diff --git a/cli/azd/cmd/container.go b/cli/azd/cmd/container.go
index 2641e20898d..135109cca12 100644
--- a/cli/azd/cmd/container.go
+++ b/cli/azd/cmd/container.go
@@ -167,6 +167,7 @@ func registerCommonDependencies(container *ioc.NestedContainer) {
 	container.RegisterSingleton(
 		func(ctx context.Context,
 			azdContext *azdcontext.AzdContext,
+			lazyEnv *lazy.Lazy[*environment.Environment],
 			envFlags envFlag,
 			console input.Console,
 		) (*environment.Environment, error) {
@@ -182,6 +183,10 @@ func registerCommonDependencies(container *ioc.NestedContainer) {
 				return nil, fmt.Errorf("loading environment: %w", err)
 			}
 
+			// Reset lazy env value after loading or creating environment
+			// This allows any previous lazy instances (such as hooks) to now point to the same instance
+			lazyEnv.SetValue(env)
+
 			return env, nil
 		},
 	)
diff --git a/cli/azd/pkg/environment/environment_test.go b/cli/azd/pkg/environment/environment_test.go
index 5e1fe3ae5cb..bfb15bd445c 100644
--- a/cli/azd/pkg/environment/environment_test.go
+++ b/cli/azd/pkg/environment/environment_test.go
@@ -114,17 +114,16 @@ func Test_SaveAndReload(t *testing.T) {
 	tempDir := t.TempDir()
 	ostest.Chdir(t, tempDir)
 
-	env, err := FromRoot(tempDir)
+	env := EmptyWithRoot(tempDir)
 	require.NotNil(t, env)
-	require.NoError(t, err)
 
 	env.SetLocation("eastus2")
 	env.SetSubscriptionId("SUBSCRIPTION_ID")
 
-	err = env.Save()
+	err := env.Save()
 	require.NoError(t, err)
 
-	// Simulate another process updating the .env file
+	// Simulate another process writing to .env file
 	envPath := filepath.Join(tempDir, azdcontext.DotEnvFileName)
 	envMap, err := godotenv.Read(envPath)
 	require.NotNil(t, envMap)
@@ -135,6 +134,9 @@ func Test_SaveAndReload(t *testing.T) {
 	err = godotenv.Write(envMap, envPath)
 	require.NoError(t, err)
 
+	err = env.Reload()
+	require.NoError(t, err)
+
 	// Set a new property in the env
 	env.SetServiceProperty("web", "ENDPOINT_URL", "http://web.example.com")
 	err = env.Save()
diff --git a/cli/azd/pkg/ext/hooks_runner.go b/cli/azd/pkg/ext/hooks_runner.go
index 1d0702d065f..fdbc1c26478 100644
--- a/cli/azd/pkg/ext/hooks_runner.go
+++ b/cli/azd/pkg/ext/hooks_runner.go
@@ -83,16 +83,19 @@ func (h *HooksRunner) RunHooks(ctx context.Context, hookType HookType, commands
 		return fmt.Errorf("failed running scripts for hooks '%s', %w", strings.Join(commands, ","), err)
 	}
 
-	// Reload env vars before execution to enable support for hooks to generate new env vars between commands
-	if err := h.env.Reload(); err != nil {
-		return fmt.Errorf("failed reloading env values, %w", err)
-	}
-
 	for _, hookConfig := range hooks {
+		if err := h.env.Reload(); err != nil {
+			return fmt.Errorf("reloading environment before running hook: %w", err)
+		}
+
 		err := h.execHook(ctx, hookConfig)
 		if err != nil {
 			return err
 		}
+
+		if err := h.env.Reload(); err != nil {
+			return fmt.Errorf("reloading environment after running hook: %w", err)
+		}
 	}
 
 	return nil
diff --git a/cli/azd/pkg/ext/hooks_runner_test.go b/cli/azd/pkg/ext/hooks_runner_test.go
index 1d3afe42043..c815985bb93 100644
--- a/cli/azd/pkg/ext/hooks_runner_test.go
+++ b/cli/azd/pkg/ext/hooks_runner_test.go
@@ -60,7 +60,7 @@ func Test_Hooks_Execute(t *testing.T) {
 			ranPreHook = true
 			require.Equal(t, "scripts/precommand.sh", args.Args[0])
 			require.Equal(t, cwd, args.Cwd)
-			require.Equal(t, env.Environ(), args.Env)
+			require.ElementsMatch(t, env.Environ(), args.Env)
 			require.Equal(t, false, args.Interactive)
 
 			return exec.NewRunResult(0, "", ""), nil
@@ -86,7 +86,7 @@ func Test_Hooks_Execute(t *testing.T) {
 			ranPostHook = true
 			require.Equal(t, "scripts/postcommand.sh", args.Args[0])
 			require.Equal(t, cwd, args.Cwd)
-			require.Equal(t, env.Environ(), args.Env)
+			require.ElementsMatch(t, env.Environ(), args.Env)
 			require.Equal(t, false, args.Interactive)
 
 			return exec.NewRunResult(0, "", ""), nil
@@ -112,7 +112,7 @@ func Test_Hooks_Execute(t *testing.T) {
 			ranPostHook = true
 			require.Equal(t, "scripts/preinteractive.sh", args.Args[0])
 			require.Equal(t, cwd, args.Cwd)
-			require.Equal(t, env.Environ(), args.Env)
+			require.ElementsMatch(t, env.Environ(), args.Env)
 			require.Equal(t, true, args.Interactive)
 
 			return exec.NewRunResult(0, "", ""), nil