diff --git a/lib/ansible/constants.py b/lib/ansible/constants.py
index fb3e2420e9..17a09adb18 100644
--- a/lib/ansible/constants.py
+++ b/lib/ansible/constants.py
@@ -79,7 +79,7 @@ def shell_expand_path(path):
     ''' shell_expand_path is needed as os.path.expanduser does not work
         when path is None, which is the default for ANSIBLE_PRIVATE_KEY_FILE '''
     if path:
-        path = os.path.expanduser(path)
+        path = os.path.expandvars(os.path.expanduser(path))
     return path
 
 p = load_config_file()