diff --git a/sdk/identity/Azure.Identity/CHANGELOG.md b/sdk/identity/Azure.Identity/CHANGELOG.md
index 008244796c2e..7880fe761159 100644
--- a/sdk/identity/Azure.Identity/CHANGELOG.md
+++ b/sdk/identity/Azure.Identity/CHANGELOG.md
@@ -9,6 +9,7 @@
 - Fixed an issue with `TokenCachePersistenceOptions` where credentials in the same process would share the same cache, even if they had different configured names.
 - ManagedIdentityCredential now ignores empty ClientId values. [#37100](https://github.com/Azure/azure-sdk-for-net/issues/37100)
 - ManagedIdentityCredential will no longer attempt to parse invalid json payloads on responses from the managed identity endpoint.
+- When utilizing `EnvironmentCredential` from `DefaultAzureCredential` the credential will now override the `TENANT_ID` environment value if the TenantId value is set in `DefaultAzureCredentialOptions`.
 
 ### Other Changes
 - All developer credentials in the `DefaultAzureCredential` credential chain will fall through to the next credential in the chain on any failure. Previously, some exceptions would throw `AuthenticationFailedException`, which stops further progress in the chain.
diff --git a/sdk/identity/Azure.Identity/src/DefaultAzureCredentialFactory.cs b/sdk/identity/Azure.Identity/src/DefaultAzureCredentialFactory.cs
index e6221a782488..f4e661948585 100644
--- a/sdk/identity/Azure.Identity/src/DefaultAzureCredentialFactory.cs
+++ b/sdk/identity/Azure.Identity/src/DefaultAzureCredentialFactory.cs
@@ -99,6 +99,11 @@ public virtual TokenCredential CreateEnvironmentCredential()
         {
             var options = Options.Clone<EnvironmentCredentialOptions>();
 
+            if (!string.IsNullOrEmpty(options.TenantId))
+            {
+                options.TenantId = Options.TenantId;
+            }
+
             return new EnvironmentCredential(Pipeline, options);
         }
 
diff --git a/sdk/identity/Azure.Identity/tests/CredentialTestHelpers.cs b/sdk/identity/Azure.Identity/tests/CredentialTestHelpers.cs
index 28c28f1bb1c7..b3cea0a69065 100644
--- a/sdk/identity/Azure.Identity/tests/CredentialTestHelpers.cs
+++ b/sdk/identity/Azure.Identity/tests/CredentialTestHelpers.cs
@@ -517,6 +517,23 @@ public static string[] ExtractAdditionalTenantProperty(TokenCredential cred)
             return additionallyAllowedTenantIds;
         }
 
+        public static bool TryGetConfiguredTenantIdForMsalCredential(TokenCredential cred, out string tenantID)
+        {
+            var targetCred = cred is EnvironmentCredential environmentCredential ? environmentCredential.Credential : cred;
+            object clientObject = targetCred.GetType().GetProperty("Client", BindingFlags.Instance | BindingFlags.NonPublic)?.GetValue(targetCred);
+            tenantID = clientObject switch
+            {
+                MsalPublicClient msalPub => msalPub?.TenantId,
+                MsalConfidentialClient msalConf => msalConf?.TenantId,
+                _ => null
+            };
+            if (tenantID == null)
+            {
+                tenantID = targetCred.GetType().GetProperty("TenantId", BindingFlags.Instance | BindingFlags.NonPublic)?.GetValue(targetCred) as string;
+            }
+            return tenantID != null;
+        }
+
         public static bool IsMsalCredential(TokenCredential cred)
         {
             var clientType = GetMsalClientType(cred);
diff --git a/sdk/identity/Azure.Identity/tests/DefaultAzureCredentialTests.cs b/sdk/identity/Azure.Identity/tests/DefaultAzureCredentialTests.cs
index 9ab026764af1..814fcef837a1 100644
--- a/sdk/identity/Azure.Identity/tests/DefaultAzureCredentialTests.cs
+++ b/sdk/identity/Azure.Identity/tests/DefaultAzureCredentialTests.cs
@@ -422,6 +422,41 @@ public void AdditionallyAllowedTenantsOptionIsHonored(Type availableCredential)
             }
         }
 
+        [Test]
+        [TestCaseSource(nameof(AllCredentialTypes))]
+        public void TenantIdOptionOverridesEnvironment(Type availableCredential)
+        {
+            using (new TestEnvVar(new Dictionary<string, string> {
+                    { "AZURE_CLIENT_ID", "mockclientid" },
+                    { "AZURE_CLIENT_SECRET", null},
+                    { "AZURE_TENANT_ID", "mocktenantid" },
+                    {"AZURE_USERNAME", "mockusername" },
+                    { "AZURE_PASSWORD", "mockpassword" },
+                    { "AZURE_CLIENT_CERTIFICATE_PATH", null },
+                    { "AZURE_FEDERATED_TOKEN_FILE", "c:/temp/token" }
+            }))
+            {
+                DefaultAzureCredentialOptions options = GetDacOptions(availableCredential, false, "overridetenantid");
+                var additionalTenant = Guid.NewGuid().ToString();
+                options.AdditionallyAllowedTenants.Add(additionalTenant);
+
+                var credential = new DefaultAzureCredential(options);
+                Assert.AreEqual(1, credential._sources.Length);
+                var targetCred = credential._sources[0];
+                if (CredentialTestHelpers.TryGetConfiguredTenantIdForMsalCredential(targetCred, out string tenantId))
+                {
+                    if (availableCredential == typeof(ManagedIdentityCredential))
+                    {
+                        Assert.Ignore("ManagedIdentityCredential does not include a TenantId option.");
+                    }
+                    else
+                    {
+                        Assert.AreEqual("overridetenantid", tenantId);
+                    }
+                }
+            }
+        }
+
         [Test]
         public void ExcludeWorkloadIdentityCredential_Disables_TokenExchangeManagedIdentitySource()
         {
@@ -449,9 +484,9 @@ public void ExcludeWorkloadIdentityCredential_Disables_TokenExchangeManagedIdent
             }
         }
 
-        private static DefaultAzureCredentialOptions GetDacOptions(Type availableCredential, bool disableInstanceDiscovery)
+        private static DefaultAzureCredentialOptions GetDacOptions(Type availableCredential, bool disableInstanceDiscovery, string tenantId = null)
         {
-            return new DefaultAzureCredentialOptions
+            var options = new DefaultAzureCredentialOptions
             {
                 ExcludeEnvironmentCredential = availableCredential != typeof(EnvironmentCredential),
                 ExcludeWorkloadIdentityCredential = availableCredential != typeof(WorkloadIdentityCredential),
@@ -463,8 +498,13 @@ private static DefaultAzureCredentialOptions GetDacOptions(Type availableCredent
                 ExcludeAzureCliCredential = availableCredential != typeof(AzureCliCredential),
                 ExcludeAzurePowerShellCredential = availableCredential != typeof(AzurePowerShellCredential),
                 ExcludeInteractiveBrowserCredential = availableCredential != typeof(InteractiveBrowserCredential),
-                DisableInstanceDiscovery = disableInstanceDiscovery
+                DisableInstanceDiscovery = disableInstanceDiscovery,
             };
+            if (tenantId != null)
+            {
+                options.TenantId = tenantId;
+            }
+            return options;
         }
 
         private static Type GetTargetCredentialOptionType(Type availableCredential)