diff --git a/plugins/boot.lua b/plugins/boot.lua
index 7acf23ca19f..11ee6682bae 100644
--- a/plugins/boot.lua
+++ b/plugins/boot.lua
@@ -1,11 +1,30 @@
 -- license:BSD-3-Clause
 -- copyright-holders:Miodrag Milanovic
 require('lfs')
-local dir = manager:options().entries.pluginspath:value()
-package.path = dir .. "/?.lua;" .. dir .. "/?/init.lua"
+
+local function env_replace(str)
+	local pathsep = package.config:sub(1,1)
+	local function dorep(val)
+		ret = os.getenv(val)
+		if ret then
+			return ret
+		end
+		return val
+	end
+
+	if pathsep == '\\' then
+		str = str:gsub("%%(%w+)%%", dorep)
+	else
+		str = str:gsub("%$(%w+)", dorep)
+	end
+	return str
+end
+local dir = env_replace(manager:options().entries.pluginspath:value())
+
+package.path = package.path .. ";" .. dir .. "/?.lua;" .. dir .. "/?/init.lua"
 
 local json = require('json')
-function readAll(file)
+local function readAll(file)
     local f = io.open(file, "rb")
     local content = f:read("*all")
     f:close()
diff --git a/src/frontend/mame/mame.cpp b/src/frontend/mame/mame.cpp
index 000c20033cd..d72d77bbc3e 100644
--- a/src/frontend/mame/mame.cpp
+++ b/src/frontend/mame/mame.cpp
@@ -160,7 +160,9 @@ void mame_machine_manager::start_luaengine()
 		osd_file::error filerr = file.open("boot.lua");
 		if (filerr == osd_file::error::NONE)
 		{
-			m_lua->load_script(file.fullpath());
+			std::string exppath;
+			osd_subst_env(exppath, std::string(file.fullpath()));
+			m_lua->load_script(exppath.c_str());
 		}
 	}
 }
diff --git a/src/frontend/mame/pluginopts.cpp b/src/frontend/mame/pluginopts.cpp
index 0dd9ca7bcf9..779ac6ff709 100644
--- a/src/frontend/mame/pluginopts.cpp
+++ b/src/frontend/mame/pluginopts.cpp
@@ -39,6 +39,7 @@ plugin_options::plugin_options()
 void plugin_options::parse_json(std::string path)
 {
 	// first try to open as a directory
+	osd_subst_env(path, path);
 	osd::directory::ptr directory = osd::directory::open(path);
 	if (directory)
 	{