diff --git a/acceptance/bundle/run/scripts/no-interpolation/databricks.yml b/acceptance/bundle/run/scripts/no-interpolation/databricks.yml
index 71e5d3e379..6e0cdd2500 100644
--- a/acceptance/bundle/run/scripts/no-interpolation/databricks.yml
+++ b/acceptance/bundle/run/scripts/no-interpolation/databricks.yml
@@ -2,7 +2,7 @@ bundle:
   name: "no-interpolation"
 
 scripts:
-  one:
+  invalid_env_var:
     content: "echo ${FOO}"
-  two:
-    content: "echo ${var.BAR}"
+  invalid_unknown_prefix:
+    content: "echo ${unknown.path}"
diff --git a/acceptance/bundle/run/scripts/no-interpolation/output.txt b/acceptance/bundle/run/scripts/no-interpolation/output.txt
index 45bc397bdb..3b42600972 100644
--- a/acceptance/bundle/run/scripts/no-interpolation/output.txt
+++ b/acceptance/bundle/run/scripts/no-interpolation/output.txt
@@ -1,40 +1,48 @@
 
 >>> [CLI] bundle deploy
-Error: Found ${FOO} in script one. Interpolation syntax ${...} is not allowed in scripts
-  at scripts.one.content
+Error: Invalid interpolation reference ${FOO} in script invalid_env_var
+  at scripts.invalid_env_var.content
   in databricks.yml:6:14
 
-We do not support the ${...} interpolation syntax in scripts because
-it's ambiguous whether it's a variable reference or reference to an
-environment variable.
+The interpolation reference ${FOO} does not start with a valid prefix.
+Valid prefixes are: var, bundle, workspace, variables, resources, artifacts.
 
-Error: Found ${var.BAR} in script two. Interpolation syntax ${...} is not allowed in scripts
-  at scripts.two.content
+If you meant to use an environment variable, use $FOO instead of ${FOO}.
+If you meant to use a bundle variable, use ${var.FOO} instead.
+
+Error: Invalid interpolation reference ${unknown.path} in script invalid_unknown_prefix
+  at scripts.invalid_unknown_prefix.content
   in databricks.yml:8:14
 
-We do not support the ${...} interpolation syntax in scripts because
-it's ambiguous whether it's a variable reference or reference to an
-environment variable.
+The interpolation reference ${unknown.path} does not start with a valid prefix.
+Valid prefixes are: var, bundle, workspace, variables, resources, artifacts.
+
+If you meant to use an environment variable, use $unknown.path instead of ${unknown.path}.
+If you meant to use a bundle variable, use ${var.unknown.path} instead.
 
 
 Exit code: 1
 
 >>> [CLI] bundle run foo
-Error: Found ${FOO} in script one. Interpolation syntax ${...} is not allowed in scripts
-  at scripts.one.content
+Error: Invalid interpolation reference ${FOO} in script invalid_env_var
+  at scripts.invalid_env_var.content
   in databricks.yml:6:14
 
-We do not support the ${...} interpolation syntax in scripts because
-it's ambiguous whether it's a variable reference or reference to an
-environment variable.
+The interpolation reference ${FOO} does not start with a valid prefix.
+Valid prefixes are: var, bundle, workspace, variables, resources, artifacts.
 
-Error: Found ${var.BAR} in script two. Interpolation syntax ${...} is not allowed in scripts
-  at scripts.two.content
+If you meant to use an environment variable, use $FOO instead of ${FOO}.
+If you meant to use a bundle variable, use ${var.FOO} instead.
+
+Error: Invalid interpolation reference ${unknown.path} in script invalid_unknown_prefix
+  at scripts.invalid_unknown_prefix.content
   in databricks.yml:8:14
 
-We do not support the ${...} interpolation syntax in scripts because
-it's ambiguous whether it's a variable reference or reference to an
-environment variable.
+The interpolation reference ${unknown.path} does not start with a valid prefix.
+Valid prefixes are: var, bundle, workspace, variables, resources, artifacts.
+
+If you meant to use an environment variable, use $unknown.path instead of ${unknown.path}.
+If you meant to use a bundle variable, use ${var.unknown.path} instead.
 
