diff --git a/lib/kamal/secrets/dotenv/inline_command_substitution.rb b/lib/kamal/secrets/dotenv/inline_command_substitution.rb
index 71e0e9e28..8e699b273 100644
--- a/lib/kamal/secrets/dotenv/inline_command_substitution.rb
+++ b/lib/kamal/secrets/dotenv/inline_command_substitution.rb
@@ -15,7 +15,19 @@ class Kamal::Secrets::Dotenv::InlineCommandSubstitution
 
   class << self
     def install!
-      ::Dotenv::Parser.substitutions.map! { |sub| sub == ::Dotenv::Substitutions::Command ? self : sub }
+      substitutions = ::Dotenv::Parser.substitutions
+      substitutions.map! { |sub| sub == ::Dotenv::Substitutions::Command ? self : sub }
+
+      # Run variable substitution before command substitution, so command
+      # output is inserted literally. Otherwise a "$word" in the output --
+      # common in passwords and tokens -- is treated as a reference to a
+      # (usually undefined) variable and silently dropped. This matches
+      # POSIX shell semantics, where the output of command substitution is
+      # not subject to further expansion. Variable references inside the
+      # command itself are still substituted in #call before execution.
+      if substitutions.delete(::Dotenv::Substitutions::Variable)
+        substitutions.unshift(::Dotenv::Substitutions::Variable)
+      end
     end
 
     def call(value, env, overwrite: false)
diff --git a/test/secrets_test.rb b/test/secrets_test.rb
index 870ca371b..a3b3d98ad 100644
--- a/test/secrets_test.rb
+++ b/test/secrets_test.rb
@@ -26,6 +26,29 @@ class SecretsTest < ActiveSupport::TestCase
     end
   end
 
+  test "command interpolation preserves dollar signs in the output" do
+    # The command outputs pa$1wor$D. Built with tr because "$word" in the
+    # command text itself is substituted before running.
+    with_test_secrets("secrets" => "SECRET=$(echo 'paX1worXD' | tr X '$')") do
+      assert_equal "pa$1wor$D", Kamal::Secrets.new(secrets_path: ".kamal/secrets")["SECRET"]
+    end
+  end
+
+  test "command interpolation still substitutes variables in the command" do
+    with_test_secrets("secrets" => "SECRET1=ABC\nSECRET2=$(echo ${SECRET1}DEF)") do
+      assert_equal "ABCDEF", Kamal::Secrets.new(secrets_path: ".kamal/secrets")["SECRET2"]
+    end
+  end
+
+  test "inline kamal secrets commands preserve dollar signs in extracted values" do
+    # Single-quoted so the stored value matches what an inlined
+    # "kamal secrets fetch" returns: shell-escaped JSON.
+    secrets_json = { "vault/password" => "pa$1wor$D" }.to_json.shellescape
+    with_test_secrets("secrets" => "SECRETS='#{secrets_json}'\nPASSWORD=$(kamal secrets extract vault/password ${SECRETS})") do
+      assert_equal "pa$1wor$D", Kamal::Secrets.new(secrets_path: ".kamal/secrets")["PASSWORD"]
+    end
+  end
+
   test "variable references" do
     with_test_secrets("secrets" => "SECRET1=ABC\nSECRET2=${SECRET1}DEF") do
       assert_equal "ABC", Kamal::Secrets.new(secrets_path: ".kamal/secrets")["SECRET1"]