diff --git a/packages/nx/migrations.json b/packages/nx/migrations.json
index cf5fd96773082..f3dddf4f46893 100644
--- a/packages/nx/migrations.json
+++ b/packages/nx/migrations.json
@@ -83,6 +83,12 @@
       "version": "16.6.0-beta.6",
       "description": "Prefix outputs with {workspaceRoot}/{projectRoot} if needed",
       "implementation": "./src/migrations/update-15-0-0/prefix-outputs"
+    },
+    "16.8.0-escape-dollar-sign-env": {
+      "cli": "nx",
+      "version": "16.8.0-beta.3",
+      "description": "Escape $ in env variables",
+      "implementation": "./src/migrations/update-16-8-0/escape-dollar-sign-env-variables"
     }
   }
 }
diff --git a/packages/nx/src/migrations/update-16-8-0/escape-dollar-sign-env-variables.spec.ts b/packages/nx/src/migrations/update-16-8-0/escape-dollar-sign-env-variables.spec.ts
new file mode 100644
index 0000000000000..dc262102d10a0
--- /dev/null
+++ b/packages/nx/src/migrations/update-16-8-0/escape-dollar-sign-env-variables.spec.ts
@@ -0,0 +1,132 @@
+import { createTreeWithEmptyWorkspace } from '../../generators/testing-utils/create-tree-with-empty-workspace';
+import { addProjectConfiguration } from '../../generators/utils/project-configuration';
+import escapeDollarSignEnvVariables from './escape-dollar-sign-env-variables';
+
+describe('escape $ in env variables', () => {
+  let tree;
+  beforeEach(() => {
+    tree = createTreeWithEmptyWorkspace();
+  });
+
+  it('should escape $ in env variables in .env file', () => {
+    tree.write(
+      '.env',
+      `dollar=$
+NX_SOME_VAR=$ABC`
+    );
+    escapeDollarSignEnvVariables(tree);
+    expect(tree.read('.env', 'utf-8')).toEqual(`dollar=\\$
+NX_SOME_VAR=\\$ABC`);
+  });
+
+  it('should escape $ env variables in .env file under project', () => {
+    addProjectConfiguration(tree, 'my-app', {
+      root: 'apps/my-app',
+    });
+    addProjectConfiguration(tree, 'my-app2', {
+      root: 'apps/my-app2',
+    });
+    tree.write(
+      'apps/my-app/.env',
+      `dollar=$
+NX_SOME_VAR=$ABC`
+    );
+    tree.write(
+      'apps/my-app2/.env',
+      `dollar=$
+NX_SOME_VAR=$DEF`
+    );
+    escapeDollarSignEnvVariables(tree);
+    expect(tree.read('apps/my-app/.env', 'utf-8')).toEqual(`dollar=\\$
+NX_SOME_VAR=\\$ABC`);
+    expect(tree.read('apps/my-app2/.env', 'utf-8')).toEqual(`dollar=\\$
+NX_SOME_VAR=\\$DEF`);
+  });
+
+  it('should escape $ env variables in .env for target', () => {
+    tree.write('.env', 'dollar=$');
+    tree.write('.env.build', 'dollar=$');
+    addProjectConfiguration(tree, 'my-app', {
+      root: 'apps/my-app',
+      targets: {
+        build: {
+          executor: '@nx/node:build',
+          configurations: {
+            production: {},
+          },
+        },
+      },
+    });
+    tree.write(
+      'apps/my-app/.build.env',
+      `dollar=$
+NX_SOME_VAR=$ABC`
+    );
+    tree.write(
+      'apps/my-app/.env',
+      `dollar=$
+NX_SOME_VAR=$ABC`
+    );
+    escapeDollarSignEnvVariables(tree);
+    expect(tree.read('.env', 'utf-8')).toEqual(`dollar=\\$`);
+    expect(tree.read('apps/my-app/.env', 'utf-8')).toEqual(`dollar=\\$
+NX_SOME_VAR=\\$ABC`);
+    expect(tree.read('apps/my-app/.build.env', 'utf-8')).toEqual(`dollar=\\$
+NX_SOME_VAR=\\$ABC`);
+  });
+
+  it('should escape $ env variables in .env for configuration', () => {
+    tree.write('.env', 'dollar=$');
+    tree.write('.env.production', 'dollar=$');
+    addProjectConfiguration(tree, 'my-app', {
+      root: 'apps/my-app',
+      targets: {
+        build: {
+          executor: '@nx/node:build',
+          configurations: {
+            production: {},
+          },
+        },
+      },
+    });
+    tree.write(
+      'apps/my-app/.production.env',
+      `dollar=$
+NX_SOME_VAR=$ABC`
+    );
+    tree.write(
+      'apps/my-app/.build.production.env',
+      `dollar=$
+NX_SOME_VAR=$ABC`
+    );
+    tree.write(
