diff --git a/mercurial/dispatch.py b/mercurial/dispatch.py
--- a/mercurial/dispatch.py
+++ b/mercurial/dispatch.py
@@ -384,7 +384,7 @@ class cmdalias(object):
         self.cmdname = ''
         self.definition = definition
         self.fn = None
-        self.args = []
+        self.givenargs = []
         self.opts = []
         self.help = ''
         self.badalias = None
@@ -432,7 +432,7 @@ class cmdalias(object):
                              % (self.name, inst))
             return
         self.cmdname = cmd = args.pop(0)
-        args = map(util.expandpath, args)
+        self.givenargs = args
 
         for invalidarg in ("--cwd", "-R", "--repository", "--repo", "--config"):
             if _earlygetopt([invalidarg], args):
@@ -448,7 +448,6 @@ class cmdalias(object):
             else:
                 self.fn, self.opts = tableentry
 
-            self.args = aliasargs(self.fn, args)
             if self.help.startswith("hg " + cmd):
                 # drop prefix in old-style help lines so hg shows the alias
                 self.help = self.help[4 + len(cmd):]
@@ -462,6 +461,11 @@ class cmdalias(object):
             self.badalias = (_("alias '%s' resolves to ambiguous command '%s'")
                              % (self.name, cmd))
 
+    @property
+    def args(self):
+        args = map(util.expandpath, self.givenargs)
+        return aliasargs(self.fn, args)
+
     def __getattr__(self, name):
         adefaults = {'norepo': True, 'optionalrepo': False, 'inferrepo': False}
         if name not in adefaults:
diff --git a/tests/test-alias.t b/tests/test-alias.t
--- a/tests/test-alias.t
+++ b/tests/test-alias.t
@@ -525,6 +525,24 @@ invalid global arguments for normal comm
   (use "hg help" for the full list of commands or "hg -v" for details)
   [255]
 
+environment variable changes in alias commands
+
+  $ cat > $TESTTMP/setcount.py <<EOF
+  > import os
+  > def uisetup(ui):
+  >     os.environ['COUNT'] = '2'
+  > EOF
+
+  $ cat >> $HGRCPATH <<'EOF'
+  > [extensions]
+  > setcount = $TESTTMP/setcount.py
+  > [alias]
+  > showcount = log -T "$COUNT\n" -r .
+  > EOF
+
+  $ COUNT=1 hg showcount
+  2
+
 This should show id:
 
   $ hg --config alias.log='id' log