diff --git a/packages/core/core/src/resolveOptions.js b/packages/core/core/src/resolveOptions.js
index 1ce2e208571..d650aa1d74a 100644
--- a/packages/core/core/src/resolveOptions.js
+++ b/packages/core/core/src/resolveOptions.js
@@ -49,7 +49,15 @@ export default async function resolveOptions(
     entries = [path.resolve(inputCwd, initialOptions.entries)];
   }
 
-  let entryRoot = getRootDir(entries);
+  let entryRoot = getRootDir(
+    entries.map(entry =>
+      // if the entry refers entryRootDir, getRootDir returns the parent directory of entryRootDir.
+      // In this case, each entry should refers some file, but without cli build target entry refers entryRootDir directory.
+      // So, we add /. to entry to make entry refers some (virtual) file in such case.
+      path.extname(entry) !== '' ? entry : entry + '/.',
+    ),
+  );
+
   let projectRootFile =
     (await resolveConfig(
       inputFS,
diff --git a/packages/core/integration-tests/test/integration/env-file-with-package-source/.env b/packages/core/integration-tests/test/integration/env-file-with-package-source/.env
new file mode 100644
index 00000000000..3552f1442f9
--- /dev/null
+++ b/packages/core/integration-tests/test/integration/env-file-with-package-source/.env
@@ -0,0 +1,2 @@
+FOO=bar
+BAR=test
diff --git a/packages/core/integration-tests/test/integration/env-file-with-package-source/index.js b/packages/core/integration-tests/test/integration/env-file-with-package-source/index.js
new file mode 100644
index 00000000000..e81b72112b6
--- /dev/null
+++ b/packages/core/integration-tests/test/integration/env-file-with-package-source/index.js
@@ -0,0 +1 @@
+module.exports = process.env.FOO + process.env.BAR;
diff --git a/packages/core/integration-tests/test/integration/env-file-with-package-source/package.json b/packages/core/integration-tests/test/integration/env-file-with-package-source/package.json
new file mode 100644
index 00000000000..2db67e93689
--- /dev/null
+++ b/packages/core/integration-tests/test/integration/env-file-with-package-source/package.json
@@ -0,0 +1,4 @@
+{
+    "name": "env-file-with-package-source",
+    "source": "index.js"
+}
\ No newline at end of file
diff --git a/packages/core/integration-tests/test/integration/env-file-with-package-source/yarn.lock b/packages/core/integration-tests/test/integration/env-file-with-package-source/yarn.lock
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/packages/core/integration-tests/test/javascript.js b/packages/core/integration-tests/test/javascript.js
index dda211e5016..4a2039166aa 100644
--- a/packages/core/integration-tests/test/javascript.js
+++ b/packages/core/integration-tests/test/javascript.js
@@ -2955,6 +2955,26 @@ describe('javascript', function () {
     assert.equal(output, 'barbaz');
   });
 
+  it('should insert environment variables from a file even if entry file is specified with source value in package.json', async function () {
+    let b = await bundle(
+      path.join(
+        __dirname,
+        '/integration/env-file-with-package-source/index.js',
+      ),
+      {
+        // when the entry file is specified with a source value in package.json and not specified with cli build target value,
+        // the entry file is resolved to the entry root directory in packages/core/core/src/resolveOptions.js as InitialParcelOptions.
+        // So, entry root directory is specified as InitialParcelOptions' entries value.
+        entries: [
+          path.join(__dirname, '/integration/env-file-with-package-source'),
+        ],
+      },
+    );
+
+    let output = await run(b);
+    assert.equal(output, 'bartest');
+  });
+
   it('should error on process.env mutations', async function () {
     let filePath = path.join(__dirname, '/integration/env-mutate/index.js');
     await assert.rejects(bundle(filePath), {