diff --git a/.changeset/pr-282.md b/.changeset/pr-282.md
new file mode 100644
index 00000000..5f24eaf8
--- /dev/null
+++ b/.changeset/pr-282.md
@@ -0,0 +1,5 @@
+---
+"@wdio/browserstack-service": patch
+---
+
+- Fixed `BROWSERSTACK_PROJECT_NAME` and `BROWSERSTACK_BUILD_NAME` being ignored — the environment now takes precedence over the project and build names in your config file, matching the other BrowserStack SDKs.
diff --git a/packages/browserstack-service/src/launcher.ts b/packages/browserstack-service/src/launcher.ts
index d9c95f02..d5c135b3 100644
--- a/packages/browserstack-service/src/launcher.ts
+++ b/packages/browserstack-service/src/launcher.ts
@@ -162,13 +162,18 @@ export default class BrowserstackLauncherService implements Services.ServiceInst
                                 capability['browserstack.wdioService'] = BSTACK_SERVICE_VERSION
                             }
                         }
+                        const envNames = this._applyEnvBuildNames(capability)
 
                         // Need this details for sending data to Test Reporting and Analytics
                         this._buildIdentifier = capability['browserstack.buildIdentifier']?.toString()
                         // @ts-expect-error ToDo: fix invalid cap
-                        this._buildName = capability.build?.toString()
+                        this._buildName = envNames.buildName ?? capability.build?.toString()
+                        if (envNames.projectName) {
+                            this._projectName = envNames.projectName
+                        }
                     } else {
                         capability['bstack:options'].wdioService = BSTACK_SERVICE_VERSION
+                        this._applyEnvBuildNames(capability)
                         this._buildName = capability['bstack:options'].buildName
                         this._projectName = capability['bstack:options'].projectName
                         this._buildTag = capability['bstack:options'].buildTag
@@ -197,10 +202,18 @@ export default class BrowserstackLauncherService implements Services.ServiceInst
                             (caps.capabilities as WebdriverIO.Capabilities)['browserstack.wdioService'] = BSTACK_SERVICE_VERSION
                         }
                     }
+                    const envNames = this._applyEnvBuildNames(caps.capabilities as WebdriverIO.Capabilities)
+                    if (envNames.buildName) {
+                        this._buildName = envNames.buildName
+                    }
+                    if (envNames.projectName) {
+                        this._projectName = envNames.projectName
+                    }
                     this._buildIdentifier = (caps.capabilities as WebdriverIO.Capabilities)['browserstack.buildIdentifier']
                 } else {
                     const bstackOptions = (caps.capabilities as WebdriverIO.Capabilities)['bstack:options']
                     bstackOptions!.wdioService = BSTACK_SERVICE_VERSION
+                    this._applyEnvBuildNames(caps.capabilities as WebdriverIO.Capabilities)
                     this._buildName = bstackOptions!.buildName
                     this._projectName = bstackOptions!.projectName
                     this._buildTag = bstackOptions!.buildTag
@@ -241,6 +254,45 @@ export default class BrowserstackLauncherService implements Services.ServiceInst
         }
     }
 
