diff --git a/CHANGELOG.md b/CHANGELOG.md
index 2d562eb6850..d05eadfc3c1 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -53,6 +53,8 @@ release.
 
 - Clarify environment variable substitution is not recursive
   ([#3913](https://github.com/open-telemetry/opentelemetry-specification/pull/3913))
+- Allow `env:` prefix in environment variable substitution syntax.
+  ([#3974](https://github.com/open-telemetry/opentelemetry-specification/pull/3974))
 
 ### Common
 
diff --git a/specification/configuration/file-configuration.md b/specification/configuration/file-configuration.md
index 4b34f951ed0..44debb95998 100644
--- a/specification/configuration/file-configuration.md
+++ b/specification/configuration/file-configuration.md
@@ -72,14 +72,14 @@ Configuration files support environment variables substitution for references
 which match the following regular expression:
 
 ```regexp
-\$\{(?<ENV_NAME>[a-zA-Z_][a-zA-Z0-9_]*)(:-(?<DEFAULT_VALUE>[^\n]*))?}
+\$\{(?:env:)?(?<ENV_NAME>[a-zA-Z_][a-zA-Z0-9_]*)(:-(?<DEFAULT_VALUE>[^\n]*))?}
 ```
 
 The `ENV_NAME` MUST start with an alphabetic or `_` character, and is followed
 by 0 or more alphanumeric or `_` characters.
 
-For example, `${API_KEY}` is valid, while `${1API_KEY}` and `${API_$KEY}` are
-invalid.
+For example, `${API_KEY}` and `${env:API_KEY}` are valid, while `${1API_KEY}`
+and `${API_$KEY}` are invalid.
 
 Environment variable substitution MUST only apply to scalar values. Mapping keys
 are not candidates for substitution.
@@ -115,6 +115,7 @@ export REPLACE_ME='${DO_NOT_REPLACE_ME}'              # A valid replacement text
 
 ```yaml
 string_key: ${STRING_VALUE}                           # Valid reference to STRING_VALUE
+env_string_key: ${env:STRING_VALUE}                   # Valid reference to STRING_VALUE
 other_string_key: "${STRING_VALUE}"                   # Valid reference to STRING_VALUE inside double quotes
 another_string_key: "${BOOl_VALUE}"                   # Valid reference to BOOl_VALUE inside double quotes
 yet_another_string_key: ${INVALID_MAP_VALUE}          # Valid reference to INVALID_MAP_VALUE, but YAML structure from INVALID_MAP_VALUE MUST NOT be injected
@@ -132,6 +133,7 @@ Environment variable substitution results in the following YAML:
 
 ```yaml
 string_key: value                           # Interpreted as type string, tag URI tag:yaml.org,2002:str
+env_string_key: value                       # Interpreted as type string, tag URI tag:yaml.org,2002:str
 other_string_key: "value"                   # Interpreted as type string, tag URI tag:yaml.org,2002:str
 another_string_key: "true"                  # Interpreted as type string, tag URI tag:yaml.org,2002:str
 yet_another_string_key: "value\nkey:value"  # Interpreted as type string, tag URI tag:yaml.org,2002:str