diff --git a/options_test.go b/options_test.go
new file mode 100644
index 00000000..7cfea2db
--- /dev/null
+++ b/options_test.go
@@ -0,0 +1,98 @@
+package envbuilder_test
+
+import (
+	"bytes"
+	"testing"
+
+	"github.com/coder/envbuilder"
+	"github.com/coder/serpent"
+	"github.com/stretchr/testify/require"
+)
+
+// TestEnvOptionParsing tests that given environment variables of different types are handled as expected.
+func TestEnvOptionParsing(t *testing.T) {
+	t.Run("string", func(t *testing.T) {
+		const val = "setup.sh"
+		t.Setenv("SETUP_SCRIPT", val)
+		o := runCLI()
+		require.Equal(t, o.SetupScript, val)
+	})
+
+	t.Run("int", func(t *testing.T) {
+		t.Setenv("CACHE_TTL_DAYS", "7")
+		o := runCLI()
+		require.Equal(t, o.CacheTTLDays, int64(7))
+	})
+
+	t.Run("string array", func(t *testing.T) {
+		t.Setenv("IGNORE_PATHS", "/var,/temp")
+		o := runCLI()
+		require.Equal(t, o.IgnorePaths, []string{"/var", "/temp"})
+	})
+
+	t.Run("bool", func(t *testing.T) {
+		t.Run("lowercase", func(t *testing.T) {
+			t.Setenv("SKIP_REBUILD", "true")
+			t.Setenv("GIT_CLONE_SINGLE_BRANCH", "false")
+			o := runCLI()
+			require.True(t, o.SkipRebuild)
+			require.False(t, o.GitCloneSingleBranch)
+		})
+
+		t.Run("uppercase", func(t *testing.T) {
+			t.Setenv("SKIP_REBUILD", "TRUE")
+			t.Setenv("GIT_CLONE_SINGLE_BRANCH", "FALSE")
+			o := runCLI()
+			require.True(t, o.SkipRebuild)
+			require.False(t, o.GitCloneSingleBranch)
+		})
+
+		t.Run("numeric", func(t *testing.T) {
+			t.Setenv("SKIP_REBUILD", "1")
+			t.Setenv("GIT_CLONE_SINGLE_BRANCH", "0")
+			o := runCLI()
+			require.True(t, o.SkipRebuild)
+			require.False(t, o.GitCloneSingleBranch)
+		})
+
+		t.Run("empty", func(t *testing.T) {
+			t.Setenv("GIT_CLONE_SINGLE_BRANCH", "")
+			o := runCLI()
+			require.False(t, o.GitCloneSingleBranch)
+		})
+	})
+}
+
+func runCLI() envbuilder.Options {
+	var o envbuilder.Options
+	cmd := serpent.Command{
+		Options: o.CLI(),
+		Handler: func(inv *serpent.Invocation) error {
+			return nil
+		},
+	}
+
+	i := cmd.Invoke().WithOS()
+	fakeIO(i)
+	err := i.Run()
+
+	if err != nil {
+		panic("failed to run CLI: " + err.Error())
+	}
+
+	return o
+}
+
+type ioBufs struct {
+	Stdin  bytes.Buffer
+	Stdout bytes.Buffer
+	Stderr bytes.Buffer
+}
+
+func fakeIO(i *serpent.Invocation) *ioBufs {
+	var b ioBufs
+	i.Stdout = &b.Stdout
+	i.Stderr = &b.Stderr
+	i.Stdin = &b.Stdin
+	return &b
+}