+    /**
+     * SDK-7075: BROWSERSTACK_PROJECT_NAME / BROWSERSTACK_BUILD_NAME take precedence over the
+     * config file, as every other SDK and the binary's own env->config map already do. They are
+     * written back into the caps so the session itself carries them: into bstack:options for W3C
+     * caps (including one this constructor just created), and into the top-level project/build
+     * keys that legacy caps name a build with - added on a BrowserStack session that has no
+     * bstack:options, otherwise only overwritten where already present. Blank values are ignored.
+     * Returns the values applied, for the Test Reporting fields - none for the caps of a
+     * non-BrowserStack session, which are left untouched so the reported names match the session.
+     */
+    private _applyEnvBuildNames (capability: WebdriverIO.Capabilities): { projectName?: string, buildName?: string } {
+        const bstackOptions = capability['bstack:options']
+        if (!bstackOptions && !isBStackSession(this._config)) {
+            return {}
+        }
+        const projectName = process.env.BROWSERSTACK_PROJECT_NAME?.trim() || undefined
+        const buildName = process.env.BROWSERSTACK_BUILD_NAME?.trim() || undefined
+        if (bstackOptions) {
+            if (projectName) {
+                bstackOptions.projectName = projectName
+            }
+            if (buildName) {
+                bstackOptions.buildName = buildName
+            }
+        }
+        // Legacy caps name a build with top-level keys. Without bstack:options they are the only
+        // place the name can go; next to bstack:options, any the caps already carry are aligned
+        // too, so the session never sends two different names.
+        const legacyCaps = capability as Record<string, unknown>
+        const writeLegacy = (key: string) => !bstackOptions || key in legacyCaps
+        if (projectName && writeLegacy('project')) {
+            legacyCaps.project = projectName
+        }
+        if (buildName && writeLegacy('build')) {
+            legacyCaps.build = buildName
+        }
+        return { projectName, buildName }
+    }
+
     @PerformanceTester.Measure(PERFORMANCE_SDK_EVENTS.EVENTS.SDK_SETUP)
     async onWorkerStart (cid: string, caps: WebdriverIO.Capabilities) {
         try {
@@ -1197,9 +1249,11 @@ export default class BrowserstackLauncherService implements Services.ServiceInst
          * A buildIdentifier is only meaningful next to a buildName - the dashboard appends it
          * to that name. BROWSERSTACK_BUILD_NAME used to force this branch as well, which
          * silently discarded every explicitly configured buildIdentifier whenever that env var
-         * happened to be exported (SDK-4748). This service never reads BROWSERSTACK_BUILD_NAME
-         * as a buildName source, and unlike the yml-driven SDKs it has no default identifier to
-         * suppress, so the env var no longer takes part in this decision.
+         * happened to be exported (SDK-4748). SDK-7075 then made BROWSERSTACK_BUILD_NAME a
+         * buildName source - the constructor folds it into the caps of a BrowserStack session, or
+         * of any caps carrying bstack:options - so the env var no longer suppresses the identifier;
+         * it supplies the very name the identifier is appended to. This branch therefore fires
+         * only when neither the caps nor (for those caps) the environment name a build.
          */
         if (!this._buildName) {
             this._updateCaps(capabilities, 'buildIdentifier')
diff --git a/packages/browserstack-service/tests/launcher.test.ts b/packages/browserstack-service/tests/launcher.test.ts
index f6216c7a..43562b43 100644
--- a/packages/browserstack-service/tests/launcher.test.ts
+++ b/packages/browserstack-service/tests/launcher.test.ts
@@ -918,6 +918,146 @@ describe('constructor', () => {
         delete process.env[RERUN_TESTS_ENV]
     })
 
