diff --git a/.gitignore b/.gitignore
index 23ba8cd..3e66c23 100644
--- a/.gitignore
+++ b/.gitignore
@@ -41,3 +41,5 @@ services/rootusr
 scripts/devfs.sh
 scripts/overlay.sh
 scripts/trymount.sh
+
+etc/initd.env
diff --git a/Makefile.am b/Makefile.am
index 7f4f197..6d3d77e 100644
--- a/Makefile.am
+++ b/Makefile.am
@@ -5,6 +5,7 @@ AM_CFLAGS = -std=c99 $(WARN_CFLAGS)
 
 sbin_PROGRAMS =
 noinst_LIBRARIES =
+sysconf_DATA = etc/initd.env
 EXTRA_DIST = README LICENSE
 
 helperdir = @SCRIPTDIR@
diff --git a/configure.ac b/configure.ac
index 750141e..5afbfce 100644
--- a/configure.ac
+++ b/configure.ac
@@ -53,6 +53,7 @@ AC_DEFINE_DIR(SOCKDIR, localstatedir/run, [Directory for initd socket])
 
 AC_DEFINE_DIR(BINPATH, bindir, [Fully evaluated bin directory])
 AC_DEFINE_DIR(SBINPATH, sbindir, [Fully evaluated sbin directory])
+AC_DEFINE_DIR(ETCPATH, sysconfdir, [Fulle evaluated etc directory])
 
 AC_CONFIG_FILES([services/agetty])
 AC_CONFIG_FILES([services/hostname])
@@ -74,5 +75,6 @@ AC_CONFIG_FILES([services/rootusr])
 AC_CONFIG_FILES([scripts/devfs.sh])
 AC_CONFIG_FILES([scripts/overlay.sh])
 AC_CONFIG_FILES([scripts/trymount.sh])
+AC_CONFIG_FILES([etc/initd.env])
 
 AC_OUTPUT([Makefile])
diff --git a/etc/initd.env.in b/etc/initd.env.in
new file mode 100644
index 0000000..7481385
--- /dev/null
+++ b/etc/initd.env.in
@@ -0,0 +1,7 @@
+##############################################################################
+# initd.env                                                                  #
+#                                                                            #
+# This file contains environment variables that should be set for init.      #
+##############################################################################
+
+PATH=@BINPATH@:@SBINPATH@
diff --git a/initd/Makemodule.am b/initd/Makemodule.am
index 692cdfb..752978b 100644
--- a/initd/Makemodule.am
+++ b/initd/Makemodule.am
@@ -1,5 +1,5 @@
 init_SOURCES = initd/main.c initd/runlst.c initd/init.h
-init_SOURCES += initd/status.c initd/mksock.c initd/svclist.c
+init_SOURCES += initd/status.c initd/mksock.c initd/svclist.c initd/env.c
 init_CPPFLAGS = $(AM_CPPFLAGS)
 init_CFLAGS = $(AM_CFLAGS)
 init_LDFLAGS = $(AM_LDFLAGS)
diff --git a/initd/env.c b/initd/env.c
new file mode 100644
index 0000000..c6a9e65
--- /dev/null
+++ b/initd/env.c
@@ -0,0 +1,137 @@
+/* SPDX-License-Identifier: GPL-3.0-or-later */
+/*
+ * Copyright (C) 2018 - David Oberhollenzer
+ *
+ * This program is free software: you can redistribute it and/or modify
+ * it under the terms of the GNU General Public License as published by
+ * the Free Software Foundation, either version 3 of the License, or
+ * (at your option) any later version.
+ *
+ * This program is distributed in the hope that it will be useful,
+ * but WITHOUT ANY WARRANTY; without even the implied warranty of
+ * MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
+ * GNU General Public License for more details.
+ *
+ * You should have received a copy of the GNU General Public License
+ * along with this program.  If not, see <https://www.gnu.org/licenses/>.
+ */
+#include <unistd.h>
+#include <string.h>
+#include <stdlib.h>
+#include <stdio.h>
+#include <fcntl.h>
+
+#include "init.h"
+#include "util.h"
+
+struct entry {
+	struct entry *next;
+	char data[];
+};
+
+extern char **environ;
+
+static void free_list(struct entry *list)
+{
+	struct entry *e;
+
+	while (list != NULL) {
+		e = list;
+		list = list->next;
+		free(e);
+	}
+}
+
+static struct entry *parse_list(rdline_t *rd)
+{
+	struct entry *e, *list = NULL;
+	char *ptr;
+
+	while (rdline(rd) == 0) {
+		ptr = rd->buffer;
+
+		while (*ptr != '\0' && *ptr != ' ' && *ptr != '=')
+			++ptr;
+
+		if (*ptr == ' ')
+			memmove(ptr, ptr + 1, strlen(ptr + 1) + 1);
+
+		if (*(ptr++) != '=') {
+			fprintf(stderr, "%s: %zu: line is not of the shape "
+					"'key = value', skipping\n",
+				rd->filename, rd->lineno);
+			continue;
+		}
+
+		if (*ptr == ' ')
+			memmove(ptr, ptr + 1, strlen(ptr + 1) + 1);
+
+		if (unescape(ptr)) {
+			fprintf(stderr, "%s: %zu: malformed string constant, "
+					"skipping\n",
+				rd->filename, rd->lineno);
+			continue;
+		}
+
+		e = calloc(1, sizeof(*e) + strlen(rd->buffer) + 1);
+		if (e == NULL)
+			goto fail_oom;
+
+		strcpy(e->data, rd->buffer);
+		e->next = list;
+		list = e;
+	}
+
+	return list;
+fail_oom:
+	fputs("out of memory\n", stderr);
+	free_list(list);
+	return NULL;
+}
+
+static struct entry *list_from_file(void)
+{
+	struct entry *list;
+	rdline_t rd;
+	int fd;
+
+	fd = open(ENVFILE, O_RDONLY);
+	if (fd < 0) {
+		perror(ENVFILE);
+		return NULL;
+	}
+
+	rdline_init(&rd, fd, ENVFILE, 0, NULL);
+	list = parse_list(&rd);
+	close(fd);
+	return list;
+}
+
+int initenv(void)
+{
+	struct entry *list, *e;
+	int i, count;
+	char **envp;
+
+	list = list_from_file();
+	if (list == NULL)
+		return -1;
+
+	for (count = 0, e = list; e != NULL; e = e->next)
+		++count;
+
+	envp = malloc((count + 1) * sizeof(char *));
+	if (envp == NULL) {
+		fputs("out of memory\n", stderr);
+		free_list(list);
+		return -1;
+	}
+
+	for (i = 0, e = list; e != NULL; e = e->next)
+		envp[i] = e->data;
+
+	envp[i] = NULL;
+
+	environ = envp;
+	return 0;
+}
diff --git a/initd/init.h b/initd/init.h
index 878dc8d..a43b3f1 100644
--- a/initd/init.h
+++ b/initd/init.h
@@ -25,6 +25,8 @@
 #include "telinit.h"
 #include "util.h"
 
+#define ENVFILE ETCPATH "/initd.env"
+
 enum {
 	STATUS_OK = 0,
 	STATUS_FAIL,
@@ -107,5 +109,13 @@ void svclist_add(service_t *svc);
 */
 service_t *svclist_remove(pid_t pid);
 
+/********** env.c **********/
+
+/*
+	Read /etc/initd.env (actually ENVFILE defined above)
+	and setup environment variables for init.
+*/
+int initenv(void);
+
 #endif /* INIT_H */