diff --git a/plugins/woocommerce/.wp-env.json b/plugins/woocommerce/.wp-env.json
index be25f189c38..618c4a21fdf 100644
--- a/plugins/woocommerce/.wp-env.json
+++ b/plugins/woocommerce/.wp-env.json
@@ -1,19 +1,24 @@
 {
-	"phpVersion": "7.4",
-	"plugins": [ "." ],
-	"config": {
-		"JETPACK_AUTOLOAD_DEV": true,
-		"WP_DEBUG_LOG": true,
-		"WP_DEBUG_DISPLAY": true,
-		"ALTERNATE_WP_CRON": true
-	},
-	"env": {
-		"development": {},
-		"tests": {
-			"port": 8086,
-			"config": {
-				"ALTERNATE_WP_CRON": false
-			}
-		}
-	}
-}
+    "phpVersion": "7.4",
+    "plugins": [
+        "."
+    ],
+    "config": {
+        "JETPACK_AUTOLOAD_DEV": true,
+        "WP_DEBUG_LOG": true,
+        "WP_DEBUG_DISPLAY": true,
+        "ALTERNATE_WP_CRON": true
+    },
+    "mappings": {
+        "wp-cli.yml": ".\/tests\/wp-cli.yml"
+    },
+    "env": {
+        "development": [],
+        "tests": {
+            "port": 8086,
+            "config": {
+                "ALTERNATE_WP_CRON": false
+            }
+        }
+    }
+}
\ No newline at end of file
diff --git a/plugins/woocommerce/changelog/add-e2e-tests-wp-version-support b/plugins/woocommerce/changelog/add-e2e-tests-wp-version-support
new file mode 100644
index 00000000000..0525f22750f
--- /dev/null
+++ b/plugins/woocommerce/changelog/add-e2e-tests-wp-version-support
@@ -0,0 +1,4 @@
+Significance: patch
+Type: add
+
+Allows the WP, WC & PHP version to be specified in .wp-env.json for e2e and api tests
diff --git a/plugins/woocommerce/package.json b/plugins/woocommerce/package.json
index 827d2042bf8..4c235643577 100644
--- a/plugins/woocommerce/package.json
+++ b/plugins/woocommerce/package.json
@@ -30,16 +30,17 @@
 		"docker:ssh": "pnpm exec wc-e2e docker:ssh",
 		"docker:up": "pnpm exec wc-e2e docker:up",
 		"env:dev": "pnpm wp-env start",
-		"env:test": "pnpm run env:dev && ./tests/e2e-pw/bin/test-env-setup.sh",
+		"update-wp-env": "php ./tests/e2e-pw/bin/update-wp-env.php",
+		"env:test": "pnpm run update-wp-env && pnpm run env:dev && ./tests/e2e-pw/bin/test-env-setup.sh",
 		"test:e2e-pw": "USE_WP_ENV=1 pnpm playwright test --config=tests/e2e-pw/playwright.config.js",
 		"test:api-pw": "USE_WP_ENV=1 pnpm playwright test --config=tests/api-core-tests/playwright.config.js",
 		"env:start": "pnpm wp-env start && ./tests/e2e-pw/bin/test-env-setup.sh",
 		"env:restart": "pnpm wp-env destroy && pnpm wp-env start && ./tests/e2e-pw/bin/test-env-setup.sh",
 		"env:stop": "pnpm wp-env stop",
-		"env:test:cot": "pnpm run env:dev && ENABLE_HPOS=1 ./tests/e2e-pw/bin/test-env-setup.sh",
+		"env:test:cot": "pnpm run update-wp-env && pnpm run env:dev && ENABLE_HPOS=1 ./tests/e2e-pw/bin/test-env-setup.sh",
 		"env:performance-init": "./tests/performance/bin/init-sample-products.sh",
 		"env:down": "pnpm wp-env stop",
-		"env:destroy": "pnpm wp-env destroy",
+		"env:destroy": "pnpm run update-wp-env && pnpm wp-env destroy",
 		"test:api": "API_TEST_REPORT_DIR=\"$PWD/tests/api\" pnpm exec wc-api-tests test api",
 		"make:collection": "pnpm exec wc-api-tests make:collection",
 		"e2e:debug": "pnpm exec wc-e2e test:e2e-debug",
diff --git a/plugins/woocommerce/tests/e2e-pw/README.md b/plugins/woocommerce/tests/e2e-pw/README.md
index 4cb9d6fb2a8..5df175f010b 100644
--- a/plugins/woocommerce/tests/e2e-pw/README.md
+++ b/plugins/woocommerce/tests/e2e-pw/README.md
@@ -57,13 +57,30 @@ To see all options, run `cd plugins/woocommerce && pnpm playwright test --help`
 
 The default values are:
 