 
 Exit code: 1
diff --git a/acceptance/bundle/run/scripts/valid-interpolation/databricks.yml b/acceptance/bundle/run/scripts/valid-interpolation/databricks.yml
new file mode 100644
index 0000000000..e4e2cb0aaa
--- /dev/null
+++ b/acceptance/bundle/run/scripts/valid-interpolation/databricks.yml
@@ -0,0 +1,16 @@
+bundle:
+  name: "valid-interpolation"
+
+variables:
+  my_var:
+    default: "hello"
+
+scripts:
+  with_var:
+    content: "echo ${var.my_var}"
+  with_bundle:
+    content: "echo ${bundle.name}"
+  with_bash_env:
+    content: "echo $HOME"
+  with_bash_param_expansion:
+    content: "echo ${HOME:-/tmp}"
diff --git a/acceptance/bundle/run/scripts/valid-interpolation/out.test.toml b/acceptance/bundle/run/scripts/valid-interpolation/out.test.toml
new file mode 100644
index 0000000000..d560f1de04
--- /dev/null
+++ b/acceptance/bundle/run/scripts/valid-interpolation/out.test.toml
@@ -0,0 +1,5 @@
+Local = true
+Cloud = false
+
+[EnvMatrix]
+  DATABRICKS_BUNDLE_ENGINE = ["terraform", "direct"]
diff --git a/acceptance/bundle/run/scripts/valid-interpolation/output.txt b/acceptance/bundle/run/scripts/valid-interpolation/output.txt
new file mode 100644
index 0000000000..401bcc10ef
--- /dev/null
+++ b/acceptance/bundle/run/scripts/valid-interpolation/output.txt
@@ -0,0 +1,9 @@
+
+>>> [CLI] bundle validate
+Name: valid-interpolation
+Target: default
+Workspace:
+  User: [USERNAME]
+  Path: /Workspace/Users/[USERNAME]/.bundle/valid-interpolation/default
+
+Validation OK!
diff --git a/acceptance/bundle/run/scripts/valid-interpolation/script b/acceptance/bundle/run/scripts/valid-interpolation/script
new file mode 100644
index 0000000000..5350876150
--- /dev/null
+++ b/acceptance/bundle/run/scripts/valid-interpolation/script
@@ -0,0 +1 @@
+trace $CLI bundle validate
diff --git a/bundle/config/validate/scripts.go b/bundle/config/validate/scripts.go
index 421ca593cb..a12b9aa1a8 100644
--- a/bundle/config/validate/scripts.go
+++ b/bundle/config/validate/scripts.go
@@ -3,11 +3,12 @@ package validate
 import (
 	"context"
 	"fmt"
-	"regexp"
+	"strings"
 
 	"github.com/databricks/cli/bundle"
 	"github.com/databricks/cli/libs/diag"
 	"github.com/databricks/cli/libs/dyn"
+	"github.com/databricks/cli/libs/dyn/dynvar"
 	"github.com/databricks/cli/libs/utils"
 )
 
@@ -24,8 +25,6 @@ func (f *validateScripts) Name() string {
 func (f *validateScripts) Apply(ctx context.Context, b *bundle.Bundle) diag.Diagnostics {
 	diags := diag.Diagnostics{}
 
-	re := regexp.MustCompile(`\$\{.*\}`)
-
 	// Sort the scripts to have a deterministic order for the
 	// generated diagnostics.
 	scriptKeys := utils.SortedKeys(b.Config.Scripts)
@@ -48,18 +47,33 @@ func (f *validateScripts) Apply(ctx context.Context, b *bundle.Bundle) diag.Diag
 			return diags.Extend(diag.FromErr(err))
 		}
 
