diff --git a/docs/sources/reference/builder.md b/docs/sources/reference/builder.md
index 93225994..2678a87a 100644
--- a/docs/sources/reference/builder.md
+++ b/docs/sources/reference/builder.md
@@ -552,9 +552,19 @@ instruction. For example:
     WORKDIR c
     RUN pwd
 
-The output of the final `pwd` command in this Dockerfile would be
+The output of the final `pwd` command in this `Dockerfile` would be
 `/a/b/c`.
 
+The `WORKDIR` instruction can resolve environment variables previously set using
+`ENV`. You can only use environment variables explicitly set in the `Dockerfile`.
+For example:
+
+    ENV DIRPATH /path
+    WORKDIR $DIRPATH/$DIRNAME
+
+The output of the final `pwd` command in this `Dockerfile` would be
+`/path/$DIRNAME`
+
 ## ONBUILD
 
     ONBUILD [INSTRUCTION]