+    describe('BROWSERSTACK_PROJECT_NAME / BROWSERSTACK_BUILD_NAME (SDK-7075)', () => {
+        const setEnvNames = () => {
+            process.env.BROWSERSTACK_PROJECT_NAME = 'project from env'
+            process.env.BROWSERSTACK_BUILD_NAME = 'build from env'
+        }
+
+        afterEach(() => {
+            delete process.env.BROWSERSTACK_PROJECT_NAME
+            delete process.env.BROWSERSTACK_BUILD_NAME
+        })
+
+        it('should prefer the env vars over the values in the caps', async () => {
+            setEnvNames()
+            const caps: any = [{ 'bstack:options': { projectName: 'project from config', buildName: 'build from config' } }]
+            const service: any = new BrowserstackLauncher(options as any, caps, config)
+
+            expect(caps).toEqual([
+                { 'bstack:options': { wdioService: pkg.version, projectName: 'project from env', buildName: 'build from env' } }
+            ])
+            expect(service._projectName).toEqual('project from env')
+            expect(service._buildName).toEqual('build from env')
+        })
+
+        it('should keep the caps projectName / buildName when the env vars are not set', async () => {
+            const caps: any = [{ 'bstack:options': { projectName: 'project from config', buildName: 'build from config' } }]
+            new BrowserstackLauncher(options as any, caps, config)
+
+            expect(caps).toEqual([
+                { 'bstack:options': { wdioService: pkg.version, projectName: 'project from config', buildName: 'build from config' } }
+            ])
+        })
+
+        it('should ignore blank env values', async () => {
+            process.env.BROWSERSTACK_PROJECT_NAME = '  '
+            process.env.BROWSERSTACK_BUILD_NAME = ''
+            const caps: any = [{ 'bstack:options': { projectName: 'project from config', buildName: 'build from config' } }]
+            new BrowserstackLauncher(options as any, caps, config)
+
+            expect(caps[0]['bstack:options']).toMatchObject({ projectName: 'project from config', buildName: 'build from config' })
+        })
+
+        it('should apply the env vars to the bstack:options the service creates for extension caps', async () => {
+            setEnvNames()
+            const caps: any = [{ 'goog:chromeOptions': {} }]
+            const service: any = new BrowserstackLauncher(options as any, caps, config)
+
+            expect(caps).toEqual([{
+                'goog:chromeOptions': {},
+                'bstack:options': { wdioService: pkg.version, projectName: 'project from env', buildName: 'build from env' }
+            }])
+            expect(service._projectName).toEqual('project from env')
+            expect(service._buildName).toEqual('build from env')
+        })
+
+        it('should apply the env vars to the top-level project / build keys of legacy caps', async () => {
+            setEnvNames()
+            const caps: any = [{ project: 'project from config', build: 'build from config' }]
+            const service: any = new BrowserstackLauncher(options as any, caps, config)
+
+            expect(caps).toEqual([{
+                'browserstack.wdioService': pkg.version,
+                project: 'project from env',
+                build: 'build from env'
+            }])
+            expect(service._projectName).toEqual('project from env')
+            expect(service._buildName).toEqual('build from env')
+        })
+
+        it('should align top-level project / build keys that sit next to bstack:options', async () => {
+            setEnvNames()
+            const caps: any = [
+                { 'bstack:options': { buildName: 'build from config' }, project: 'project from config', build: 'build from config' },
+                { 'bstack:options': {} }
+            ]
+            new BrowserstackLauncher(options as any, caps, config)
+
+            expect(caps[0]).toEqual({
+                'bstack:options': { wdioService: pkg.version, projectName: 'project from env', buildName: 'build from env' },
+                project: 'project from env',
+                build: 'build from env'
+            })
+            expect(caps[1]).toEqual({
+                'bstack:options': { wdioService: pkg.version, projectName: 'project from env', buildName: 'build from env' }
+            })
+        })
+
+        it('should prefer the env vars for an object of capabilities', async () => {
+            setEnvNames()
+            const caps: any = { browserA: { capabilities: { 'bstack:options': { projectName: 'project from config', buildName: 'build from config' } } } }
+            new BrowserstackLauncher(options as BrowserstackConfig & Options.Testrunner, caps, config)
+
+            expect(caps).toEqual({ 'browserA': { 'capabilities': { 'bstack:options': { 'wdioService': pkg.version, 'projectName': 'project from env', 'buildName': 'build from env' } } } })
+        })
+
+        it('should apply the env vars for an object of capabilities without bstack:options', async () => {
+            setEnvNames()
+            const caps: any = { browserA: { capabilities: { 'goog:chromeOptions': {} } }, browserB: { capabilities: {} } }
+            const service: any = new BrowserstackLauncher(options as BrowserstackConfig & Options.Testrunner, caps, config)
+
+            expect(caps.browserA.capabilities['bstack:options']).toEqual({ wdioService: pkg.version, projectName: 'project from env', buildName: 'build from env' })
+            expect(caps.browserB.capabilities).toMatchObject({ project: 'project from env', build: 'build from env' })
+            expect(service._projectName).toEqual('project from env')
+            expect(service._buildName).toEqual('build from env')
+        })
+
+        it('should leave a non-BrowserStack session untouched', async () => {
+            setEnvNames()
+            const spy = vi.spyOn(utils, 'isBStackSession').mockReturnValue(false)
+            try {
+                const caps: any = [{ build: 'build from config' }]
+                const service: any = new BrowserstackLauncher(options as any, caps, config)
+
+                expect(caps).toEqual([{ build: 'build from config' }])
+                expect(service._buildName).toEqual('build from config')
+                expect(service._projectName).toBeUndefined()
+            } finally {
+                spy.mockRestore()
+            }
+        })
+
+        it('should trim padded env values', async () => {
+            process.env.BROWSERSTACK_PROJECT_NAME = '  project from env '
+            process.env.BROWSERSTACK_BUILD_NAME = ' build from env  '
+            const caps: any = [{ 'bstack:options': { projectName: 'project from config', buildName: 'build from config' } }]
+            new BrowserstackLauncher(options as any, caps, config)
+
+            expect(caps[0]['bstack:options']).toMatchObject({ projectName: 'project from env', buildName: 'build from env' })
+        })
+
+        it('should override only the name the env sets', async () => {
+            process.env.BROWSERSTACK_BUILD_NAME = 'build from env'
+            const caps: any = [{ 'bstack:options': { projectName: 'project from config', buildName: 'build from config' } }]
+            const service: any = new BrowserstackLauncher(options as any, caps, config)
+
+            expect(caps[0]['bstack:options']).toMatchObject({ projectName: 'project from config', buildName: 'build from env' })
+            expect(service._projectName).toEqual('project from config')
+            expect(service._buildName).toEqual('build from env')
+        })
+    })
+
     describe('#non-bstack session', () => {
         const spy = vi.spyOn(utils, 'isBStackSession')
         it('should not add service version to caps', async () => {
@@ -1394,8 +1534,8 @@ describe('_handleBuildIdentifier', () => {
 