-		// Check for interpolation syntax
-		match := re.FindString(script.Content)
-		if match != "" {
-			diags = append(diags, diag.Diagnostic{
-				Severity: diag.Error,
-				Summary:  fmt.Sprintf("Found %s in script %s. Interpolation syntax ${...} is not allowed in scripts", match, k),
-				Detail: `We do not support the ${...} interpolation syntax in scripts because
-it's ambiguous whether it's a variable reference or reference to an
-environment variable.`,
-				Locations: v.Locations(),
-				Paths:     []dyn.Path{p},
-			})
+		// Find all interpolation references in the script content.
+		// This uses the same regex as the variable resolver, so it only matches
+		// patterns that look like DAB variable references (not bash parameter
+		// expansion like ${VAR:-default}).
+		refs := dynvar.FindAllInterpolationReferences(script.Content)
+		for _, ref := range refs {
+			// Check if this reference has a valid DAB prefix.
+			// Valid prefixes are: var, bundle, workspace, variables, resources, artifacts
+			if !dynvar.HasValidDABPrefix(ref.Path) {
+				diags = append(diags, diag.Diagnostic{
+					Severity: diag.Error,
+					Summary:  fmt.Sprintf("Invalid interpolation reference %s in script %s", ref.Match, k),
+					Detail: fmt.Sprintf(`The interpolation reference %s does not start with a valid prefix.
+Valid prefixes are: %s.
+
+If you meant to use an environment variable, use $%s instead of %s.
+If you meant to use a bundle variable, use ${var.%s} instead.`,
+						ref.Match,
+						strings.Join(dynvar.ValidDABPrefixes, ", "),
+						ref.Path,
+						ref.Match,
+						ref.Path,
+					),
+					Locations: v.Locations(),
+					Paths:     []dyn.Path{p},
+				})
+			}
 		}
 	}
 
diff --git a/bundle/config/validate/scripts_test.go b/bundle/config/validate/scripts_test.go
new file mode 100644
index 0000000000..cb4e65d2c8
--- /dev/null
+++ b/bundle/config/validate/scripts_test.go
@@ -0,0 +1,152 @@
+package validate
+
+import (
+	"context"
+	"testing"
+
+	"github.com/databricks/cli/bundle"
+	"github.com/databricks/cli/bundle/config"
+	"github.com/databricks/cli/bundle/internal/bundletest"
+	"github.com/databricks/cli/libs/diag"
+	"github.com/databricks/cli/libs/dyn"
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+)
+
+func TestScriptsWithValidDABInterpolation(t *testing.T) {
+	b := &bundle.Bundle{
+		Config: config.Root{
+			Scripts: map[string]config.Script{
+				"valid_var": {
+					Content: "echo ${var.my_variable}",
+				},
+				"valid_bundle": {
+					Content: "echo ${bundle.name}",
+				},
+				"valid_workspace": {
+					Content: "echo ${workspace.host}",
+				},
+				"valid_resources": {
+					Content: "echo ${resources.jobs.my_job.id}",
+				},
+				"valid_multiple": {
+					Content: "echo ${var.foo} and ${bundle.name}",
+				},
+			},
+		},
+	}
+
+	bundletest.SetLocation(b, "scripts.valid_var.content", []dyn.Location{{File: "databricks.yml", Line: 1, Column: 1}})
+	bundletest.SetLocation(b, "scripts.valid_bundle.content", []dyn.Location{{File: "databricks.yml", Line: 2, Column: 1}})
+	bundletest.SetLocation(b, "scripts.valid_workspace.content", []dyn.Location{{File: "databricks.yml", Line: 3, Column: 1}})
+	bundletest.SetLocation(b, "scripts.valid_resources.content", []dyn.Location{{File: "databricks.yml", Line: 4, Column: 1}})
+	bundletest.SetLocation(b, "scripts.valid_multiple.content", []dyn.Location{{File: "databricks.yml", Line: 5, Column: 1}})
+
+	ctx := context.Background()
+	diags := Scripts().Apply(ctx, b)
+	assert.Empty(t, diags, "valid DAB interpolation should not produce errors")
+}
+
+func TestScriptsWithInvalidInterpolation(t *testing.T) {
+	b := &bundle.Bundle{
+		Config: config.Root{
+			Scripts: map[string]config.Script{
+				"invalid_single": {
+					Content: "echo ${FOO}",
+				},
+			},
+		},
+	}
+
+	bundletest.SetLocation(b, "scripts.invalid_single.content", []dyn.Location{{File: "databricks.yml", Line: 1, Column: 1}})
+
+	ctx := context.Background()
+	diags := Scripts().Apply(ctx, b)
+	require.Len(t, diags, 1)
+	assert.Equal(t, diag.Error, diags[0].Severity)
+	assert.Contains(t, diags[0].Summary, "${FOO}")
+	assert.Contains(t, diags[0].Summary, "Invalid interpolation reference")
+	assert.Contains(t, diags[0].Detail, "$FOO")
+	assert.Contains(t, diags[0].Detail, "${var.FOO}")
+}
+
+func TestScriptsWithBashEnvVars(t *testing.T) {
+	b := &bundle.Bundle{
+		Config: config.Root{
+			Scripts: map[string]config.Script{
+				"bash_simple": {
+					Content: "echo $FOO",
+				},
+				"bash_param_expansion": {
+					Content: "echo ${VAR:-default}",
+				},
+			},
+		},
+	}
+
+	bundletest.SetLocation(b, "scripts.bash_simple.content", []dyn.Location{{File: "databricks.yml", Line: 1, Column: 1}})
+	bundletest.SetLocation(b, "scripts.bash_param_expansion.content", []dyn.Location{{File: "databricks.yml", Line: 2, Column: 1}})
+
+	ctx := context.Background()
+	diags := Scripts().Apply(ctx, b)
+	assert.Empty(t, diags, "bash env vars should not produce errors")
+}
+
+func TestScriptsWithMixedContent(t *testing.T) {
+	b := &bundle.Bundle{
+		Config: config.Root{
+			Scripts: map[string]config.Script{
+				"mixed": {
+					Content: "databricks psql ${var.instance} -- -d $LAKEBASE_DATABASE -c 'CREATE SCHEMA my_schema;'",
+				},
+			},
+		},
+	}
+
+	bundletest.SetLocation(b, "scripts.mixed.content", []dyn.Location{{File: "databricks.yml", Line: 1, Column: 1}})
+
+	ctx := context.Background()
+	diags := Scripts().Apply(ctx, b)
+	assert.Empty(t, diags, "valid DAB interpolation with bash env vars should not produce errors")
+}
+
+func TestScriptsWithEmptyContent(t *testing.T) {
+	b := &bundle.Bundle{
+		Config: config.Root{
+			Scripts: map[string]config.Script{
+				"empty": {
+					Content: "",
+				},
+			},
+		},
+	}
+
+	bundletest.SetLocation(b, "scripts.empty.content", []dyn.Location{{File: "databricks.yml", Line: 1, Column: 1}})
+
+	ctx := context.Background()
+	diags := Scripts().Apply(ctx, b)
+	require.Len(t, diags, 1)
+	assert.Equal(t, diag.Error, diags[0].Severity)
+	assert.Contains(t, diags[0].Summary, "has no content")
+}
+
+func TestScriptsMultipleInvalidReferences(t *testing.T) {
+	b := &bundle.Bundle{
+		Config: config.Root{
+			Scripts: map[string]config.Script{
+				"multiple_invalid": {
+					Content: "echo ${FOO} ${BAR}",
+				},
+			},
+		},
+	}
+
+	bundletest.SetLocation(b, "scripts.multiple_invalid.content", []dyn.Location{{File: "databricks.yml", Line: 1, Column: 1}})
+
+	ctx := context.Background()
+	diags := Scripts().Apply(ctx, b)
+	require.Len(t, diags, 2)
+	// Order matches order of appearance in the string
+	assert.Contains(t, diags[0].Summary, "${FOO}")
+	assert.Contains(t, diags[1].Summary, "${BAR}")
+}
diff --git a/libs/dyn/dynvar/ref.go b/libs/dyn/dynvar/ref.go
index a048c80cb8..8552c78e2b 100644
--- a/libs/dyn/dynvar/ref.go
+++ b/libs/dyn/dynvar/ref.go
@@ -84,6 +84,56 @@ func ContainsVariableReference(s string) bool {
 	return re.MatchString(s)
 }
 
