diff --git a/moto/awslambda/models.py b/moto/awslambda/models.py
index b11bde042..a37a15e27 100644
--- a/moto/awslambda/models.py
+++ b/moto/awslambda/models.py
@@ -386,7 +386,7 @@ class LambdaFunction(BaseModel):
             'Role': properties['Role'],
             'Runtime': properties['Runtime'],
         }
-        optional_properties = 'Description MemorySize Publish Timeout VpcConfig'.split()
+        optional_properties = 'Description MemorySize Publish Timeout VpcConfig Environment'.split()
         # NOTE: Not doing `properties.get(k, DEFAULT)` to avoid duplicating the
         # default logic
         for prop in optional_properties:
diff --git a/tests/test_cloudformation/test_cloudformation_stack_integration.py b/tests/test_cloudformation/test_cloudformation_stack_integration.py
index 2c808726f..449fde4ce 100644
--- a/tests/test_cloudformation/test_cloudformation_stack_integration.py
+++ b/tests/test_cloudformation/test_cloudformation_stack_integration.py
@@ -1952,7 +1952,12 @@ def lambda_handler(event, context):
                     "Description": "Test function",
                     "MemorySize": 128,
                     "Role": "test-role",
-                    "Runtime": "python2.7"
+                    "Runtime": "python2.7",
+                    "Environment": {
+                        "Variables": {
+                            "TEST_ENV_KEY": "test-env-val",
+                        }
+                    },
                 }
             }
         }
@@ -1973,6 +1978,9 @@ def lambda_handler(event, context):
     result['Functions'][0]['MemorySize'].should.equal(128)
     result['Functions'][0]['Role'].should.equal('test-role')
     result['Functions'][0]['Runtime'].should.equal('python2.7')
+    result['Functions'][0]['Environment'].should.equal({
+        "Variables": {"TEST_ENV_KEY": "test-env-val"}
+    })
 
 
 @mock_cloudformation