diff --git a/content/io.js b/content/io.js
index c61e42a9..9ff46105 100644
--- a/content/io.js
+++ b/content/io.js
@@ -426,12 +426,12 @@ function IO() //{{{
             }
 
             // expand any $ENV vars - this is naive but so is Vim and we like to be compatible
-            // TODO: Vim does not expand variables set to an empty string, nor does it recognise
-            // ${VAR} on WINDOWS - are we just matching bugs?
-            // Yes. --Kris
+            // TODO: Vim does not expand variables set to an empty string (and documents it).
+            // Kris reckons we shouldn't replicate this 'bug'. --djk
+            // TODO: should we be doing this for all paths?
             path = path.replace(
-                WINDOWS ? /\$(\w+)\b|%(\w+)%/g : /\$(\w+)\b|\${(\w+)}/g,
-                function (m, n1, n2, i, s) environmentService.get((n1 || n2), "$1")
+                RegExp("\\$(\\w+)\\b|\\${(\\w+)}" + (WINDOWS ? "|%(\\w+)%" : ""), "g"),
+                function (m, n1, n2, n3) environmentService.get(n1 || n2 || n3) || m
             );
 
             return path.replace("\\ ", " ", "g");
diff --git a/locale/en-US/options.txt b/locale/en-US/options.txt
index fc137f2f..55aee76c 100644
--- a/locale/en-US/options.txt
+++ b/locale/en-US/options.txt
@@ -147,6 +147,13 @@ The same as [c]:set[c] command, but operates on global options only.
 See [c]:set[c] for details.
 ____
 
+
+|expand-environment-var| |expand-env| |:set_env| +
+
+Environment variables are expanded for path options like 'cdpath' and
+'runtimepath'. The variable notation is _$VAR_ (terminated by a non-word
+character) or _$\\{VAR}_. _%VAR%_ is also supported on Windows.
+
 section:Setting{nbsp}Firefox{nbsp}options[firefox-options]
 
 Most Firefox options are not touched/overridden by Vimperator. In order to set