diff --git a/Cargo.lock b/Cargo.lock
index c7b29fa16e..df8a455352 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -1905,6 +1905,15 @@ dependencies = [
  "lazy_static",
 ]
 
+[[package]]
+name = "shellexpand"
+version = "2.0.0"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "9a2b22262a9aaf9464d356f656fea420634f78c881c5eebd5ef5e66d8b9bc603"
+dependencies = [
+ "dirs",
+]
+
 [[package]]
 name = "smallvec"
 version = "1.4.1"
@@ -2700,6 +2709,7 @@ dependencies = [
  "heck",
  "proc-macro2",
  "quote",
+ "shellexpand",
  "syn",
  "witx",
 ]
diff --git a/crates/wiggle/generate/Cargo.toml b/crates/wiggle/generate/Cargo.toml
index 632b649153..732fa34991 100644
--- a/crates/wiggle/generate/Cargo.toml
+++ b/crates/wiggle/generate/Cargo.toml
@@ -20,6 +20,7 @@ proc-macro2 = "1.0"
 heck = "0.3"
 anyhow = "1"
 syn = { version = "1.0", features = ["full"] }
+shellexpand = "2.0"
 
 [badges]
 maintenance = { status = "actively-developed" }
diff --git a/crates/wiggle/generate/src/config.rs b/crates/wiggle/generate/src/config.rs
index 20d75812b2..520532a3ec 100644
--- a/crates/wiggle/generate/src/config.rs
+++ b/crates/wiggle/generate/src/config.rs
@@ -1,10 +1,6 @@
 use {
     proc_macro2::Span,
-    std::{
-        collections::HashMap,
-        iter::FromIterator,
-        path::{Path, PathBuf},
-    },
+    std::{collections::HashMap, iter::FromIterator, path::PathBuf},
     syn::{
         braced, bracketed,
         parse::{Parse, ParseStream},
@@ -143,20 +139,6 @@ impl WitxConf {
             Self::Literal(doc) => witx::parse(doc.as_ref()).expect("parsing witx"),
         }
     }
-
-    /// If using the [`Paths`][paths] syntax, make all paths relative to a root directory.
-    ///
-    /// [paths]: enum.WitxConf.html#variant.Paths
-    // FIXME this can be deleted once we have env var interpolation
-    pub fn make_paths_relative_to<P: AsRef<Path>>(&mut self, root: P) {
-        if let Self::Paths(paths) = self {
-            paths.as_mut().iter_mut().for_each(|p| {
-                if !p.is_absolute() {
-                    *p = PathBuf::from(root.as_ref()).join(p.clone());
-                }
-            });
-        }
-    }
 }
 
 /// A collection of paths, pointing to witx documents.
@@ -203,32 +185,18 @@ impl Parse for Paths {
         let _ = bracketed!(content in input);
         let path_lits: Punctuated<LitStr, Token![,]> = content.parse_terminated(Parse::parse)?;
 
-        /* TODO interpolate env variables here!!!
-                        fn main() {
-            let p = "foo/$BAR/baz";
-            let buf = PathBuf::from(p);
-            let components = buf
-                .iter()
-                .map(|osstr| interpolate(osstr.to_str().expect("always a str")))
-                .collect::<Vec<String>>();
-
-            println!("{:?}", components);
-        }
-
-        fn interpolate(v: &str) -> String {
-            if let Some('$') = v.chars().nth(0) {
-                let var = &v[1..];
-                std::env::var(var).unwrap_or(String::new())
-            } else {
-                v.to_owned()
-            }
-        }
-        */
-
-        Ok(path_lits
+        let expanded_paths = path_lits
             .iter()
-            .map(|lit| PathBuf::from(lit.value()))
-            .collect())
+            .map(|lit| {
+                PathBuf::from(
+                    shellexpand::env(&lit.value())
+                        .expect("shell expansion")
+                        .as_ref(),
+                )
+            })
+            .collect::<Vec<PathBuf>>();
+
+        Ok(Paths(expanded_paths))
     }
 }
 
diff --git a/crates/wiggle/macro/src/lib.rs b/crates/wiggle/macro/src/lib.rs
index ed4a3dc6f0..48f0367312 100644
--- a/crates/wiggle/macro/src/lib.rs
+++ b/crates/wiggle/macro/src/lib.rs
@@ -90,10 +90,7 @@ use syn::parse_macro_input;
 /// ```
 #[proc_macro]
 pub fn from_witx(args: TokenStream) -> TokenStream {
-    let mut config = parse_macro_input!(args as wiggle_generate::Config);
-    config.witx.make_paths_relative_to(
-        std::env::var("CARGO_MANIFEST_DIR").expect("CARGO_MANIFEST_DIR env var"),
-    );
+    let config = parse_macro_input!(args as wiggle_generate::Config);
 
     let doc = config.load_document();
     let names = wiggle_generate::Names::new(&config.ctx.name, quote!(wiggle));
diff --git a/crates/wiggle/wasmtime/macro/src/lib.rs b/crates/wiggle/wasmtime/macro/src/lib.rs
index 160babeb12..4ba1c1b9fb 100644
--- a/crates/wiggle/wasmtime/macro/src/lib.rs
+++ b/crates/wiggle/wasmtime/macro/src/lib.rs
@@ -47,10 +47,7 @@ use config::{MissingMemoryConf, ModuleConf, TargetConf};
 ///
 #[proc_macro]
 pub fn wasmtime_integration(args: TokenStream) -> TokenStream {
-    let mut config = parse_macro_input!(args as config::Config);
-    config.witx.make_paths_relative_to(
-        std::env::var("CARGO_MANIFEST_DIR").expect("CARGO_MANIFEST_DIR env var"),
-    );
+    let config = parse_macro_input!(args as config::Config);
     let doc = config.load_document();
     let names = Names::new(&config.ctx.name, quote!(wasmtime_wiggle));