diff --git a/.changeset/three-lizards-shave.md b/.changeset/three-lizards-shave.md
new file mode 100644
index 0000000000..66466f5cc8
--- /dev/null
+++ b/.changeset/three-lizards-shave.md
@@ -0,0 +1,7 @@
+---
+"@latticexyz/cli": patch
+"@latticexyz/common": patch
+"@latticexyz/world": minor
+---
+
+Replaced temporary `.mudtest` file in favor of `WORLD_ADDRESS` environment variable when running tests with `MudTest` contract
diff --git a/packages/cli/src/commands/test.ts b/packages/cli/src/commands/test.ts
index ab0465cb29..0e255aa8b0 100644
--- a/packages/cli/src/commands/test.ts
+++ b/packages/cli/src/commands/test.ts
@@ -7,8 +7,6 @@ import { DeployOptions, deployHandler } from "../utils/deployHandler";
 
 type Options = DeployOptions & { port?: number; worldAddress?: string; forgeOptions?: string };
 
-const WORLD_ADDRESS_FILE = ".mudtest";
-
 const commandModule: CommandModule<Options, Options> = {
   command: "test",
 
@@ -48,23 +46,19 @@ const commandModule: CommandModule<Options, Options> = {
 
     console.log(chalk.blue("World address", worldAddress));
 
-    // Create a temporary file to pass the world address to the tests
-    writeFileSync(WORLD_ADDRESS_FILE, worldAddress);
-
     const userOptions = args.forgeOptions?.replaceAll("\\", "").split(" ") ?? [];
     try {
-      const testResult = await forge(["test", "--fork-url", forkRpc, ...userOptions], {
+      await forge(["test", "--fork-url", forkRpc, ...userOptions], {
         profile: args.profile,
+        env: {
+          WORLD_ADDRESS: worldAddress,
+        },
       });
-      console.log(testResult);
+      process.exit(0);
     } catch (e) {
       console.error(e);
-      rmSync(WORLD_ADDRESS_FILE);
       process.exit(1);
     }
-
-    rmSync(WORLD_ADDRESS_FILE);
-    process.exit(0);
   },
 };
 
diff --git a/packages/common/src/foundry/index.ts b/packages/common/src/foundry/index.ts
index fa46956b9b..2faffc9acd 100644
--- a/packages/common/src/foundry/index.ts
+++ b/packages/common/src/foundry/index.ts
@@ -84,9 +84,12 @@ export async function getRemappings(profile?: string): Promise<[string, string][
  * @param args The arguments to pass to forge
  * @param options { profile?: The foundry profile to use; silent?: If true, nothing will be logged to the console }
  */
-export async function forge(args: string[], options?: { profile?: string; silent?: boolean }): Promise<void> {
+export async function forge(
+  args: string[],
+  options?: { profile?: string; silent?: boolean; env?: NodeJS.ProcessEnv }
+): Promise<void> {
   const execOptions: Options<string> = {
-    env: { FOUNDRY_PROFILE: options?.profile },
+    env: { FOUNDRY_PROFILE: options?.profile, ...options?.env },
     stdout: "inherit",
     stderr: "pipe",
   };
diff --git a/packages/world/test/MudTest.t.sol b/packages/world/test/MudTest.t.sol
index 098a487ae5..5960e4ac68 100644
--- a/packages/world/test/MudTest.t.sol
+++ b/packages/world/test/MudTest.t.sol
@@ -8,7 +8,7 @@ abstract contract MudTest is Test {
   address public worldAddress;
 
   function setUp() public virtual {
-    worldAddress = vm.parseAddress(vm.readFile(".mudtest"));
+    worldAddress = vm.envAddress("WORLD_ADDRESS");
     StoreSwitch.setStoreAddress(worldAddress);
   }
 }