diff --git a/.env.example b/.env.example
new file mode 100644
index 000000000..4eb77b5c7
--- /dev/null
+++ b/.env.example
@@ -0,0 +1,45 @@
+# ──────────────────────────────────────────────
+# CDISC Rules Engine — Environment Configuration
+# ──────────────────────────────────────────────
+# Copy this file to .env and fill in your values.
+
+# Required for CORE command line execution (not used by cdisc-open-rules)
+CDISC_LIBRARY_API_KEY=your_api_key_here
+
+# Maximum dataset size in bytes before forcing Dask implementation
+DATASET_SIZE_THRESHOLD=10485760
+
+# Maximum number of issues per Excel sheet in the result report (default: 10000)
+MAX_REPORT_ROWS=10
+
+# Maximum errors to report per rule during a validation run.
+# Format: (max_errors, per_dataset_flag)
+#   max_errors      — integer cap on reported errors
+#   per_dataset_flag — if True, the cap applies per dataset; if False, across all datasets
+MAX_ERRORS_PER_RULE=(10, True)
+
+# ──────────────────────────────────────────────
+# Study Configuration
+# ──────────────────────────────────────────────
+
+# Path to define.xml — absolute path, or filename if located in the same directory as .env
+DEFINE_XML=define.xml
+
+# Controlled terminology package
+# see ./resources/cache for package names
+# Format: <standard>ct-YYYY-MM-DD (e.g. sdtmct-2024-03-29)
+CT= 
+
+# Standard product (e.g. sdtmig, adamig, sendig)
+PRODUCT=
+
+# Standard version, denoted with a dash (e.g. 3-4)
+VERSION=
+
+# TIG substandard
+#  SDTM, SEND, ADaM, or CDASH
+SUBSTANDARD=
+
+# TIG use case
+# INDH, PROD, NONCLIN, or ANALYSIS
+USE_CASE=
\ No newline at end of file
diff --git a/README.md b/README.md
index febe8e9ae..1322b7445 100644
--- a/README.md
+++ b/README.md
@@ -385,7 +385,7 @@ core.exe validate -rest -of -config -commands
 
 ---
 
-**Note:** Setting `DATASET_SIZE_THRESHOLD=0` tells the engine to use Dask processing for all datasets regardless of size, size threshold defaults to 1/4 of available RAM so datasets larger than this will use Dask. See env.example to see what the CLI .env file should look like
+**Note:** Setting `DATASET_SIZE_THRESHOLD=0` tells the engine to use Dask processing for all datasets regardless of size, size threshold defaults to 1/4 of available RAM so datasets larger than this will use Dask. See .env.example to see what the CLI .env file should look like
 
 ### Updating the Cache (`update-cache`)
 
diff --git a/core.py b/core.py
index f6bad6a99..299bd2759 100644
--- a/core.py
+++ b/core.py
@@ -600,6 +600,13 @@ def validate(  # noqa
     load_dotenv(dotenv_path)
     validate_dataset_files_exist(dataset_path, logger, ctx)
 
+    if define_xml_path and dotenv_path and os.getenv("DEFINE_XML"):
+        dxp = Path(define_xml_path)
+        if not dxp.is_absolute() and dxp.parent == Path("."):
+            resolved = Path(dotenv_path).parent / define_xml_path
+            if resolved.is_file():
+                define_xml_path = str(resolved)
+
     if not custom_standard:
         standard = standard.lower()
         supported_standards = StandardTypes.values()
diff --git a/env.example b/env.example
deleted file mode 100644
index 3e87d175c..000000000
--- a/env.example
+++ /dev/null
@@ -1,10 +0,0 @@
-CDISC_LIBRARY_API_KEY=your_api_key_here
-DATASET_SIZE_THRESHOLD=10485760  # max dataset size in bytes to force dask implementation
-MAX_REPORT_ROWS = 10  # integer for maximum number of issues per excel sheet (plus headers) in result report.  Defaults to 10000.
-MAX_ERRORS_PER_RULE = (10, True)  # Tuple for maximum number of errors to report per rule during a validation run. Also has a per dataset flag described as second bool value in readme. example value 
-DEFINE_XML = define.xml path
-CT = controlled terminology package
-PRODUCT= standard
-VERSION= version, denoted with a dash i.e. 3-4
-SUBSTANDARD= TIG substandard
-USE_CASE= TIG use case
\ No newline at end of file