diff --git a/backend/conftest.py b/backend/conftest.py
new file mode 100644
index 000000000..16452bb9e
--- /dev/null
+++ b/backend/conftest.py
@@ -0,0 +1,24 @@
+"""Top-level pytest conftest for the backend service.
+
+Loads environment variables from ``test.env`` before pytest collects any
+test modules. This replaces the ``pytest-dotenv`` plugin, which has been
+unreleased since Feb 2020 and is a recurring break risk across pytest
+majors.
+
+Behavior matches the previous ``env_files = "test.env"`` setting under
+``[tool.pytest.ini_options]``: variables already in the process
+environment are preserved (``override=False``); a missing file is
+silently tolerated.
+
+Note: backend tests do not run under tox in CI today (no ``backend``
+testenv); this file only takes effect in local/IDE runs.
+"""
+
+from pathlib import Path
+
+from dotenv import load_dotenv
+
+# `-s` is set in pyproject so prints surface — log when test.env is absent
+# to make a mis-located file debuggable instead of silently empty.
+if not load_dotenv(Path(__file__).parent / "test.env", override=False):
+    print("[conftest] backend/test.env not found; using ambient environment", flush=True)
diff --git a/backend/pyproject.toml b/backend/pyproject.toml
index 536b04332..7b520d3a8 100644
--- a/backend/pyproject.toml
+++ b/backend/pyproject.toml
@@ -71,7 +71,7 @@ dev = [
     "responses>=0.25.7",
     "psutil>=7.0.0",
 ]
-test = ["pytest>=8.0.1", "pytest-dotenv==0.5.2"]
+test = ["pytest>=8.0.1"]
 deploy = [
     "gunicorn~=23.0", # For serving the application
     # Keep versions empty and let uv decide version
@@ -98,7 +98,8 @@ constraint-dependencies = [
 ]
 
 [tool.pytest.ini_options]
-env_files = "test.env" # Load env from particular env file
+# Note: test.env is loaded by backend/conftest.py via python-dotenv directly
+# (replaces the unmaintained pytest-dotenv plugin).
 addopts = "-s"
 
 [tool.poe]
diff --git a/backend/uv.lock b/backend/uv.lock
index 04d6894c1..bc5b7c6e7 100644
--- a/backend/uv.lock
+++ b/backend/uv.lock
@@ -2983,19 +2983,6 @@ wheels = [
     { url = "https://files.pythonhosted.org/packages/3b/ab/b3226f0bd7cdcf710fbede2b3548584366da3b19b5021e74f5bde2a8fa3f/pytest-9.0.2-py3-none-any.whl", hash = "sha256:711ffd45bf766d5264d487b917733b453d917afd2b0ad65223959f59089f875b", size = 374801, upload-time = "2025-12-06T21:30:49.154Z" },
 ]
 
-[[package]]
-name = "pytest-dotenv"
-version = "0.5.2"
-source = { registry = "https://pypi.org/simple" }
-dependencies = [
-    { name = "pytest" },
-    { name = "python-dotenv" },
-]
-sdist = { url = "https://files.pythonhosted.org/packages/cd/b0/cafee9c627c1bae228eb07c9977f679b3a7cb111b488307ab9594ba9e4da/pytest-dotenv-0.5.2.tar.gz", hash = "sha256:2dc6c3ac6d8764c71c6d2804e902d0ff810fa19692e95fe138aefc9b1aa73732", size = 3782, upload-time = "2020-06-16T12:38:03.4Z" }
-wheels = [
-    { url = "https://files.pythonhosted.org/packages/d0/da/9da67c67b3d0963160e3d2cbc7c38b6fae342670cc8e6d5936644b2cf944/pytest_dotenv-0.5.2-py3-none-any.whl", hash = "sha256:40a2cece120a213898afaa5407673f6bd924b1fa7eafce6bda0e8abffe2f710f", size = 3993, upload-time = "2020-06-16T12:38:01.139Z" },
-]
-
 [[package]]
 name = "python-crontab"
 version = "3.3.0"
@@ -3745,7 +3732,6 @@ dev = [
 ]
 test = [
     { name = "pytest" },
-    { name = "pytest-dotenv" },
 ]
 
