diff --git a/bootstrap/helpers/parsers.php b/bootstrap/helpers/parsers.php
index 99ce9185a..85ae5ad3e 100644
--- a/bootstrap/helpers/parsers.php
+++ b/bootstrap/helpers/parsers.php
@@ -986,15 +986,17 @@ function applicationParser(Application $resource, int $pull_request_id = 0, ?int
                 continue;
             }
             if ($key->value() === $parsedValue->value()) {
-                $value = null;
-                $resource->environment_variables()->firstOrCreate([
+                // Simple variable reference (e.g. DATABASE_URL: ${DATABASE_URL})
+                // Use firstOrCreate to avoid overwriting user-saved values on redeploy
+                $envVar = $resource->environment_variables()->firstOrCreate([
                     'key' => $key,
                     'resourceable_type' => get_class($resource),
                     'resourceable_id' => $resource->id,
                 ], [
-                    'value' => $value,
                     'is_preview' => false,
                 ]);
+                // Add the variable to the environment using the saved DB value
+                $environment[$key->value()] = $envVar->value;
             } else {
                 if ($value->startsWith('$')) {
                     $isRequired = false;
@@ -1074,7 +1076,7 @@ function applicationParser(Application $resource, int $pull_request_id = 0, ?int
                         } else {
                             // Simple variable reference without default
                             $parsedKeyValue = replaceVariables($value);
-                            $resource->environment_variables()->firstOrCreate([
+                            $envVar = $resource->environment_variables()->firstOrCreate([
                                 'key' => $content,
                                 'resourceable_type' => get_class($resource),
                                 'resourceable_id' => $resource->id,
@@ -1082,8 +1084,8 @@ function applicationParser(Application $resource, int $pull_request_id = 0, ?int
                                 'is_preview' => false,
                                 'is_required' => $isRequired,
                             ]);
-                            // Add the variable to the environment
-                            $environment[$content] = $value;
+                            // Add the variable to the environment using the saved DB value
+                            $environment[$content] = $envVar->value;
                         }
                     } else {
                         // Fallback to old behavior for malformed input (backward compatibility)
@@ -1109,7 +1111,7 @@ function applicationParser(Application $resource, int $pull_request_id = 0, ?int
                         if ($originalValue->value() === $value->value()) {
                             // This means the variable does not have a default value
                             $parsedKeyValue = replaceVariables($value);
-                            $resource->environment_variables()->firstOrCreate([
+                            $envVar = $resource->environment_variables()->firstOrCreate([
                                 'key' => $parsedKeyValue,
                                 'resourceable_type' => get_class($resource),
                                 'resourceable_id' => $resource->id,
@@ -1117,7 +1119,8 @@ function applicationParser(Application $resource, int $pull_request_id = 0, ?int
                                 'is_preview' => false,
                                 'is_required' => $isRequired,
                             ]);
-                            $environment[$parsedKeyValue->value()] = $value;
+                            // Add the variable to the environment using the saved DB value
+                            $environment[$parsedKeyValue->value()] = $envVar->value;
 
                             continue;
                         }
@@ -2325,16 +2328,18 @@ function serviceParser(Service $resource): Collection
                 continue;
             }
             if ($key->value() === $parsedValue->value()) {
-                $value = null;
-                $resource->environment_variables()->updateOrCreate([
+                // Simple variable reference (e.g. DATABASE_URL: ${DATABASE_URL})
+                // Use firstOrCreate to avoid overwriting user-saved values on redeploy
+                $envVar = $resource->environment_variables()->firstOrCreate([
                     'key' => $key,
                     'resourceable_type' => get_class($resource),
                     'resourceable_id' => $resource->id,
                 ], [
-                    'value' => $value,
                     'is_preview' => false,
                     'comment' => $envComments[$originalKey] ?? null,
                 ]);
+                // Add the variable to the environment using the saved DB value
+                $environment[$key->value()] = $envVar->value;
             } else {
                 if ($value->startsWith('$')) {
                     $isRequired = false;
@@ -2421,7 +2426,8 @@ function serviceParser(Service $resource): Collection
                             }
                         } else {
                             // Simple variable reference without default
-                            $resource->environment_variables()->updateOrCreate([
+                            // Use firstOrCreate to avoid overwriting user-saved values on redeploy
+                            $envVar = $resource->environment_variables()->firstOrCreate([
                                 'key' => $content,
                                 'resourceable_type' => get_class($resource),
                                 'resourceable_id' => $resource->id,
@@ -2430,6 +2436,8 @@ function serviceParser(Service $resource): Collection
                                 'is_required' => $isRequired,
                                 'comment' => $envComments[$originalKey] ?? null,
                             ]);
+                            // Add the variable to the environment using the saved DB value
+                            $environment[$content] = $envVar->value;
                         }
                     } else {
                         // Fallback to old behavior for malformed input (backward compatibility)
@@ -2455,8 +2463,9 @@ function serviceParser(Service $resource): Collection
 
