diff --git a/backend/remote-state/azure/backend.go b/backend/remote-state/azure/backend.go
index 5c7577b30..38e6de5da 100644
--- a/backend/remote-state/azure/backend.go
+++ b/backend/remote-state/azure/backend.go
@@ -39,7 +39,7 @@ func New() backend.Backend {
 				Type:        schema.TypeString,
 				Optional:    true,
 				Description: "The Azure cloud environment.",
-				Default:     "",
+				DefaultFunc: schema.EnvDefaultFunc("ARM_ENVIRONMENT", ""),
 			},
 
 			"access_key": {