diff --git a/src/lightning/pytorch/CHANGELOG.md b/src/lightning/pytorch/CHANGELOG.md
index a364618a3eb36..b03830455cc37 100644
--- a/src/lightning/pytorch/CHANGELOG.md
+++ b/src/lightning/pytorch/CHANGELOG.md
@@ -17,6 +17,9 @@ The format is based on [Keep a Changelog](http://keepachangelog.com/en/1.0.0/).
 - `seed_everything()` without passing in a seed no longer randomly selects a seed, and now defaults to `0` ([#18846](https://github.com/Lightning-AI/lightning/pull/18846))
 - `LightningCLI` no longer allows setting a normal class instance as default. A `lazy_instance` can be used instead ([#18822](https://github.com/Lightning-AI/lightning/pull/18822))
 
+- The `PL_TRAINER_*` env variables now takes precedence over the arguments passed to the Trainer ([#18876](https://github.com/Lightning-AI/lightning/issues/18876))
+
+
 
 ### Deprecated
 
@@ -36,6 +39,8 @@ The format is based on [Keep a Changelog](http://keepachangelog.com/en/1.0.0/).
 - Fixed an issue when `BatchSizeFinder` `steps_per_trial` parameter ends up defining how many validation batches to run during the entire training ([#18394](https://github.com/Lightning-AI/lightning/issues/18394))
 
 
+- Fixed an issue that would prevent the user to override the Trainer arguments with the `PL_TRAINER_*` env variable ([#18876](https://github.com/Lightning-AI/lightning/issues/18876))
+
 
 ## [2.1.0] - 2023-10-11
 
diff --git a/src/lightning/pytorch/trainer/trainer.py b/src/lightning/pytorch/trainer/trainer.py
index d0dcb8f437558..56885bec82a9b 100644
--- a/src/lightning/pytorch/trainer/trainer.py
+++ b/src/lightning/pytorch/trainer/trainer.py
@@ -66,7 +66,7 @@
 from lightning.pytorch.trainer.connectors.signal_connector import _SignalConnector
 from lightning.pytorch.trainer.states import RunningStage, TrainerFn, TrainerState, TrainerStatus
 from lightning.pytorch.utilities import GradClipAlgorithmType, parsing
-from lightning.pytorch.utilities.argparse import _defaults_from_env_vars
+from lightning.pytorch.utilities.argparse import _overrides_from_env_vars
 from lightning.pytorch.utilities.compile import _maybe_unwrap_optimized, _verify_strategy_supports_compile
 from lightning.pytorch.utilities.exceptions import MisconfigurationException
 from lightning.pytorch.utilities.model_helpers import is_overridden
@@ -89,7 +89,7 @@
 
 
 class Trainer:
-    @_defaults_from_env_vars
+    @_overrides_from_env_vars
     def __init__(
         self,
         *,
diff --git a/src/lightning/pytorch/utilities/argparse.py b/src/lightning/pytorch/utilities/argparse.py
index eb7273b54a577..285d935fe8d33 100644
--- a/src/lightning/pytorch/utilities/argparse.py
+++ b/src/lightning/pytorch/utilities/argparse.py
@@ -53,9 +53,9 @@ def _parse_env_variables(cls: Type, template: str = "PL_%(cls_name)s_%(cls_argum
     return Namespace(**env_args)
 
 
-def _defaults_from_env_vars(fn: _T) -> _T:
+def _overrides_from_env_vars(fn: _T) -> _T:
     @wraps(fn)
-    def insert_env_defaults(self: Any, *args: Any, **kwargs: Any) -> Any:
+    def update_kwargs_from_env(self: Any, *args: Any, **kwargs: Any) -> Any:
         cls = self.__class__  # get the class
         if args:  # in case any args passed move them to kwargs
             # parse the argument names
@@ -64,9 +64,9 @@ def insert_env_defaults(self: Any, *args: Any, **kwargs: Any) -> Any:
             kwargs.update(dict(zip(cls_arg_names, args)))
         env_variables = vars(_parse_env_variables(cls))
         # update the kwargs by env variables
-        kwargs = dict(list(env_variables.items()) + list(kwargs.items()))
+        kwargs = dict(list(kwargs.items()) + list(env_variables.items()))
 