 [package.metadata]
@@ -3811,7 +3797,6 @@ dev = [
 ]
 test = [
     { name = "pytest", specifier = ">=8.0.1" },
-    { name = "pytest-dotenv", specifier = "==0.5.2" },
 ]
 
 [[package]]
diff --git a/prompt-service/pyproject.toml b/prompt-service/pyproject.toml
index ae32c9520..5654af6e5 100644
--- a/prompt-service/pyproject.toml
+++ b/prompt-service/pyproject.toml
@@ -30,7 +30,6 @@ unstract-sdk1 = { path = "../unstract/sdk1", editable = true }
 test = [
     "pytest~=8.0.1",
     "pytest-asyncio>=0.23.0",
-    "pytest-dotenv==0.5.2",
     "pytest-mock~=3.14.0",
     "pytest-md-report>=0.6.2",
     "python-dotenv==1.0.1",
diff --git a/prompt-service/uv.lock b/prompt-service/uv.lock
index b3a8cf1a6..30eea4ad0 100644
--- a/prompt-service/uv.lock
+++ b/prompt-service/uv.lock
@@ -2200,19 +2200,6 @@ wheels = [
     { url = "https://files.pythonhosted.org/packages/ee/82/62e2d63639ecb0fbe8a7ee59ef0bc69a4669ec50f6d3459f74ad4e4189a2/pytest_asyncio-0.23.8-py3-none-any.whl", hash = "sha256:50265d892689a5faefb84df80819d1ecef566eb3549cf915dfb33569359d1ce2", size = 17663, upload-time = "2024-07-17T17:39:32.478Z" },
 ]
 
-[[package]]
-name = "pytest-dotenv"
-version = "0.5.2"
-source = { registry = "https://pypi.org/simple" }
-dependencies = [
-    { name = "pytest" },
-    { name = "python-dotenv" },
-]
-sdist = { url = "https://files.pythonhosted.org/packages/cd/b0/cafee9c627c1bae228eb07c9977f679b3a7cb111b488307ab9594ba9e4da/pytest-dotenv-0.5.2.tar.gz", hash = "sha256:2dc6c3ac6d8764c71c6d2804e902d0ff810fa19692e95fe138aefc9b1aa73732", size = 3782, upload-time = "2020-06-16T12:38:03.4Z" }
-wheels = [
-    { url = "https://files.pythonhosted.org/packages/d0/da/9da67c67b3d0963160e3d2cbc7c38b6fae342670cc8e6d5936644b2cf944/pytest_dotenv-0.5.2-py3-none-any.whl", hash = "sha256:40a2cece120a213898afaa5407673f6bd924b1fa7eafce6bda0e8abffe2f710f", size = 3993, upload-time = "2020-06-16T12:38:01.139Z" },
-]
-
 [[package]]
 name = "pytest-md-report"
 version = "0.7.0"
@@ -2780,7 +2767,6 @@ test = [
     { name = "flask-wtf" },
     { name = "pytest" },
     { name = "pytest-asyncio" },
-    { name = "pytest-dotenv" },
     { name = "pytest-md-report" },
     { name = "pytest-mock" },
     { name = "python-dotenv" },
@@ -2815,7 +2801,6 @@ test = [
     { name = "flask-wtf", specifier = "~=1.1" },
     { name = "pytest", specifier = "~=8.0.1" },
     { name = "pytest-asyncio", specifier = ">=0.23.0" },
-    { name = "pytest-dotenv", specifier = "==0.5.2" },
     { name = "pytest-md-report", specifier = ">=0.6.2" },
     { name = "pytest-mock", specifier = "~=3.14.0" },
     { name = "python-dotenv", specifier = "==1.0.1" },