diff --git a/command/connect/envoy/bootstrap_config.go b/command/connect/envoy/bootstrap_config.go
index af383c01d..28cd7ac9b 100644
--- a/command/connect/envoy/bootstrap_config.go
+++ b/command/connect/envoy/bootstrap_config.go
@@ -280,6 +280,8 @@ func (c *BootstrapConfig) generateStatsSinkJSON(name string, typeName string, ad
 	// Resolve address ENV var
 	if len(addr) > 2 && addr[0] == '$' {
 		addr = os.Getenv(addr[1:])
+	} else {
+		addr = os.Expand(addr, statsSinkEnvMapping)
 	}
 
 	u, err := url.Parse(addr)
@@ -318,6 +320,18 @@ func (c *BootstrapConfig) generateStatsSinkJSON(name string, typeName string, ad
 	}`, nil
 }
 
+func statsSinkEnvMapping(s string) string {
+	allowedStatsSinkEnvVars := map[string]bool{
+		"HOST_IP": true,
+	}
+
+	if !allowedStatsSinkEnvVars[s] {
+		// if the specified env var isn't explicitly allowed, unexpand it
+		return fmt.Sprintf("${%s}", s)
+	}
+	return os.Getenv(s)
+}
+
 // resourceTagSpecifiers returns patterns used to generate tags from cluster and filter metric names.
 func resourceTagSpecifiers(omitDeprecatedTags bool) ([]string, error) {
 	const (
diff --git a/command/connect/envoy/bootstrap_config_test.go b/command/connect/envoy/bootstrap_config_test.go
index 35a0505b6..de9105efc 100644
--- a/command/connect/envoy/bootstrap_config_test.go
+++ b/command/connect/envoy/bootstrap_config_test.go
@@ -485,6 +485,40 @@ func TestBootstrapConfig_ConfigureArgs(t *testing.T) {
 			},
 			wantErr: false,
 		},
+		{
+			name: "simple-statsd-sink-inline-env-allowed",
+			input: BootstrapConfig{
+				StatsdURL: "udp://$HOST_IP:9125",
+			},
+			env: []string{"HOST_IP=127.0.0.1"},
+			wantArgs: BootstrapTplArgs{
+				StatsConfigJSON: defaultStatsConfigJSON,
+				StatsSinksJSON: `[{
+					"name": "envoy.stat_sinks.statsd",
+					"typedConfig": {
+						"@type": "type.googleapis.com/envoy.config.metrics.v3.StatsdSink",
+						"address": {
+							"socket_address": {
+								"address": "127.0.0.1",
+								"port_value": 9125
+							}
+						}
+					}
+				}]`,
+			},
+			wantErr: false,
+		},
+		{
+			name: "simple-statsd-sink-inline-env-disallowed",
+			input: BootstrapConfig{
+				StatsdURL: "udp://$HOST_ADDRESS:9125",
+			},
+			env: []string{"HOST_ADDRESS=127.0.0.1"},
+			wantArgs: BootstrapTplArgs{
+				StatsConfigJSON: defaultStatsConfigJSON,
+			},
+			wantErr: true,
+		},
 		{
 			name: "simple-dogstatsd-sink",
 			input: BootstrapConfig{