diff --git a/CHANGELOG.md b/CHANGELOG.md
index 7d22467..bfc031f 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -2,7 +2,13 @@
 
 All notable changes to this project will be documented in this file. See [standard-version](https://github.com/conventional-changelog/standard-version) for commit guidelines.
 
-## [Unreleased](https://github.com/motdotla/dotenv-expand/compare/v11.0.4...master)
+## [Unreleased](https://github.com/motdotla/dotenv-expand/compare/v11.0.5...master)
+
+## [11.0.5](https://github.com/motdotla/dotenv-expand/compare/v11.0.4...v11.0.5) (2024-02-17)
+
+### Changed
+
+- 🐞 fix recursive expansion when expansion key is sourced from `process.env` ([#121](https://github.com/motdotla/dotenv-expand/pull/121))
 
 ## [11.0.4](https://github.com/motdotla/dotenv-expand/compare/v11.0.3...v11.0.4) (2024-02-15)
 
diff --git a/lib/main.js b/lib/main.js
index 40bf18b..33e38db 100644
--- a/lib/main.js
+++ b/lib/main.js
@@ -22,7 +22,12 @@ function interpolate (value, processEnv, parsed) {
       return match.slice(1)
     } else {
       if (processEnv[key]) {
-        return processEnv[key]
+        if (processEnv[key] === parsed[key]) {
+          return processEnv[key]
+        } else {
+          // scenario: PASSWORD_EXPAND_NESTED=${PASSWORD_EXPAND}
+          return interpolate(processEnv[key], processEnv, parsed)
+        }
       }
 
       if (parsed[key]) {
@@ -57,7 +62,6 @@ function expand (options) {
     let value = options.parsed[key]
 
     const inProcessEnv = Object.prototype.hasOwnProperty.call(processEnv, key)
-
     if (inProcessEnv) {
       if (processEnv[key] === options.parsed[key]) {
         // assume was set to processEnv from the .env file if the values match and therefore interpolate
diff --git a/package-lock.json b/package-lock.json
index da68650..45272b6 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -9,7 +9,7 @@
       "version": "11.0.4",
       "license": "BSD-2-Clause",
       "dependencies": {
-        "dotenv": "^16.4.1"
+        "dotenv": "^16.4.4"
       },
       "devDependencies": {
         "@types/node": "^18.11.3",
@@ -1615,14 +1615,14 @@
       }
     },
     "node_modules/dotenv": {
-      "version": "16.4.1",
-      "resolved": "https://registry.npmjs.org/dotenv/-/dotenv-16.4.1.tgz",
-      "integrity": "sha512-CjA3y+Dr3FyFDOAMnxZEGtnW9KBR2M0JvvUtXNW+dYJL5ROWxP9DUHCwgFqpMk0OXCc0ljhaNTr2w/kutYIcHQ==",
+      "version": "16.4.4",
+      "resolved": "https://registry.npmjs.org/dotenv/-/dotenv-16.4.4.tgz",
+      "integrity": "sha512-XvPXc8XAQThSjAbY6cQ/9PcBXmFoWuw1sQ3b8HqUCR6ziGXjkTi//kB9SWa2UwqlgdAIuRqAa/9hVljzPehbYg==",
       "engines": {
         "node": ">=12"
       },
       "funding": {
-        "url": "https://github.com/motdotla/dotenv?sponsor=1"
+        "url": "https://dotenvx.com"
       }
     },
     "node_modules/dotgitignore": {
@@ -9841,9 +9841,9 @@
       }
     },
     "dotenv": {
-      "version": "16.4.1",
-      "resolved": "https://registry.npmjs.org/dotenv/-/dotenv-16.4.1.tgz",
-      "integrity": "sha512-CjA3y+Dr3FyFDOAMnxZEGtnW9KBR2M0JvvUtXNW+dYJL5ROWxP9DUHCwgFqpMk0OXCc0ljhaNTr2w/kutYIcHQ=="
+      "version": "16.4.4",
+      "resolved": "https://registry.npmjs.org/dotenv/-/dotenv-16.4.4.tgz",
+      "integrity": "sha512-XvPXc8XAQThSjAbY6cQ/9PcBXmFoWuw1sQ3b8HqUCR6ziGXjkTi//kB9SWa2UwqlgdAIuRqAa/9hVljzPehbYg=="
     },
     "dotgitignore": {
       "version": "2.1.0",
diff --git a/package.json b/package.json
index 6ea8fe4..76cd467 100644
--- a/package.json
+++ b/package.json
@@ -51,6 +51,6 @@
     "node": ">=12"
   },
   "dependencies": {
-    "dotenv": "^16.4.1"
+    "dotenv": "^16.4.4"
   }
 }
diff --git a/tests/.env.test b/tests/.env.test
index c3cd3e7..b5a602f 100644
--- a/tests/.env.test
+++ b/tests/.env.test
@@ -72,3 +72,10 @@ EXPAND_SELF=$EXPAND_SELF
 # https://github.com/motdotla/dotenv-expand/issues/112#issuecomment-1937330651
 HOST="something"
 DOMAIN="https://${HOST}"
+
+# https://github.com/motdotla/dotenv-expand/issues/120
+PASSWORD=password
+PASSWORD_EXPAND=${PASSWORD}
+PASSWORD_EXPAND_SIMPLE=$PASSWORD
+PASSWORD_EXPAND_NESTED=${PASSWORD_EXPAND}
+PASSWORD_EXPAND_NESTED_NESTED=${PASSWORD_EXPAND_NESTED}
diff --git a/tests/main.js b/tests/main.js
index a2b8aa9..3db8947 100644
--- a/tests/main.js
+++ b/tests/main.js
@@ -63,24 +63,6 @@ t.test('uses environment variables existing already on the machine for expansion
   ct.end()
 })
 