+      'apps/my-app/.env',
+      `dollar=$
+NX_SOME_VAR=$ABC`
+    );
+    escapeDollarSignEnvVariables(tree);
+    expect(tree.read('.env', 'utf-8')).toEqual(`dollar=\\$`);
+    expect(tree.read('apps/my-app/.env', 'utf-8')).toEqual(`dollar=\\$
+NX_SOME_VAR=\\$ABC`);
+    expect(tree.read('apps/my-app/.build.production.env', 'utf-8'))
+      .toEqual(`dollar=\\$
+NX_SOME_VAR=\\$ABC`);
+    expect(tree.read('apps/my-app/.production.env', 'utf-8'))
+      .toEqual(`dollar=\\$
+NX_SOME_VAR=\\$ABC`);
+  });
+
+  it('should not escape $ env variables if it is already escaped', () => {
+    addProjectConfiguration(tree, 'my-app', {
+      root: 'apps/my-app',
+    });
+    tree.write(
+      'apps/my-app/.env',
+      `dollar=\\$
+NX_SOME_VAR=\\$ABC`
+    );
+    escapeDollarSignEnvVariables(tree);
+    expect(tree.read('apps/my-app/.env', 'utf-8')).toEqual(`dollar=\\$
+NX_SOME_VAR=\\$ABC`);
+  });
+});
diff --git a/packages/nx/src/migrations/update-16-8-0/escape-dollar-sign-env-variables.ts b/packages/nx/src/migrations/update-16-8-0/escape-dollar-sign-env-variables.ts
new file mode 100644
index 0000000000000..de32897c0eb42
--- /dev/null
+++ b/packages/nx/src/migrations/update-16-8-0/escape-dollar-sign-env-variables.ts
@@ -0,0 +1,76 @@
+import { Tree } from '../../generators/tree';
+import { getProjects } from '../../generators/utils/project-configuration';
+
+/**
+ * This function escapes dollar sign in env variables
+ * It will go through:
+ * - '.env', '.local.env', '.env.local'
+ * - .env.[target-name], .[target-name].env
+ * - .env.[target-name].[configuration-name], .[target-name].[configuration-name].env
+ * - .env.[configuration-name], .[configuration-name].env
+ * at each project root and workspace root
+ * @param tree
+ */
+export default function escapeDollarSignEnvVariables(tree: Tree) {
+  const envFiles = ['.env', '.local.env', '.env.local'];
+  for (const [_, configuration] of getProjects(tree).entries()) {
+    envFiles.push(
+      `${configuration.root}/.env`,
+      `${configuration.root}/.local.env`,
+      `${configuration.root}/.env.local`
+    );
+    for (const targetName in configuration.targets) {
+      const task = configuration.targets[targetName];
+      envFiles.push(
+        `.env.${targetName}`,
+        `.${targetName}.env`,
+        `${configuration.root}/.env.${targetName}`,
+        `${configuration.root}/.${targetName}.env`
+      );
+
+      if (task.configurations) {
+        for (const configurationName in task.configurations) {
+          envFiles.push(
+            `.env.${targetName}.${configurationName}`,
+            `.${targetName}.${configurationName}.env`,
+            `.env.${configurationName}`,
+            `.${configurationName}.env`,
+            `${configuration.root}/.env.${targetName}.${configurationName}`,
+            `${configuration.root}/.${targetName}.${configurationName}.env`,
+            `${configuration.root}/.env.${configurationName}`,
+            `${configuration.root}/.${configurationName}.env`
+          );
+        }
+      }
+    }
+  }
+  for (const envFile of new Set(envFiles)) {
+    parseEnvFile(tree, envFile);
+  }
+}
+
+/**
+ * This function parse the env file and escape dollar sign
+ * @param tree
+ * @param envFilePath
+ * @returns
+ */
+function parseEnvFile(tree: Tree, envFilePath: string) {
+  if (!tree.exists(envFilePath)) {
+    return;
+  }
+  let envFileContent = tree.read(envFilePath, 'utf-8');
+  envFileContent = envFileContent
+    .split('\n')
+    .map((line) => {
+      line = line.trim();
+      const declarations = line.split('=');
+      if (declarations[1].includes('$') && !declarations[1].includes(`\\$`)) {
+        declarations[1] = declarations[1].replace('$', `\\$`);
+        line = declarations.join('=');
+      }
+      return line;
+    })
+    .join('\n');
+  tree.write(envFilePath, envFileContent);
+}