+// ValidDABPrefixes are the known prefixes for DAB variable interpolation.
+// A reference like ${prefix.path} is a valid DAB reference if prefix is one of these.
+var ValidDABPrefixes = []string{
+	"var",
+	"bundle",
+	"workspace",
+	"variables",
+	"resources",
+	"artifacts",
+}
+
+// InterpolationReference represents a single ${...} reference found in a string.
+type InterpolationReference struct {
+	// Full match including ${...}
+	Match string
+	// The path inside the braces (e.g., "var.foo" from "${var.foo}")
+	Path string
+}
+
+// FindAllInterpolationReferences returns all ${...} patterns that match the DAB
+// variable reference syntax. This does not include bash-style patterns like
+// ${VAR:-default} which don't match the DAB identifier rules.
+func FindAllInterpolationReferences(s string) []InterpolationReference {
+	matches := re.FindAllStringSubmatch(s, -1)
+	if len(matches) == 0 {
+		return nil
+	}
+
+	refs := make([]InterpolationReference, len(matches))
+	for i, m := range matches {
+		refs[i] = InterpolationReference{
+			Match: m[0], // Full match including ${}
+			Path:  m[1], // Captured group (path inside braces)
+		}
+	}
+	return refs
+}
+
+// HasValidDABPrefix checks if the given path starts with a known DAB prefix.
+// For example, "var.foo" returns true (prefix "var"), "FOO" returns false.
+func HasValidDABPrefix(path string) bool {
+	for _, prefix := range ValidDABPrefixes {
+		// Check if path equals prefix or starts with prefix followed by a dot
+		if path == prefix || len(path) > len(prefix) && path[:len(prefix)] == prefix && path[len(prefix)] == '.' {
+			return true
+		}
+	}
+	return false
+}
+
 // If s is a pure variable reference, this function returns the corresponding
 // dyn.Path. Otherwise, it returns false.
 func PureReferenceToPath(s string) (dyn.Path, bool) {
diff --git a/libs/dyn/dynvar/ref_test.go b/libs/dyn/dynvar/ref_test.go
index d59d80cba1..c366ed4b7b 100644
--- a/libs/dyn/dynvar/ref_test.go
+++ b/libs/dyn/dynvar/ref_test.go
@@ -54,6 +54,85 @@ func TestIsPureVariableReference(t *testing.T) {
 	assert.True(t, IsPureVariableReference("${foo.bar}"))
 }
 