     /**
      * SDK-4748: BROWSERSTACK_BUILD_NAME used to delete an explicitly configured
-     * buildIdentifier outright. It is not a buildName source for this service, so it must
-     * not influence the identifier at all once a buildName is present in the caps.
+     * buildIdentifier outright. Since SDK-7075 it is a buildName source, so it must not
+     * suppress the identifier - it names the build the identifier is appended to.
      */
     it('should keep buildIdentifier when BROWSERSTACK_BUILD_NAME is defined as env var and buildName is in caps', async() => {
         process.env.BROWSERSTACK_BUILD_NAME = 'browserstack wdio build'
@@ -1428,23 +1568,28 @@ describe('_handleBuildIdentifier', () => {
         expect(caps[0]['bstack:options']?.buildIdentifier).toEqual('2026-09-27_14-35-36')
     })
 
-    it('should still delete buildIdentifier if buildName is absent and BROWSERSTACK_BUILD_NAME is defined as env var', async() => {
+    /**
+     * SDK-7075: the constructor now folds BROWSERSTACK_BUILD_NAME into the caps, so a buildName
+     * IS present even when the caps themselves carried none, and the identifier is appended to
+     * that env-sourced name instead of being dropped. A buildName counts as absent only when
+     * neither the caps nor the environment supply one - see the BUILD_RUN_IDENTIFIER test below.
+     */
+    it('should resolve buildIdentifier against the env buildName when the caps carry no buildName', async() => {
         process.env.BROWSERSTACK_BUILD_NAME = 'browserstack wdio build'
         const caps: any = [{
             'bstack:options': {
                 buildIdentifier: '#${BUILD_NUMBER}'
             }
         }]
-        const updatedcaps: any = [{
-            'bstack:options': {
-                wdioService: pkg.version
-            }
-        }]
         const service = new BrowserstackLauncher(options as any, caps, config)
 
+        vi.spyOn(utils, 'getCiInfo').mockReturnValueOnce(null)
+        vi.spyOn(service, '_getLocalBuildNumber').mockReturnValueOnce('1')
+        vi.spyOn(service, '_updateLocalBuildCache').mockImplementation(() => {})
         service._handleBuildIdentifier(caps)
-        expect(caps[0]).toMatchObject(updatedcaps[0])
-        expect(caps[0]['bstack:options']?.buildIdentifier).toBeUndefined()
+
+        expect(caps[0]['bstack:options']?.buildName).toEqual('browserstack wdio build')
+        expect(caps[0]['bstack:options']?.buildIdentifier).toEqual('#1')
     })
 
     it('should prefer BROWSERSTACK_BUILD_RUN_IDENTIFIER over the configured buildIdentifier', async() => {