diff --git a/lib/uffizzi/services/env_variables_service.rb b/lib/uffizzi/services/env_variables_service.rb
index d64a3e3d..4c837641 100644
--- a/lib/uffizzi/services/env_variables_service.rb
+++ b/lib/uffizzi/services/env_variables_service.rb
@@ -7,7 +7,7 @@
 class EnvVariablesService
   class << self
     def substitute_env_variables(compose_file_data)
-      compose_file_data.gsub(/\${1,2}\{?([?:\-_A-Za-z0-9]+)\}?/) do |variable|
+      compose_file_data.gsub(/(?<![^ \t\n])\${1,2}\{?([?:\-_A-Za-z0-9]+)\}?/) do |variable|
         next variable if variable.start_with?('$$')
 
         variable_content = variable.match(/[?:\-_A-Za-z0-9]+/).to_s
diff --git a/test/compose_files/test_compose_with_env_vars_with_dollar_sign.yml b/test/compose_files/test_compose_with_env_vars_with_dollar_sign.yml
new file mode 100644
index 00000000..4deded4a
--- /dev/null
+++ b/test/compose_files/test_compose_with_env_vars_with_dollar_sign.yml
@@ -0,0 +1,15 @@
+services:
+  hello-world:
+    image: ${IMAGE:-nginx}
+    environment:
+      KEY: 'lkjlkjk@^$lkjj'
+
+configs:
+  vote_conf:
+    file: ./vote.conf
+  defaulf_conf:
+    file: config_files/config_file.conf
+
+x-uffizzi-ingress:
+  service: hello-world
+  port: $PORT
diff --git a/test/uffizzi/cli/preview_test.rb b/test/uffizzi/cli/preview_test.rb
index 9e2803ed..ef5694c2 100644
--- a/test/uffizzi/cli/preview_test.rb
+++ b/test/uffizzi/cli/preview_test.rb
@@ -426,7 +426,6 @@ def test_preview_create_with_env_vars_failed
     stubbed_uffizzi_preview_create = stub_uffizzi_preview_create_success(create_body, @project_slug)
     ENV['IMAGE'] = 'nginx'
     ENV['CONFIG_SOURCE'] = 'vote.conf'
-
     error = assert_raises(Uffizzi::Error) do
       @preview.create('test/compose_files/test_compose_with_env_vars.yml')
     end
@@ -683,4 +682,23 @@ def test_create_preview_with_failed_deployment
                    " finished_at: #{k8s_container_last_state[:finished_at]}\n"
     assert_equal(render_server_error(expected_msg), error.message)
   end
+
+  def test_preview_update_with_env_var_containing_dollar_sign_success
+    update_body = json_fixture('files/uffizzi/uffizzi_preview_create_success.json')
+    activity_items_body = json_fixture('files/uffizzi/uffizzi_preview_activity_items_deployed.json')
+    deployment_id = update_body[:deployment][:id]
+    stubbed_uffizzi_preview_update = stub_uffizzi_preview_update_success(update_body, @project_slug, deployment_id)
+    stubbed_uffizzi_preview_deploy_containers = stub_uffizzi_preview_deploy_containers_success(@project_slug, deployment_id)
+    stubbed_uffizzi_preview_activity_items = stub_uffizzi_preview_activity_items_success(activity_items_body, @project_slug, deployment_id)
+    ENV['PORT'] = '80'
+
+    @preview.update("deployment-#{deployment_id}", 'test/compose_files/test_compose_with_env_vars_with_dollar_sign.yml')
+
+    *_, url_message, proxy_url_message = Uffizzi.ui.messages
+    assert_equal("Deployment url: https://#{update_body[:deployment][:preview_url]}", url_message)
+    assert_equal("Deployment proxy url: https://#{update_body[:deployment][:proxy_preview_url]}", proxy_url_message)
+    assert_requested(stubbed_uffizzi_preview_activity_items, times: 2)
+    assert_requested(stubbed_uffizzi_preview_deploy_containers)
+    assert_requested(stubbed_uffizzi_preview_update)
+  end
 end