--   Latest stable WordPress version
+-   Latest stable WordPress version 
 -   PHP 7.4
 -   MariaDB
 -   URL: `http://localhost:8086/`
 -   Admin credentials: `admin/password`
 
-If you want to customize these, check the [Test Variables](#test-variables) section.
+If you want to customize the port or admin credentials, check the [Test Variables](#test-variables) section.
+
+If you would like to customize the `PHP`, `WordPress` or `WooCommerce` versions installed in the environment, you can define `UPDATE_WP_JSON_FILE=1` along with any or all of the following env vars when building the environment.
+- `WP_VERSION`
+  - Acceptable versions are `nightly`, `trunk`, and any version listed on [WordPress Releases] page.
+- `WC_VERSION`
+  - Acceptable versions can be found on the [WooCommerce Releases](https://github.com/woocommerce/woocommerce/releases) page
+- `PHP`
+  - Any PHP version you see it. Please note that WooCommerce requries a minimum of PHP 7.2.
+
+**Example**
+
+The command below will create and environment with WordPress version 6.2, WooCommerce version 7.5.1 and PHP version 8.2 installed.
+
+`UPDATE_WP_JSON_FILE=1 WP_VERSION=6.2 WC_TEST_VERSION=7.5.1 PHP_VERSION=8.2 pnpm run env:test`
+
+If you'd like to run with the default configuation, simply remove the `UPDATE_WP_JSON_FILE`.
+
 
 For more information how to configure the test environment for `wp-env`, please checkout the [documentation](https://github.com/WordPress/gutenberg/tree/trunk/packages/env) documentation.
 
diff --git a/plugins/woocommerce/tests/e2e-pw/bin/test-env-setup.sh b/plugins/woocommerce/tests/e2e-pw/bin/test-env-setup.sh
index 9f3d7601740..623f4caa128 100755
--- a/plugins/woocommerce/tests/e2e-pw/bin/test-env-setup.sh
+++ b/plugins/woocommerce/tests/e2e-pw/bin/test-env-setup.sh
@@ -4,39 +4,39 @@ ENABLE_HPOS="${ENABLE_HPOS:-0}"
 ENABLE_NEW_PRODUCT_EDITOR="${ENABLE_NEW_PRODUCT_EDITOR:-0}"
 ENABLE_TRACKING="${ENABLE_TRACKING:-0}"
 
-wp-env run tests-cli "wp theme install twentynineteen --activate"
+echo -e 'Normalize permissions for wp-content directory \n'
+docker-compose -f $(wp-env install-path)/docker-compose.yml run --rm -u www-data -e HOME=/tmp tests-wordpress sh -c "chmod -c ugo+w /var/www/html/wp-config.php \
+&& chmod -c ugo+w /var/www/html/wp-content \
+&& chmod -c ugo+w /var/www/html/wp-content/themes \
+&& chmod -c ugo+w /var/www/html/wp-content/plugins"
 
-wp-env run tests-cli "wp plugin install https://github.com/WP-API/Basic-Auth/archive/master.zip --activate"
-
-wp-env run tests-cli "wp plugin install wp-mail-logging --activate"
-
-wp-env run tests-cli "wp plugin install https://github.com/woocommerce/woocommerce-reset/archive/refs/heads/trunk.zip --activate"
-
-wp-env run tests-cli "wp rewrite structure /%postname%/"
-
-wp-env run tests-cli "wp user create customer customer@woocommercecoree2etestsuite.com \
+docker-compose -f $(wp-env install-path)/docker-compose.yml run --rm -u www-data -e HOME=/tmp tests-cli sh -c "ls \
+&& wp theme install twentynineteen --activate \
+&& wp plugin install https://github.com/WP-API/Basic-Auth/archive/master.zip --activate \
+&& wp plugin install wp-mail-logging --activate \
+&& wp plugin install https://github.com/woocommerce/woocommerce-reset/archive/refs/heads/trunk.zip --activate \
+&& wp rewrite structure '/%postname%/' --hard \
+&& wp user create customer customer@woocommercecoree2etestsuite.com \
 	--user_pass=password \
 	--role=subscriber \
 	--first_name='Jane' \
 	--last_name='Smith' \
-	--path=/var/www/html \
-	--user_registered='2022-01-01 12:23:45'
-"
+	--user_registered='2022-01-01 12:23:45'"
 
 echo -e 'Update Blog Name \n'
-wp-env run tests-cli 'wp option update blogname "WooCommerce Core E2E Test Suite"'
+docker-compose -f $(wp-env install-path)/docker-compose.yml run --rm -u $(id -u) -e HOME=/tmp tests-cli sh -c 'wp option update blogname "WooCommerce Core E2E Test Suite"'
 
