diff --git a/examples/memory.py b/examples/memory.py
new file mode 100644
index 0000000..79cd481
--- /dev/null
+++ b/examples/memory.py
@@ -0,0 +1,122 @@
+"""
+filesystem mcp server with basic memory capabilities.
+keeps a user profile that can be updated and summarized by an llm.
+"""
+
+import os
+from datetime import UTC, datetime
+from pathlib import Path
+from typing import Annotated
+
+from pydantic import BaseModel, Field
+from pydantic_ai import Agent
+
+from fastmcp import FastMCP
+
+MAX_MEMORIES = 3
+
+
+class Memory(BaseModel):
+    """a single memory/observation about the user"""
+
+    content: str
+    timestamp: float
+    importance: Annotated[int, Field(ge=1, le=5)] = Field(default=3)
+
+
+class Profile(BaseModel):
+    """user profile built from memories"""
+
+    memories: list[Memory] = Field(default_factory=list, max_length=MAX_MEMORIES)
+    summary: str = Field(default="")
+
+
+class MemoryUpdate(BaseModel):
+    """llm analysis of how to update the profile"""
+
+    keep_indices: list[int] = Field(description="indices of memories to keep")
+    new_memory: Memory = Field(description="processed version of the new memory")
+    updated_summary: str = Field(description="brief summary of all memories")
+
+
+memory_agent = Agent(
+    "openai:gpt-4o",
+    result_type=MemoryUpdate,
+    system_prompt="""
+    you help maintain a concise user memory profile. when given a new memory:
+    1. analyze its importance relative to existing memories
+    2. if we're at max capacity of memories, decide which to keep
+    3. provide a brief summary of all memories
+    focus on keeping the most important and relevant information.
+    """,
+)
+
+mcp = FastMCP("memory", dependencies=["pydantic-ai-slim[openai]"])
+
+PROFILE_DIR = (
+    Path.home() / ".fastmcp" / os.environ.get("USER", "anon") / "memory"
+).resolve()
+PROFILE_DIR.mkdir(parents=True, exist_ok=True)
+
+
+@mcp.tool()
+async def remember(
+    content: Annotated[str, Field(description="new observation/memory to store")],
+    importance: Annotated[int, Field(ge=1, le=5, description="importance (1-5)")],
+) -> str:
+    """store a new memory/observation about the user"""
+    profile_path = PROFILE_DIR / "profile.json"
+
+    if profile_path.exists():
+        profile = Profile.model_validate_json(profile_path.read_text())
+    else:
+        profile = Profile()
+
+    new_memory = Memory(
+        content=content,
+        timestamp=datetime.now(UTC).timestamp(),
+        importance=importance,
+    )
+
+    if len(profile.memories) >= MAX_MEMORIES:
+        result = await memory_agent.run(
+            f"""
+            new memory: {content} (importance: {importance})
+            
+            current memories:
+            {[f"{i}: {m.content} (importance: {m.importance})" 
+              for i, m in enumerate(profile.memories)]}
+            """
+        )
+
+        profile.memories = [profile.memories[i] for i in result.data.keep_indices]
+        profile.memories.append(result.data.new_memory)
+        profile.summary = result.data.updated_summary
+    else:
+        profile.memories.append(new_memory)
+
+    profile_path.write_text(profile.model_dump_json(indent=2))
+    return f"remembered: {content}"
+
+
+@mcp.tool()
+async def read_profile() -> str:
+    """read and display the current memory profile"""
+    profile_path = PROFILE_DIR / "profile.json"
+    if not profile_path.exists():
+        return "no profile found"
+
+    profile = Profile.model_validate_json(profile_path.read_text())
+
+    output = ["current memories:"]
+    for i, memory in enumerate(profile.memories):
+        output.append(
+            f"{i}. {memory.content} "
+            f"(importance: {memory.importance}, "
+            f"timestamp: {datetime.fromtimestamp(memory.timestamp, UTC)})"
+        )
+
+    if profile.summary:
+        output.append(f"\nsummary: {profile.summary}")
+
+    return "\n".join(output)
diff --git a/src/fastmcp/cli/cli.py b/src/fastmcp/cli/cli.py
index a735303..8c3cf2e 100644
--- a/src/fastmcp/cli/cli.py
+++ b/src/fastmcp/cli/cli.py
@@ -5,11 +5,11 @@
 import subprocess
 import sys
 from pathlib import Path
-from typing import Optional, Tuple, Dict
+from typing import Dict, Optional, Tuple
 
+import dotenv
 import typer
 from typing_extensions import Annotated
-import dotenv
 
 from fastmcp.cli import claude
 from fastmcp.utilities.logging import get_logger
@@ -423,7 +423,11 @@ def install(
         # Load from .env file if specified
         if env_file:
             try:
-                env_dict.update(dotenv.dotenv_values(env_file))
+                env_dict |= {
+                    k: v
+                    for k, v in dotenv.dotenv_values(env_file).items()
+                    if v is not None
+                }
             except Exception as e:
                 logger.error(f"Failed to load .env file: {e}")
                 sys.exit(1)