[FIX] Replace unmaintained pytest-dotenv with direct dotenv loading

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)

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]

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",