diff --git a/packages/next-env/index.ts b/packages/next-env/index.ts
index 392670c7817e2b..5355b34d112012 100644
--- a/packages/next-env/index.ts
+++ b/packages/next-env/index.ts
@@ -16,6 +16,7 @@ let combinedEnv: Env | undefined = undefined
 let parsedEnv: Env | undefined = undefined
 let cachedLoadedEnvFiles: LoadedEnvFiles = []
 let previousLoadedEnvFiles: LoadedEnvFiles = []
+let lastEnvConfigDir: string | undefined = undefined
 
 export function updateInitialEnv(newEnv: Env) {
   Object.assign(initialEnv || {}, newEnv)
@@ -122,16 +123,20 @@ export function loadEnvConfig(
   parsedEnv: Env | undefined
   loadedEnvFiles: LoadedEnvFiles
 } {
+  const resolvedDir = path.resolve(dir)
+
   if (!initialEnv) {
     initialEnv = Object.assign({}, process.env)
   }
   // only reload env when forceReload is specified
-  if (combinedEnv && !forceReload) {
+  if (combinedEnv && !forceReload && lastEnvConfigDir === resolvedDir) {
     return { combinedEnv, parsedEnv, loadedEnvFiles: cachedLoadedEnvFiles }
   }
   replaceProcessEnv(initialEnv)
-  previousLoadedEnvFiles = cachedLoadedEnvFiles
+  previousLoadedEnvFiles =
+    lastEnvConfigDir === resolvedDir ? cachedLoadedEnvFiles : []
   cachedLoadedEnvFiles = []
+  lastEnvConfigDir = resolvedDir
 
   const isTest = process.env.NODE_ENV === 'test'
   const mode = isTest ? 'test' : dev ? 'development' : 'production'
diff --git a/test/unit/preserve-process-env.test.ts b/test/unit/preserve-process-env.test.ts
index cbddc233040e7e..38b0c4360a630d 100644
--- a/test/unit/preserve-process-env.test.ts
+++ b/test/unit/preserve-process-env.test.ts
@@ -1,6 +1,44 @@
-import { loadEnvConfig } from '../../packages/next-env/'
+import { mkdtempSync, mkdirSync, rmSync, writeFileSync } from 'fs'
+import { tmpdir } from 'os'
+import { join } from 'path'
+import { loadEnvConfig, resetEnv } from '../../packages/next-env/'
 
 describe('preserve process env', () => {
+  let tempDir: string | undefined
+
+  afterEach(() => {
+    resetEnv()
+    delete process.env.__NEXT_PROCESSED_ENV
+
+    if (tempDir) {
+      rmSync(tempDir, { force: true, recursive: true })
+      tempDir = undefined
+    }
+  })
+
+  it('should reload env files when dir changes without forceReload', () => {
+    tempDir = mkdtempSync(join(tmpdir(), 'next-env-config-'))
+
+    const firstDir = join(tempDir, 'app-a')
+    const secondDir = join(tempDir, 'app-b')
+
+    mkdirSync(firstDir, { recursive: true })
+    mkdirSync(secondDir, { recursive: true })
+
+    writeFileSync(join(firstDir, '.env'), 'FROM_APP=app-a\nSHARED=first\n')
+    writeFileSync(join(secondDir, '.env'), 'FROM_APP=app-b\nSHARED=second\n')
+
+    const first = loadEnvConfig(firstDir)
+    const second = loadEnvConfig(secondDir)
+
+    expect(first.parsedEnv).toEqual({ FROM_APP: 'app-a', SHARED: 'first' })
+    expect(second.parsedEnv).toEqual({ FROM_APP: 'app-b', SHARED: 'second' })
+    expect(second.loadedEnvFiles).toHaveLength(1)
+    expect(second.loadedEnvFiles[0].contents).toContain('FROM_APP=app-b')
+    expect(process.env.FROM_APP).toBe('app-b')
+    expect(process.env.SHARED).toBe('second')
+  })
+
   it('should not reassign `process.env`', () => {
     const originalProcessEnv = process.env
     loadEnvConfig('.')