diff --git a/docs/guide/migration.md b/docs/guide/migration.md
index 0970bc08e..b5f2b3757 100644
--- a/docs/guide/migration.md
+++ b/docs/guide/migration.md
@@ -99,6 +99,8 @@ There are other breaking changes which only affect few users.
   - This PR not only introduces a breaking change mentioned above as "Default value for `resolve.conditions`", but also makes `resolve.mainFields` to not be used for no-externalized dependencies in SSR. If you were using `resolve.mainFields` and want to apply that to no-externalized dependencies in SSR, you can use [`ssr.resolve.mainFields`](/config/ssr-options#ssr-resolve-mainfields).
 - [[#18493] refactor!: remove fs.cachedChecks option](https://github.com/vitejs/vite/pull/18493)
   - This opt-in optimization was removed due to edge cases when writing a file in a cached folder and immediately importing it.
+- [[#18697] fix(deps)!: update dependency dotenv-expand to v12](https://github.com/vitejs/vite/pull/18697)
+  - Variables used in interpolation should be declared before the interpolation now. For more details, see [the `dotenv-expand` changelog](https://github.com/motdotla/dotenv-expand/blob/v12.0.1/CHANGELOG.md#1200-2024-11-16).
 
 ## Migration from v4
 
diff --git a/packages/vite/package.json b/packages/vite/package.json
index 1c05ea145..006c8b8d9 100644
--- a/packages/vite/package.json
+++ b/packages/vite/package.json
@@ -116,7 +116,7 @@
     "debug": "^4.3.7",
     "dep-types": "link:./src/types",
     "dotenv": "^16.4.5",
-    "dotenv-expand": "^11.0.7",
+    "dotenv-expand": "^12.0.1",
     "es-module-lexer": "^1.5.4",
     "escape-html": "^1.0.3",
     "estree-walker": "^3.0.3",
diff --git a/playground/env/.env b/playground/env/.env
index bca550ecc..db7181dff 100644
--- a/playground/env/.env
+++ b/playground/env/.env
@@ -2,10 +2,10 @@ VITE_CUSTOM_ENV_VARIABLE=1
 CUSTOM_PREFIX_ENV_VARIABLE=1
 VITE_EFFECTIVE_MODE_FILE_NAME=.env
 VITE_BOOL=true
+DEPEND_ENV=depend
 VITE_EXPAND_A=$EXPAND
 VITE_EXPAND_B=$DEPEND_ENV
 VITE_ESCAPE_A=escape\$
 VITE_ESCAPE_B=escape$
 IRRELEVANT_ENV=$DEPEND_ENV
 IRRELEVANT_ESCAPE_ENV=irrelevant$
-DEPEND_ENV=depend
diff --git a/pnpm-lock.yaml b/pnpm-lock.yaml
index a5e1b8ce6..101f2ac51 100644
--- a/pnpm-lock.yaml
+++ b/pnpm-lock.yaml
@@ -304,8 +304,8 @@ importers:
         specifier: ^16.4.5
         version: 16.4.5
       dotenv-expand:
-        specifier: ^11.0.7
-        version: 11.0.7
+        specifier: ^12.0.1
+        version: 12.0.1
       es-module-lexer:
         specifier: ^1.5.4
         version: 1.5.4
@@ -4369,8 +4369,8 @@ packages:
     resolution: {integrity: sha512-QM8q3zDe58hqUqjraQOmzZ1LIH9SWQJTlEKCH4kJ2oQvLZk7RbQXvtDM2XEq3fwkV9CCvvH4LA0AV+ogFsBM2Q==}
     engines: {node: '>=8'}
 
-  dotenv-expand@11.0.7:
-    resolution: {integrity: sha512-zIHwmZPRshsCdpMDyVsqGmgyP0yT8GAgXUnkdAoJisxvf33k7yO6OuoKmcTGuXPWSsm8Oh88nZicRLA9Y0rUeA==}
+  dotenv-expand@12.0.1:
+    resolution: {integrity: sha512-LaKRbou8gt0RNID/9RoI+J2rvXsBRPMV7p+ElHlPhcSARbCPDYcYG2s1TIzAfWv4YSgyY5taidWzzs31lNV3yQ==}
     engines: {node: '>=12'}
 
   dotenv@16.4.5:
@@ -10073,7 +10073,7 @@ snapshots:
     dependencies:
       is-obj: 2.0.0
 
-  dotenv-expand@11.0.7:
+  dotenv-expand@12.0.1:
     dependencies:
       dotenv: 16.4.5