diff --git a/lib/runner/cli/clirunner.js b/lib/runner/cli/clirunner.js
index 77ed47992e..5e18b0079c 100644
--- a/lib/runner/cli/clirunner.js
+++ b/lib/runner/cli/clirunner.js
@@ -85,7 +85,7 @@ CliRunner.prototype = {
     // reading the settings file
     try {
       this.settings = require(this.argv.config);
-      this.replaceEnvVariables();
+      this.replaceEnvVariables(this.settings);
 
       this.manageSelenium = !this.isParallelMode() && this.settings.selenium &&
         this.settings.selenium.start_process || false;
@@ -109,16 +109,15 @@ CliRunner.prototype = {
    * @param {Object} [target]
    */
   replaceEnvVariables : function(target) {
-    target = target || this.settings;
     for (var key in target) {
       switch(typeof target[key]) {
-      case 'object':
-        this.replaceEnvVariables(target[key]);
+        case 'object':
+          this.replaceEnvVariables(target[key]);
         break;
-      case 'string':
-        target[key] = target[key].replace(/\$\{(\w+)\}/g, function(match, varName) {
-          return process.env[varName] || '${' + varName + '}';
-        });
+        case 'string':
+          target[key] = target[key].replace(/\$\{(\w+)\}/g, function(match, varName) {
+            return process.env[varName] || '${' + varName + '}';
+          });
         break;
       }
     }
diff --git a/test/src/runner/cli/testCliRunner.js b/test/src/runner/cli/testCliRunner.js
index 69ffdd1e88..94fc454dd4 100644
--- a/test/src/runner/cli/testCliRunner.js
+++ b/test/src/runner/cli/testCliRunner.js
@@ -485,6 +485,27 @@ module.exports = {
       }, 'No testing environment specified.');
     },
 
+    testParseTestSettingsNull : function() {
+      mockery.registerMock('fs', {
+        statSync : function(module) {
+          if (module == './null.json') {
+            return {isFile : function() {return true;}};
+          }
+          throw new Error('Does not exist');
+        }
+      });
+
+      var CliRunner = common.require('runner/cli/clirunner.js');
+
+      var runner = new CliRunner({
+        config : './null.json',
+        env : 'default'
+      });
+      runner.init();
+      assert.ok(typeof runner.settings.test_settings == 'object');
+      assert.strictEqual(runner.settings.test_settings['default'].irrelevantProperty, null);
+    },
+
     testParseTestSettingsIncorrect : function() {
       mockery.registerMock('fs', {
         statSync : function(module) {
@@ -708,6 +729,15 @@ module.exports = {
         src_folders : 'tests'
       });
 
+      mockery.registerMock('./null.json', {
+        src_folders : 'tests',
+        test_settings : {
+          'default' : {
+            irrelevantProperty: null
+          }
+        }
+      });
+
       mockery.registerMock('./incorrect.json', {
         src_folders : 'tests',
         test_settings : {
@@ -849,6 +879,9 @@ module.exports = {
           if (b == './empty.json') {
             return './empty.json';
           }
+          if (b == './null.json') {
+            return './null.json';
+          }
           if (b == './incorrect.json') {
             return './incorrect.json';
           }