diff --git a/artifact_git_download.sh b/artifact_git_download.sh
index c0db725..07de958 100755
--- a/artifact_git_download.sh
+++ b/artifact_git_download.sh
@@ -72,6 +72,40 @@ log_step() {
 # ARTY.SH CORE FUNCTIONS - Repository Management
 # ============================================================================
 
+# Expand environment variables in a string with validation
+# Supports nested expansion (e.g., $AI_ROOT/subdir where AI_ROOT contains another var)
+# Fails if any undefined variables remain after expansion
+expand_env_vars() {
+  local input="$1"
+  local max_iterations=10
+  local iteration=0
+  local expanded="$input"
+
+  # Keep expanding until no more variables or max iterations reached
+  while [[ "$expanded" =~ \$ ]] && [[ $iteration -lt $max_iterations ]]; do
+    # Use eval to expand variables
+    expanded=$(eval echo "$expanded" 2>/dev/null || echo "$expanded")
+    iteration=$((iteration+1))
+  done
+
+  # Check if any unexpanded variables remain
+  if [[ "$expanded" =~ \$[A-Za-z_][A-Za-z0-9_]* ]]; then
+    # Extract the undefined variable name for better error message
+    local undefined_var=$(echo "$expanded" | grep -o '\$[A-Za-z_][A-Za-z0-9_]*' | head -1)
+    log_error "Undefined environment variable in path: ${undefined_var}"
+    log_error "  Original: $input"
+    log_error "  Expanded: $expanded"
+    log_error ""
+    log_error "Available environment variables from arty.yml:"
+    if [[ -f "$ARTY_CONFIG_FILE" ]]; then
+      yq eval '.envs.default | keys | .[]' "$ARTY_CONFIG_FILE" 2>/dev/null | sed 's/^/  - /' || true
+    fi
+    return 1
+  fi
+
+  echo "$expanded"
+}
+
 # Load environment variables from arty.yml
 load_env_vars() {
   local config_file="${1:-$ARTY_CONFIG_FILE}"
@@ -376,9 +410,16 @@ install_lib() {
   # Determine installation directory
   local lib_dir
   if [[ -n "$custom_into" ]]; then
+    # Expand environment variables in custom_into path
+    local expanded_into
+    if ! expanded_into=$(expand_env_vars "$custom_into"); then
+      log_error "Failed to expand environment variables in 'into' path for ${repo_url}"
+      return 1
+    fi
+
     # Custom directory relative to config file directory
     local config_dir=$(dirname "$(realpath "${config_file}")")
-    lib_dir="$config_dir/$custom_into"
+    lib_dir="$config_dir/$expanded_into"
   else
     # Use global .arty/libs for libraries without custom 'into'
     lib_dir="$ARTY_LIBS_DIR/$lib_name"