diff --git a/doc/guix.texi b/doc/guix.texi
index a35ea2fd9d..fdd8fdf9ae 100644
--- a/doc/guix.texi
+++ b/doc/guix.texi
@@ -4146,6 +4146,19 @@ variables in @file{.bashrc}; instead, they should be defined in
 @xref{Bash Startup Files,,, bash, The GNU Bash Reference Manual}, for
 details on Bash start-up files.}.
 
+@vindex GUIX_ENVIRONMENT
+@command{guix environment} defines the @code{GUIX_ENVIRONMENT}
+variable in the shell it spaws.  This allows users to, say, define a
+specific prompt for development environments in their @file{.bashrc}
+(@pxref{Bash Startup Files,,, bash, The GNU Bash Reference Manual}):
+
+@example
+if [ -n "$GUIX_ENVIRONMENT" ]
+then
+    export PS1="\u@@\h \w [dev]\$ "
+fi
+@end example
+
 Additionally, more than one package may be specified, in which case the
 union of the inputs for the given packages are used.  For example, the
 command below spawns a shell where all of the dependencies of both Guile
diff --git a/gnu/system/shadow.scm b/gnu/system/shadow.scm
index aa97652678..ae6229229b 100644
--- a/gnu/system/shadow.scm
+++ b/gnu/system/shadow.scm
@@ -153,7 +153,13 @@ then
     source /etc/profile
 fi
 
-PS1='\\u@\\h \\w\\$ '
+# Adjust the prompt depending on whether we're in 'guix environment'.
+if [ -n \"$GUIX_ENVIRONMENT\" ]
+then
+    export PS1='\\u@\\h \\w\\ [env]$ '
+else
+    export PS1='\\u@\\h \\w\\$ '
+fi
 alias ls='ls -p --color'
 alias ll='ls -l'\n"))
                       (zlogin (text-file "zlogin" "\
diff --git a/guix/scripts/environment.scm b/guix/scripts/environment.scm
index 00c4df7a3e..c6cac469e4 100644
--- a/guix/scripts/environment.scm
+++ b/guix/scripts/environment.scm
@@ -78,7 +78,11 @@ search paths."
                          (if (and current (not pure?))
                              (string-append value separator current)
                              value)))))
-            (evaluate-input-search-paths inputs paths)))
+            (evaluate-input-search-paths inputs paths))
+
+  ;; Give users a way to know that they're in 'guix environment', so they can
+  ;; adjust 'PS1' accordingly, for instance.
+  (setenv "GUIX_ENVIRONMENT" "t"))
 
 (define (show-search-paths inputs search-paths pure?)
   "Display SEARCH-PATHS applied to the packages specified by INPUTS, a list of