diff --git a/src/commands/dev/exec.js b/src/commands/dev/exec.js
index 1703a19dd67..35040d04a4a 100644
--- a/src/commands/dev/exec.js
+++ b/src/commands/dev/exec.js
@@ -4,6 +4,11 @@ const Command = require('../../utils/command')
 const { injectEnvVariables } = require('../../utils/dev')
 
 class ExecCommand extends Command {
+  async init() {
+    this.commandContext = 'dev'
+    await super.init()
+  }
+
   async run() {
     const { log, warn, netlify } = this
     const { cachedConfig, site } = netlify
diff --git a/src/commands/dev/index.js b/src/commands/dev/index.js
index e485b3a5805..7ad45c5778a 100644
--- a/src/commands/dev/index.js
+++ b/src/commands/dev/index.js
@@ -203,6 +203,11 @@ const printBanner = ({ url, log }) => {
 }
 
 class DevCommand extends Command {
+  async init() {
+    this.commandContext = 'dev'
+    await super.init()
+  }
+
   async run() {
     this.log(`${NETLIFYDEV}`)
     const { error: errorExit, log, warn, exit } = this
diff --git a/src/commands/dev/trace.js b/src/commands/dev/trace.js
index b526f419b16..866d8c6f60e 100644
--- a/src/commands/dev/trace.js
+++ b/src/commands/dev/trace.js
@@ -4,6 +4,11 @@ const Command = require('../../utils/command')
 const { runProcess } = require('../../utils/traffic-mesh')
 
 class TraceCommand extends Command {
+  async init() {
+    this.commandContext = 'dev'
+    await super.init()
+  }
+
   async run() {
     this.parse(TraceCommand)
 
diff --git a/src/utils/command.js b/src/utils/command.js
index f3a30a5778d..e4129e3d0e1 100644
--- a/src/utils/command.js
+++ b/src/utils/command.js
@@ -142,7 +142,7 @@ class BaseCommand extends Command {
       return await resolveConfig({
         config: argv.config,
         cwd,
-        context: argv.context,
+        context: argv.context || this.commandContext,
         debug: argv.debug,
         siteId: argv.siteId || (typeof argv.site === 'string' && argv.site) || state.get('siteId'),
         token,
diff --git a/src/utils/dev.js b/src/utils/dev.js
index 23fb90daf7a..535e97de403 100644
--- a/src/utils/dev.js
+++ b/src/utils/dev.js
@@ -153,7 +153,6 @@ const injectEnvVariables = async ({ env, log, site, warn }) => {
     }
   }
 
-  process.env.CONTEXT = 'dev'
   process.env.NETLIFY_DEV = 'true'
 }
 
diff --git a/tests/command.dev.test.js b/tests/command.dev.test.js
index bc8f544fbb4..137b6f097fc 100644
--- a/tests/command.dev.test.js
+++ b/tests/command.dev.test.js
@@ -256,6 +256,58 @@ testMatrix.forEach(({ args }) => {
     })
   })
 
+  test(testName('[context.dev.environment] should override [build.environment]', args), async (t) => {
+    await withSiteBuilder('site-with-build-environment', async (builder) => {
+      builder
+        .withNetlifyToml({
+          config: {
+            build: { environment: { TEST: 'DEFAULT_CONTEXT' }, functions: 'functions' },
+            context: { dev: { environment: { TEST: 'DEV_CONTEXT' } } },
+          },
+        })
+        .withFunction({
+          path: 'env.js',
+          handler: async () => ({
+            statusCode: 200,
+            body: `${process.env.TEST}`,
+          }),
+        })
+
+      await builder.buildAsync()
+
+      await withDevServer({ cwd: builder.directory, args }, async (server) => {
+        const response = await got(`${server.url}/.netlify/functions/env`).text()
+        t.is(response, 'DEV_CONTEXT')
+      })
+    })
+  })
+
+  test(testName('should use [build.environment] and not [context.production.environment]', args), async (t) => {
+    await withSiteBuilder('site-with-build-environment', async (builder) => {
+      builder
+        .withNetlifyToml({
+          config: {
+            build: { environment: { TEST: 'DEFAULT_CONTEXT' }, functions: 'functions' },
+            context: { production: { environment: { TEST: 'PRODUCTION_CONTEXT' } } },
+          },
+        })
+        .withFunction({
+          path: 'env.js',
+          handler: async () => ({
+            statusCode: 200,
+            body: `${process.env.TEST}`,
+          }),
+        })
+
+      await builder.buildAsync()
+
+      await withDevServer({ cwd: builder.directory, args }, async (server) => {
+        const response = await got(`${server.url}/.netlify/functions/env`).text()
+        t.is(response, 'DEFAULT_CONTEXT')
+      })
+    })
+  })
+
   test(testName('should override .env.development with process env', args), async (t) => {
     await withSiteBuilder('site-with-override', async (builder) => {
       builder
@@ -321,7 +373,7 @@ testMatrix.forEach(({ args }) => {
     })
   })
 
-  test(testName('should override value of the CONTEXT env variable', args), async (t) => {
+  test(testName('should set value of the CONTEXT env variable', args), async (t) => {
     await withSiteBuilder('site-with-context-override', async (builder) => {
       builder.withNetlifyToml({ config: { build: { functions: 'functions' } } }).withFunction({
         path: 'env.js',
@@ -333,7 +385,7 @@ testMatrix.forEach(({ args }) => {
 
       await builder.buildAsync()
 
-      await withDevServer({ cwd: builder.directory, env: { CONTEXT: 'production' }, args }, async (server) => {
+      await withDevServer({ cwd: builder.directory, args }, async (server) => {
         const response = await got(`${server.url}/.netlify/functions/env`).text()
         t.is(response, 'dev')
       })