diff --git a/offlineimap/repository/IMAP.py b/offlineimap/repository/IMAP.py
index e61f53d..8da0e19 100644
--- a/offlineimap/repository/IMAP.py
+++ b/offlineimap/repository/IMAP.py
@@ -378,7 +378,7 @@ class IMAPRepository(BaseRepository):
         # 3. read password from file specified in Repository 'remotepassfile'
         passfile = self.getconf('remotepassfile', None)
         if passfile != None:
-            fd = codecs.open(os.path.expanduser(passfile), 'r', 'UTF-8')
+            fd = codecs.open(os.path.expandvars(os.path.expanduser(passfile)), 'r', 'UTF-8')
             password = fd.readline().strip()
             fd.close()
             return password.encode('UTF-8')