diff --git a/src/main/bash/sdkman-init.sh b/src/main/bash/sdkman-init.sh
index 3e8cac5a..81ca15b3 100644
--- a/src/main/bash/sdkman-init.sh
+++ b/src/main/bash/sdkman-init.sh
@@ -128,3 +128,21 @@ for candidate_name in "${SDKMAN_CANDIDATES[@]}"; do
 done
 unset candidate_name candidate_dir
 export PATH
+
+if [[ "$sdkman_auto_env" == "true" ]]; then
+	if [[ "$zsh_shell" == "true" ]]; then
+		function sdkman_auto_env() {
+			 [[ -f ".sdkmanrc" ]] && sdk env
+		}
+
+		chpwd_functions+=(sdkman_auto_env)
+	else
+		function sdkman_auto_env() {
+			[[ "$SDKMAN_OLD_PWD" != "$PWD" ]] && [[ -f ".sdkmanrc" ]] && sdk env
+
+			export SDKMAN_OLD_PWD="$PWD"
+		}
+
+		[[ -z "$PROMPT_COMMAND" ]] && PROMPT_COMMAND="sdkman_auto_env" || PROMPT_COMMAND="${PROMPT_COMMAND%\;};sdkman_auto_env"
+	fi
+fi
\ No newline at end of file
diff --git a/src/test/groovy/sdkman/specs/EnvCommandSpec.groovy b/src/test/groovy/sdkman/specs/EnvCommandSpec.groovy
index 00e4fb30..e3c2fbca 100644
--- a/src/test/groovy/sdkman/specs/EnvCommandSpec.groovy
+++ b/src/test/groovy/sdkman/specs/EnvCommandSpec.groovy
@@ -1,6 +1,7 @@
 package sdkman.specs
 
 import sdkman.support.SdkmanEnvSpecification
+import spock.lang.Unroll
 
 import java.nio.file.Paths
 
@@ -91,6 +92,41 @@ class EnvCommandSpec extends SdkmanEnvSpecification {
 		]
 	}
 
+	def "should execute 'sdk env' when entering a directory with an .sdkmanrc"() {
+		given:
+		new FileTreeBuilder(candidatesDirectory).with {
+			"groovy" {
+				"2.4.1" {}
+			}
+		}
+
+		bash = sdkmanBashEnvBuilder
+			.withVersionCache("x.y.z")
+			.withOfflineMode(true)
+			.withConfiguration("sdkman_auto_env", sdkmanAutoEnv)
+			.build()
+
+		new FileTreeBuilder(bash.workDir).with {
+			"project" {
+				".sdkmanrc"("groovy=2.4.1\n")	
+			}
+		}
+
+		bash.start()
+		bash.execute("source $bootstrapScript")		
+
+		when:
+		bash.execute("cd project")
+
+		then:
+		verifyOutput(bash.output)
+
+		where:
+		sdkmanAutoEnv | verifyOutput
+		'true'		  | { it.contains("Using groovy version 2.4.1 in this shell") }
+		'false'       | { !it.contains("Using groovy version 2.4.1 in this shell") }
+	}
+
 	def "should issue an error if .sdkmanrc contains a malformed candidate version"() {
 		given:
 		bash = sdkmanBashEnvBuilder