diff --git a/bake/compose.go b/bake/compose.go
index 720df547113..6036e53473a 100644
--- a/bake/compose.go
+++ b/bake/compose.go
@@ -8,6 +8,7 @@ import (
 	"sort"
 	"strings"
 
+	"github.com/compose-spec/compose-go/v2/consts"
 	"github.com/compose-spec/compose-go/v2/dotenv"
 	"github.com/compose-spec/compose-go/v2/loader"
 	composetypes "github.com/compose-spec/compose-go/v2/types"
@@ -40,7 +41,11 @@ func ParseCompose(cfgs []composetypes.ConfigFile, envs map[string]string) (*Conf
 		ConfigFiles: cfgs,
 		Environment: envs,
 	}, func(options *loader.Options) {
-		options.SetProjectName("bake", false)
+		projectName := "bake"
+		if v, ok := envs[consts.ComposeProjectName]; ok && v != "" {
+			projectName = v
+		}
+		options.SetProjectName(projectName, false)
 		options.SkipNormalization = true
 		options.Profiles = []string{"*"}
 	})
diff --git a/bake/compose_test.go b/bake/compose_test.go
index d45327c1204..28541095f48 100644
--- a/bake/compose_test.go
+++ b/bake/compose_test.go
@@ -771,6 +771,33 @@ services:
 	require.NoError(t, err)
 }
 
+func TestProjectName(t *testing.T) {
+	var dt = []byte(`
+services:
+  scratch:
+    build:
+     context: ./webapp
+     args:
+       PROJECT_NAME: ${COMPOSE_PROJECT_NAME}
+`)
+
+	t.Run("default", func(t *testing.T) {
+		c, err := ParseCompose([]composetypes.ConfigFile{{Content: dt}}, nil)
+		require.NoError(t, err)
+		require.Len(t, c.Targets, 1)
+		require.Len(t, c.Targets[0].Args, 1)
+		require.Equal(t, map[string]*string{"PROJECT_NAME": ptrstr("bake")}, c.Targets[0].Args)
+	})
+
+	t.Run("env", func(t *testing.T) {
+		c, err := ParseCompose([]composetypes.ConfigFile{{Content: dt}}, map[string]string{"COMPOSE_PROJECT_NAME": "foo"})
+		require.NoError(t, err)
+		require.Len(t, c.Targets, 1)
+		require.Len(t, c.Targets[0].Args, 1)
+		require.Equal(t, map[string]*string{"PROJECT_NAME": ptrstr("foo")}, c.Targets[0].Args)
+	})
+}
+
 // chdir changes the current working directory to the named directory,
 // and then restore the original working directory at the end of the test.
 func chdir(t *testing.T, dir string) {