diff --git a/.env.example b/.env.example
new file mode 100644
index 00000000..e16b7f25
--- /dev/null
+++ b/.env.example
@@ -0,0 +1,21 @@
+# Bespoke Labs Curator Environment Configuration
+
+#######################
+# Required Settings
+#######################
+
+# OpenAI API Key
+# Currently required as OpenAI is the only supported LLM provider
+# Support for other providers (Claude, etc.) may be added in the future
+# Get your key from: https://platform.openai.com/api-keys
+OPENAI_API_KEY=sk-your-key-here
+
+#######################
+# Optional Settings
+#######################
+
+# Cache Directory
+# Location where Curator stores its cache files
+# Default: ~/.curator
+# Note: This can also be set via the working_dir parameter in code
+CURATOR_CACHE_DIR=
diff --git a/README.md b/README.md
index 92c080df..3fdfd9fd 100644
--- a/README.md
+++ b/README.md
@@ -133,4 +133,21 @@ nvm install 22
 node -v # should print `v22.11.0`
 # verifies the right npm version is in the environment
 npm -v # should print `10.9.0`
+
+```
+
+## Development
+
+<details>
+<summary><h4 style="display: inline-block">Environment Setup with .env file</h4></summary>
+
+Copy `.env.example` to create your `.env` file:
+```bash
+cp .env.example .env
 ```
+
+Available environment variables:
+- `OPENAI_API_KEY`: (Required) Your OpenAI API key for language model requests
+- `CURATOR_CACHE_DIR`: (Optional) Custom cache directory, defaults to `~/.cache/curator`. Used to store datasets, model responses, and metadata for caching and viewer functionality.
+
+</details>
diff --git a/src/bespokelabs/curator/prompter/prompter.py b/src/bespokelabs/curator/prompter/prompter.py
index 63710b28..d88ca555 100644
--- a/src/bespokelabs/curator/prompter/prompter.py
+++ b/src/bespokelabs/curator/prompter/prompter.py
@@ -140,12 +140,12 @@ def _completions(
 
         if self is None:
             raise ValueError("Prompter must be provided")
-
+        
         if working_dir is None:
-            curator_cache_dir = os.environ.get(
-                "CURATOR_CACHE_DIR",
-                os.path.expanduser(_CURATOR_DEFAULT_CACHE_DIR),
-            )
+            # First check if CURATOR_CACHE_DIR is set and non-empty
+            curator_cache_dir = os.environ.get("CURATOR_CACHE_DIR", "")
+            if not curator_cache_dir:  # If empty or not set
+                curator_cache_dir = os.path.expanduser(_CURATOR_DEFAULT_CACHE_DIR)
         else:
             curator_cache_dir = working_dir