         # all args were already moved to kwargs
         return fn(self, **kwargs)
 
-    return cast(_T, insert_env_defaults)
+    return cast(_T, update_kwargs_from_env)
diff --git a/tests/tests_pytorch/test_cli.py b/tests/tests_pytorch/test_cli.py
index fdc49f787c759..032181dcd03a5 100644
--- a/tests/tests_pytorch/test_cli.py
+++ b/tests/tests_pytorch/test_cli.py
@@ -29,6 +29,7 @@
 import yaml
 from lightning.fabric.plugins.environments import SLURMEnvironment
 from lightning.pytorch import Callback, LightningDataModule, LightningModule, Trainer, __version__, seed_everything
+from lightning.pytorch.accelerators import CPUAccelerator
 from lightning.pytorch.callbacks import LearningRateMonitor, ModelCheckpoint
 from lightning.pytorch.cli import (
     _JSONARGPARSE_SIGNATURES_AVAILABLE,
@@ -288,6 +289,21 @@ def test_lightning_env_parse(cleandir):
     assert cli.config.fit.trainer.logger is False
 
 
+def test_lightning_cli_and_trainer_kwargs_override(cleandir):
+    env_vars = {
+        "PL_TRAINER_ACCELERATOR": "cpu",
+        "PL_TRAINER_DEVICES": "2",
+        "PL_TRAINER_NUM_NODES": "4",
+        "PL_TRAINER_PRECISION": "16-true",
+    }
+    with mock.patch.dict(os.environ, env_vars), mock.patch("sys.argv", [""]):
+        cli = LightningCLI(BoringModel, run=False)
+    assert isinstance(cli.trainer.accelerator, CPUAccelerator)
+    assert cli.trainer.num_devices == 2
+    assert cli.trainer.num_nodes == 4
+    assert cli.trainer.precision == "16-true"
+
+
 def test_lightning_cli_save_config_cases(cleandir):
     config_path = "config.yaml"
     cli_args = ["fit", "--trainer.logger=false", "--trainer.fast_dev_run=1"]
diff --git a/tests/tests_pytorch/trainer/flags/test_env_vars.py b/tests/tests_pytorch/trainer/flags/test_env_vars.py
index 62c94d4cc277e..5c2b508364301 100644
--- a/tests/tests_pytorch/trainer/flags/test_env_vars.py
+++ b/tests/tests_pytorch/trainer/flags/test_env_vars.py
@@ -44,14 +44,16 @@ def test_passing_env_variables_only():
 def test_passing_env_variables_defaults():
     """Testing overwriting trainer arguments."""
     trainer = Trainer(logger=False, max_steps=42)
-    assert trainer.logger is None
-    assert trainer.max_steps == 42
+    assert trainer.logger is not None
+    assert trainer.max_steps == 7
 
 
-@mock.patch.dict(os.environ, {"CUDA_VISIBLE_DEVICES": "0,1", "PL_TRAINER_DEVICES": "2"})
-def test_passing_env_variables_devices(cuda_count_2):
+@mock.patch.dict(os.environ, {"CUDA_VISIBLE_DEVICES": "0,1", "PL_TRAINER_DEVICES": "2", "PL_TRAINER_NUM_NODES": "4"})
+def test_passing_env_variables_devices(cuda_count_2, mps_count_0):
     """Testing overwriting trainer arguments."""
     trainer = Trainer()
     assert trainer.num_devices == 2
+    assert trainer.num_nodes == 4
     trainer = Trainer(accelerator="gpu", devices=1)
-    assert trainer.num_devices == 1
+    assert trainer.num_devices == 2
+    assert trainer.num_nodes == 4