                         if ($originalValue->value() === $value->value()) {
                             // This means the variable does not have a default value
+                            // Use firstOrCreate to avoid overwriting user-saved values on redeploy
                             $parsedKeyValue = replaceVariables($value);
-                            $resource->environment_variables()->updateOrCreate([
+                            $envVar = $resource->environment_variables()->firstOrCreate([
                                 'key' => $parsedKeyValue,
                                 'resourceable_type' => get_class($resource),
                                 'resourceable_id' => $resource->id,
@@ -2465,12 +2474,13 @@ function serviceParser(Service $resource): Collection
                                 'is_required' => $isRequired,
                                 'comment' => $envComments[$originalKey] ?? null,
                             ]);
-                            // Add the variable to the environment so it will be shown in the deployable compose file
-                            $environment[$parsedKeyValue->value()] = $value;
+                            // Add the variable to the environment using the saved DB value
+                            $environment[$parsedKeyValue->value()] = $envVar->value;
 
                             continue;
                         }
-                        $resource->environment_variables()->updateOrCreate([
+                        // Variable with a default value from compose — use firstOrCreate to preserve user edits
+                        $resource->environment_variables()->firstOrCreate([
                             'key' => $key,
                             'resourceable_type' => get_class($resource),
                             'resourceable_id' => $resource->id,
diff --git a/tests/Unit/ServiceParserEnvVarPreservationTest.php b/tests/Unit/ServiceParserEnvVarPreservationTest.php
new file mode 100644
index 000000000..3f56447dc
--- /dev/null
+++ b/tests/Unit/ServiceParserEnvVarPreservationTest.php
@@ -0,0 +1,69 @@
+<?php
+
+/**
+ * Unit tests to verify that Docker Compose environment variables
+ * do not overwrite user-saved values on redeploy.
+ *
+ * Regression test for GitHub issue #8885.
+ */
+it('uses firstOrCreate for simple variable references in serviceParser to preserve user values', function () {
+    $parsersFile = file_get_contents(__DIR__.'/../../bootstrap/helpers/parsers.php');
+
+    // The serviceParser function should use firstOrCreate (not updateOrCreate)
+    // for simple variable references like DATABASE_URL: ${DATABASE_URL}
+    // This is the key === parsedValue branch
+    expect($parsersFile)->toContain(
+        "// Simple variable reference (e.g. DATABASE_URL: \${DATABASE_URL})\n".
+        "                // Use firstOrCreate to avoid overwriting user-saved values on redeploy\n".
+        '                $envVar = $resource->environment_variables()->firstOrCreate('
+    );
+});
+
+it('does not set value to null for simple variable references in serviceParser', function () {
+    $parsersFile = file_get_contents(__DIR__.'/../../bootstrap/helpers/parsers.php');
+
+    // The old bug: $value = null followed by updateOrCreate with 'value' => $value
+    // This pattern should NOT exist for simple variable references
+    expect($parsersFile)->not->toContain(
+        "\$value = null;\n".
+        '                $resource->environment_variables()->updateOrCreate('
+    );
+});
+
+it('uses firstOrCreate for simple variable refs without default in serviceParser balanced brace path', function () {
+    $parsersFile = file_get_contents(__DIR__.'/../../bootstrap/helpers/parsers.php');
+
+    // In the balanced brace extraction path, simple variable references without defaults
+    // should use firstOrCreate to preserve user-saved values
+    // This appears twice (applicationParser and serviceParser)
+    $count = substr_count(
+        $parsersFile,
+        "// Simple variable reference without default\n".
+        "                            // Use firstOrCreate to avoid overwriting user-saved values on redeploy\n".
+        '                            $envVar = $resource->environment_variables()->firstOrCreate('
+    );
+
+    expect($count)->toBe(1, 'serviceParser should use firstOrCreate for simple variable refs without default');
+});
+
+it('populates environment array with saved DB value instead of raw compose variable', function () {
+    $parsersFile = file_get_contents(__DIR__.'/../../bootstrap/helpers/parsers.php');
+
+    // After firstOrCreate, the environment should be populated with the DB value ($envVar->value)
+    // not the raw compose variable reference (e.g., ${DATABASE_URL})
+    // This pattern should appear in both parsers for all variable reference types
+    expect($parsersFile)->toContain('// Add the variable to the environment using the saved DB value');
+    expect($parsersFile)->toContain('$environment[$key->value()] = $envVar->value;');
+    expect($parsersFile)->toContain('$environment[$content] = $envVar->value;');
+});
+
+it('does not use updateOrCreate with value null for user-editable environment variables', function () {
+    $parsersFile = file_get_contents(__DIR__.'/../../bootstrap/helpers/parsers.php');
+
+    // The specific bug pattern: setting $value = null then calling updateOrCreate with 'value' => $value
+    // This overwrites user-saved values with null on every deploy
+    expect($parsersFile)->not->toContain(
+        "\$value = null;\n".
+        '                $resource->environment_variables()->updateOrCreate('
+    );
+});