diff --git a/ethers-contract/ethers-contract-abigen/src/source.rs b/ethers-contract/ethers-contract-abigen/src/source.rs
index 10695583..ec464faa 100644
--- a/ethers-contract/ethers-contract-abigen/src/source.rs
+++ b/ethers-contract/ethers-contract-abigen/src/source.rs
@@ -2,14 +2,10 @@
 use super::util;
 use ethers_core::types::Address;
 
+use crate::util::resolve_path;
 use anyhow::{anyhow, Context, Error, Result};
 use cfg_if::cfg_if;
-use std::{
-    borrow::Cow,
-    env, fs,
-    path::{Path, PathBuf},
-    str::FromStr,
-};
+use std::{env, fs, path::Path, str::FromStr};
 use url::Url;
 
 /// A source of a Truffle artifact JSON.
@@ -19,7 +15,7 @@ pub enum Source {
     String(String),
 
     /// An ABI located on the local file system.
-    Local(PathBuf),
+    Local(String),
 
     /// An ABI to be retrieved over HTTP(S).
     Http(Url),
@@ -94,7 +90,7 @@ impl Source {
         let url = base.join(source.as_ref())?;
 
         match url.scheme() {
-            "file" => Ok(Source::local(url.path())),
+            "file" => Ok(Source::local(url.path().to_string())),
             "http" | "https" => match url.host_str() {
                 Some("etherscan.io") => Source::etherscan(
                     url.path()
@@ -111,11 +107,8 @@ impl Source {
     }
 
     /// Creates a local filesystem source from a path string.
-    pub fn local<P>(path: P) -> Self
-    where
-        P: AsRef<Path>,
-    {
-        Source::Local(path.as_ref().into())
+    pub fn local(path: impl Into<String>) -> Self {
+        Source::Local(path.into())
     }
 
     /// Creates an HTTP source from a URL.
@@ -178,21 +171,27 @@ impl FromStr for Source {
     }
 }
 
-/// Reads a Truffle artifact JSON file from the local filesystem.
-fn get_local_contract(path: &Path) -> Result<String> {
+/// Reads an artifact JSON file from the local filesystem.
+///
+/// The given path can be relative or absolute and can contain env vars like
+///  `"$CARGO_MANIFEST_DIR/contracts/a.json"`
+/// If the path is relative after all env vars have been resolved then we assume the root is either
+/// `CARGO_MANIFEST_DIR` or the current working directory.
+fn get_local_contract(path: impl AsRef<str>) -> Result<String> {
+    let path = resolve_path(path.as_ref())?;
     let path = if path.is_relative() {
-        let absolute_path = path.canonicalize().with_context(|| {
-            format!(
-                "unable to canonicalize file from working dir {} with path {}",
-                env::current_dir()
-                    .map(|cwd| cwd.display().to_string())
-                    .unwrap_or_else(|err| format!("??? ({})", err)),
-                path.display(),
-            )
-        })?;
-        Cow::Owned(absolute_path)
+        let manifest_path = env::var("CARGO_MANIFEST_DIR")?;
+        let root = Path::new(&manifest_path);
+        let mut contract_path = root.join(&path);
+        if !contract_path.exists() {
+            contract_path = path.canonicalize()?;
+        }
+        if !contract_path.exists() {
+            anyhow::bail!("Unable to find local contract \"{}\"", path.display())
+        }
+        contract_path
     } else {
-        Cow::Borrowed(path)
+        path
     };
 
     let json = fs::read_to_string(&path)
diff --git a/ethers-contract/ethers-contract-abigen/src/util.rs b/ethers-contract/ethers-contract-abigen/src/util.rs
index d7b5fc60..3252e047 100644
--- a/ethers-contract/ethers-contract-abigen/src/util.rs
+++ b/ethers-contract/ethers-contract-abigen/src/util.rs
@@ -1,4 +1,5 @@
 use ethers_core::types::Address;
+use std::path::PathBuf;
 
 use anyhow::{anyhow, Result};
 use cfg_if::cfg_if;
@@ -81,10 +82,75 @@ pub fn http_get(_url: &str) -> Result<String> {
     }
 }
 
+/// Replaces any occurrences of env vars in the `raw` str with their value
+pub fn resolve_path(raw: &str) -> Result<PathBuf> {
+    let mut unprocessed = raw;
+    let mut resolved = String::new();
+
+    while let Some(dollar_sign) = unprocessed.find('$') {
+        let (head, tail) = unprocessed.split_at(dollar_sign);
+        resolved.push_str(head);
+
+        match parse_identifier(&tail[1..]) {
+            Some((variable, rest)) => {
+                let value = std::env::var(variable)?;
+                resolved.push_str(&value);
+                unprocessed = rest;
+            }
+            None => {
+                anyhow::bail!("Unable to parse a variable from \"{}\"", tail)
+            }
+        }
+    }
+    resolved.push_str(unprocessed);
+
+    Ok(PathBuf::from(resolved))
+}
+
+fn parse_identifier(text: &str) -> Option<(&str, &str)> {
+    let mut calls = 0;
+
+    let (head, tail) = take_while(text, |c| {
+        calls += 1;
+        match c {
+            '_' => true,
+            letter if letter.is_ascii_alphabetic() => true,
+            digit if digit.is_ascii_digit() && calls > 1 => true,
+            _ => false,
+        }
+    });
+
+    if head.is_empty() {
+        None
+    } else {
+        Some((head, tail))
+    }
+}
+
+fn take_while(s: &str, mut predicate: impl FnMut(char) -> bool) -> (&str, &str) {
+    let mut index = 0;
+    for c in s.chars() {
+        if predicate(c) {
+            index += c.len_utf8();
+        } else {
+            break
+        }
+    }
+    s.split_at(index)
+}
+
 #[cfg(test)]
 mod tests {
     use super::*;
 
+    #[test]
+    fn can_resolve_path() {
+        let raw = "./$ENV_VAR";
+        std::env::set_var("ENV_VAR", "file.txt");
+        let resolved = resolve_path(raw).unwrap();
+        assert_eq!(resolved.to_str().unwrap(), "./file.txt");
+    }
+
     #[test]
     fn input_name_to_ident_empty() {
         assert_quote!(expand_input_name(0, ""), { p0 });
diff --git a/ethers-contract/ethers-contract-derive/src/lib.rs b/ethers-contract/ethers-contract-derive/src/lib.rs
index d343be2c..1ab7bec0 100644
--- a/ethers-contract/ethers-contract-derive/src/lib.rs
+++ b/ethers-contract/ethers-contract-derive/src/lib.rs
@@ -16,8 +16,10 @@ mod spanned;
 pub(crate) mod utils;
 
 /// Proc macro to generate type-safe bindings to a contract(s). This macro
-/// accepts one or more Ethereum contract ABI or a path. Note that this path is
+/// accepts one or more Ethereum contract ABI or a path. Note that relative paths are
 /// rooted in the crate's root `CARGO_MANIFEST_DIR`.
+/// Environment variable interpolation is supported via `$` prefix, like
+/// `"$CARGO_MANIFEST_DIR/contracts/c.json"`
 ///
 /// # Examples
 ///