+func TestFindAllInterpolationReferences(t *testing.T) {
+	tests := []struct {
+		input    string
+		expected []InterpolationReference
+	}{
+		{
+			input:    "no interpolation",
+			expected: nil,
+		},
+		{
+			input: "${var.foo}",
+			expected: []InterpolationReference{
+				{Match: "${var.foo}", Path: "var.foo"},
+			},
+		},
+		{
+			input: "echo ${bundle.name} and ${workspace.host}",
+			expected: []InterpolationReference{
+				{Match: "${bundle.name}", Path: "bundle.name"},
+				{Match: "${workspace.host}", Path: "workspace.host"},
+			},
+		},
+		{
+			input: "${resources.jobs.my_job.id}",
+			expected: []InterpolationReference{
+				{Match: "${resources.jobs.my_job.id}", Path: "resources.jobs.my_job.id"},
+			},
+		},
+		{
+			input: "${FOO}",
+			expected: []InterpolationReference{
+				{Match: "${FOO}", Path: "FOO"},
+			},
+		},
+		{
+			// Bash parameter expansion doesn't match DAB regex
+			input:    "${VAR:-default}",
+			expected: nil,
+		},
+		{
+			// Plain bash variable without braces
+			input:    "$FOO",
+			expected: nil,
+		},
+		{
+			input: "${variables.my_var.value}",
+			expected: []InterpolationReference{
+				{Match: "${variables.my_var.value}", Path: "variables.my_var.value"},
+			},
+		},
+	}
+
+	for _, tc := range tests {
+		refs := FindAllInterpolationReferences(tc.input)
+		assert.Equal(t, tc.expected, refs, "input: %s", tc.input)
+	}
+}
+
+func TestHasValidDABPrefix(t *testing.T) {
+	// Valid DAB prefixes
+	assert.True(t, HasValidDABPrefix("var.foo"))
+	assert.True(t, HasValidDABPrefix("bundle.name"))
+	assert.True(t, HasValidDABPrefix("workspace.host"))
+	assert.True(t, HasValidDABPrefix("variables.my_var.value"))
+	assert.True(t, HasValidDABPrefix("resources.jobs.my_job.id"))
+	assert.True(t, HasValidDABPrefix("artifacts.my_artifact.path"))
+
+	// Prefix alone (edge case - valid but may not resolve to anything useful)
+	assert.True(t, HasValidDABPrefix("var"))
+	assert.True(t, HasValidDABPrefix("bundle"))
+
+	// Invalid prefixes (not known DAB prefixes)
+	assert.False(t, HasValidDABPrefix("FOO"))
+	assert.False(t, HasValidDABPrefix("MY_VAR"))
+	assert.False(t, HasValidDABPrefix("unknown.path"))
+	assert.False(t, HasValidDABPrefix("env.VAR"))
+	assert.False(t, HasValidDABPrefix(""))
+}
+
 func TestPureReferenceToPath(t *testing.T) {
 	for _, tc := range []struct {
 		in  string