diff --git a/internal/devbox/docgen/docgen.go b/internal/devbox/docgen/docgen.go
index 957a22f7821..7e338c4c38a 100644
--- a/internal/devbox/docgen/docgen.go
+++ b/internal/devbox/docgen/docgen.go
@@ -2,7 +2,9 @@ package docgen
 
 import (
 	_ "embed"
+	"maps"
 	"os"
+	"strings"
 	"text/template"
 
 	"go.jetify.com/devbox/internal/devbox"
@@ -55,13 +57,30 @@ func GenerateReadme(
 		"Description": devbox.Config().Root.Description,
 		"Scripts": devbox.Config().Scripts().
 			WithRelativePaths(devbox.ProjectDir()),
-		"EnvVars":  devbox.Config().Env(),
+		"EnvVars":  envWithRelativePaths(devbox.Config().Env(), devbox.ProjectDir()),
 		"InitHook": devbox.Config().InitHook(),
 		"Packages": devbox.TopLevelPackages(),
 		// TODO add includes
 	})
 }
 
+// envWithRelativePaths returns a copy of env where occurrences of the absolute
+// project directory are replaced with ".". This keeps generated READMEs free of
+// machine-specific absolute paths (such as a user's home directory) that plugins
+// expand into environment variables like PGDATA and PGHOST. It mirrors the
+// behavior of configfile.Scripts.WithRelativePaths, which is already applied to
+// scripts in the generated README.
+func envWithRelativePaths(env map[string]string, projectDir string) map[string]string {
+	if projectDir == "" {
+		return maps.Clone(env)
+	}
+	result := make(map[string]string, len(env))
+	for key, value := range env {
+		result[key] = strings.ReplaceAll(value, projectDir, ".")
+	}
+	return result
+}
+
 func SaveDefaultReadmeTemplate(outputPath string) error {
 	if outputPath == "" {
 		outputPath = defaultTemplateName
diff --git a/internal/devbox/docgen/docgen_test.go b/internal/devbox/docgen/docgen_test.go
new file mode 100644
index 00000000000..9c312aed988
--- /dev/null
+++ b/internal/devbox/docgen/docgen_test.go
@@ -0,0 +1,44 @@
+package docgen
+
+import (
+	"maps"
+	"testing"
+)
+
+func TestEnvWithRelativePaths(t *testing.T) {
+	projectDir := "/home/user/myproject"
+
+	t.Run("replaces project dir with relative path", func(t *testing.T) {
+		env := map[string]string{
+			"PGDATA": projectDir + "/.devbox/virtenv/postgresql/data",
+			"PGHOST": projectDir + "/.devbox/virtenv/postgresql",
+			"PGPORT": "5432",
+		}
+		got := envWithRelativePaths(env, projectDir)
+		want := map[string]string{
+			"PGDATA": "./.devbox/virtenv/postgresql/data",
+			"PGHOST": "./.devbox/virtenv/postgresql",
+			"PGPORT": "5432",
+		}
+		if !maps.Equal(got, want) {
+			t.Errorf("envWithRelativePaths() = %v, want %v", got, want)
+		}
+	})
+
+	t.Run("does not mutate the input map", func(t *testing.T) {
+		original := projectDir + "/.devbox/virtenv/postgresql"
+		env := map[string]string{"PGHOST": original}
+		envWithRelativePaths(env, projectDir)
+		if env["PGHOST"] != original {
+			t.Errorf("input map was mutated: PGHOST = %q, want %q", env["PGHOST"], original)
+		}
+	})
+
+	t.Run("empty project dir returns env unchanged", func(t *testing.T) {
+		env := map[string]string{"PGHOST": "/some/abs/path"}
+		got := envWithRelativePaths(env, "")
+		if !maps.Equal(got, env) {
+			t.Errorf("envWithRelativePaths() = %v, want %v", got, env)
+		}
+	})
+}