-t.test('does not expand environment variables existing already on the machine that look like they could expand', ct => {
-  process.env.PASSWORD = 'pas$word'
-  const dotenv = {
-    parsed: {
-      PASSWORD: 'dude',
-      PASSWORD_EXPAND: '${PASSWORD}',
-      PASSWORD_EXPAND_SIMPLE: '$PASSWORD'
-    }
-  }
-  const parsed = dotenvExpand.expand(dotenv).parsed
-
-  ct.equal(parsed.PASSWORD_EXPAND, 'pas$word')
-  ct.equal(parsed.PASSWORD_EXPAND_SIMPLE, 'pas$word')
-  ct.equal(parsed.PASSWORD, 'pas$word')
-
-  ct.end()
-})
-
 t.test('expands missing environment variables to an empty string', ct => {
   const dotenv = {
     parsed: {
@@ -556,3 +538,31 @@ t.test('expands recursively reverse order', ct => {
 
   ct.end()
 })
+
+t.test('expands recursively', ct => {
+  const dotenv = require('dotenv').config({ path: 'tests/.env.test' })
+  dotenvExpand.expand(dotenv)
+
+  ct.equal(process.env.PASSWORD_EXPAND, 'password')
+  ct.equal(process.env.PASSWORD_EXPAND_SIMPLE, 'password')
+  ct.equal(process.env.PASSWORD, 'password')
+  ct.equal(process.env.PASSWORD_EXPAND_NESTED, 'password')
+  ct.equal(process.env.PASSWORD_EXPAND_NESTED, 'password')
+
+  ct.end()
+})
+
+t.test('expands recursively but is smart enough to not attempt expansion of a pre-set env in process.env', ct => {
+  process.env.PASSWORD = 'pas$word'
+
+  const dotenv = require('dotenv').config({ path: 'tests/.env.test' })
+  dotenvExpand.expand(dotenv)
+
+  ct.equal(process.env.PASSWORD_EXPAND, 'pas$word')
+  ct.equal(process.env.PASSWORD_EXPAND_SIMPLE, 'pas$word')
+  ct.equal(process.env.PASSWORD, 'pas$word')
+  ct.equal(process.env.PASSWORD_EXPAND_NESTED, 'pas$word')
+  ct.equal(process.env.PASSWORD_EXPAND_NESTED, 'pas$word')
+
+  ct.end()
+})