBuilder.cs
+++ b/src/Microsoft.Tye.Core/AzureFunctionServiceBuilder.cs
@@ -2,6 +2,8 @@
 // The .NET Foundation licenses this file to you under the MIT license.
 // See the LICENSE file in the project root for more information.
 
+using System.Collections.Generic;
+
 namespace Microsoft.Tye
 {
     public class AzureFunctionServiceBuilder : ServiceBuilder
@@ -17,5 +19,6 @@ namespace Microsoft.Tye
         public string FunctionPath { get; }
         public string? FuncExecutablePath { get; set; }
         public string? ProjectFile { get; set; }
+        public List<EnvironmentVariableBuilder> EnvironmentVariables { get; } = new List<EnvironmentVariableBuilder>();
     }
 }
diff --git a/src/tye/ApplicationBuilderExtensions.cs b/src/tye/ApplicationBuilderExtensions.cs
index c5099c2c..34256471 100644
--- a/src/tye/ApplicationBuilderExtensions.cs
+++ b/src/tye/ApplicationBuilderExtensions.cs
@@ -151,6 +151,11 @@ namespace Microsoft.Tye
                     replicas = function.Replicas;
                     liveness = null;
                     readiness = null;
+
+                    foreach (var entry in function.EnvironmentVariables)
+                    {
+                        env.Add(entry.ToHostingEnvironmentVariable());
+                    }
                 }
                 else
                 {