diff --git a/pkg/leeway/package.go b/pkg/leeway/package.go
index acd0c35b..5d210032 100644
--- a/pkg/leeway/package.go
+++ b/pkg/leeway/package.go
@@ -840,6 +840,20 @@ func (p *Package) resolveBuiltinVariables() error {
 		}
 	}
 
+	// Resolve builtin variables in PackageInternal (prep, env, etc.)
+	pifc, err := yaml.Marshal(p.PackageInternal)
+	if err != nil {
+		return err
+	}
+	pifc = replaceBuildArguments(pifc, builtinArgs)
+	var pi PackageInternal
+	err = yaml.Unmarshal(pifc, &pi)
+	if err != nil {
+		return err
+	}
+	p.PackageInternal = pi
+
+	// Resolve builtin variables in Config
 	type configOnlyHelper struct {
 		Config PackageConfig `yaml:"config"`
 	}
diff --git a/pkg/leeway/package_test.go b/pkg/leeway/package_test.go
index 8a7c2f3e..348740af 100644
--- a/pkg/leeway/package_test.go
+++ b/pkg/leeway/package_test.go
@@ -172,6 +172,57 @@ func TestResolveBuiltinVariables(t *testing.T) {
 	}
 }
 
+func TestResolveBuiltinVariablesInPackageInternal(t *testing.T) {
+	tests := []struct {
+		Name         string
+		Prep         [][]string
+		Env          []string
+		ExpectedPrep [][]string
+		ExpectedEnv  []string
+	}{
+		{
+			Name:         "prep with __pkg_version",
+			Prep:         [][]string{{"/bin/bash", "prepare.sh", "${__pkg_version}"}},
+			ExpectedPrep: [][]string{{"/bin/bash", "prepare.sh", "this-version"}},
+		},
+		{
+			Name:        "env with __pkg_version",
+			Env:         []string{"VERSION=${__pkg_version}"},
+			ExpectedEnv: []string{"VERSION=this-version"},
+		},
+		{
+			Name:         "prep and env with __pkg_version",
+			Prep:         [][]string{{"echo", "${__pkg_version}"}},
+			Env:          []string{"BUILD_VERSION=${__pkg_version}"},
+			ExpectedPrep: [][]string{{"echo", "this-version"}},
+			ExpectedEnv:  []string{"BUILD_VERSION=this-version"},
+		},
+	}
+
+	for _, test := range tests {
+		t.Run(test.Name, func(t *testing.T) {
+			pkg := NewTestPackage("pkg")
+			pkg.Type = GenericPackage
+			pkg.Config = GenericPkgConfig{Commands: [][]string{{"echo", "hello"}}}
+			pkg.PreparationCommands = test.Prep
+			pkg.Environment = test.Env
+
+			err := pkg.resolveBuiltinVariables()
+			if err != nil {
+				t.Fatalf("unexpected error: %v", err)
+			}
+
+			if test.ExpectedPrep != nil && !reflect.DeepEqual(pkg.PreparationCommands, test.ExpectedPrep) {
+				t.Errorf("PreparationCommands mismatch. expected: %v, actual: %v", test.ExpectedPrep, pkg.PreparationCommands)
+			}
+
+			if test.ExpectedEnv != nil && !reflect.DeepEqual(pkg.Environment, test.ExpectedEnv) {
+				t.Errorf("Environment mismatch. expected: %v, actual: %v", test.ExpectedEnv, pkg.Environment)
+			}
+		})
+	}
+}
+
 func TestFindCycles(t *testing.T) {
 	tests := []struct {
 		Name  string