 if [ $ENABLE_HPOS == 1 ]; then
 	echo 'Enable the COT feature'
-	wp-env run tests-cli "wp plugin install https://gist.github.com/vedanshujain/564afec8f5e9235a1257994ed39b1449/archive/b031465052fc3e04b17624acbeeb2569ef4d5301.zip --activate"
+	docker-compose -f $(wp-env install-path)/docker-compose.yml run --rm -u www-data -e HOME=/tmp tests-cli sh -c "wp plugin install https://gist.github.com/vedanshujain/564afec8f5e9235a1257994ed39b1449/archive/b031465052fc3e04b17624acbeeb2569ef4d5301.zip --activate"
 fi
 
 if [ $ENABLE_NEW_PRODUCT_EDITOR == 1 ]; then
 	echo 'Enable the new product editor feature'
-	wp-env run tests-cli "wp plugin install https://github.com/woocommerce/woocommerce-experimental-enable-new-product-editor/releases/download/0.1.0/woocommerce-experimental-enable-new-product-editor.zip --activate"
+	docker-compose -f $(wp-env install-path)/docker-compose.yml run --rm -u www-data -e HOME=/tmp tests-cli sh -c "wp plugin install https://github.com/woocommerce/woocommerce-experimental-enable-new-product-editor/releases/download/0.1.0/woocommerce-experimental-enable-new-product-editor.zip --activate"
 fi
 
 if [ $ENABLE_TRACKING == 1 ]; then
 	echo 'Enable tracking'
-	wp-env run tests-cli "wp option update woocommerce_allow_tracking 'yes'"
+	docker-compose -f $(wp-env install-path)/docker-compose.yml run --rm -u $(id -u) -e HOME=/tmp tests-cli sh -c "wp option update woocommerce_allow_tracking 'yes'"
 fi
diff --git a/plugins/woocommerce/tests/e2e-pw/bin/update-wp-env.php b/plugins/woocommerce/tests/e2e-pw/bin/update-wp-env.php
new file mode 100644
index 00000000000..07e5be7c0db
--- /dev/null
+++ b/plugins/woocommerce/tests/e2e-pw/bin/update-wp-env.php
@@ -0,0 +1,99 @@
+<?php
+// phpcs:ignoreFile
+
+if ( ! class_exists( UPDATE_WP_JSON::class ) ) {
+	class UPDATE_WP_JSON {
+
+		private $wp_env_path  = __DIR__ . '/../../../.wp-env.json';
+		private $wp_json      = [];
+		private $wc_version   = null;
+		private $wp_version   = null;
+		private $php_version  = null;
+
+		public function __construct() {
+			if ( file_exists( $this->wp_env_path ) ) {
+				$this->wp_json = json_decode( file_get_contents( $this->wp_env_path ), true );
+			} else {
+				throw new Exception( ".wp_env.json doesn't exist!" );
+			}
+
+			$env = getenv();
+
+			$this->wp_version  = isset( $env['WP_VERSION'] ) ? $env['WP_VERSION'] : null;
+			$this->wc_version  = isset( $env['WC_TEST_VERSION'] ) ? $env['WC_TEST_VERSION'] : null;
+			$this->php_version = isset( $env['PHP_VERSION'] ) ? $env['PHP_VERSION'] : null;
+		}
+
+		public function set_wp_version(){
+			if ( $this->wp_version ) {
+
+				$version = "WordPress/WordPress#tags/$this->wp_version";
+
+				if ( 'trunk' === $this->wp_version ) {
+					$version = "WordPress/WordPress";
+				}
+
+				if ( 'nightly' === $this->wp_version ) {
+					$version = "https://wordpress.org/nightly-builds/wordpress-latest.zip";
+				}
+
+				echo "Set WP Version to $version \n";
+				$this->wp_json["core"] = $version;
+			}
+		}
+
+		public function revert_wp_version(){
+			unset( $this->wp_json["core"] );
+		}
+
+		public function set_wc_version(){
+			if ( $this->wc_version ) {
+				echo "Set WC Version to $this->wc_version \n";
+				$this->wp_json["plugins"] = [ "https://github.com/woocommerce/woocommerce/releases/download/$this->wc_version/woocommerce.zip" ];
+			}
+		}
+
+		public function revert_wc_version(){
+			$this->wp_json["plugins"] = [ "." ];
+		}
+
+		public function set_php_version(){
+			if ( $this->php_version ) {
+				echo "Set PHP Version to $this->php_version \n";
+				$this->wp_json["phpVersion"] = $this->php_version;
+			}
+		}
+
+		public function revert_php_version(){
+			$this->wp_json["phpVersion"] = "7.4";
+		}
+
+		public function update(){
+			$this->set_wp_version();
+			$this->set_wc_version();
+			$this->set_php_version();
+			file_put_contents( $this->wp_env_path, json_encode( $this->wp_json, JSON_PRETTY_PRINT ) );
+		}
+
+		public function revert(){
+			$this->revert_wp_version();
+			$this->revert_wc_version();
+			$this->revert_php_version();
+			file_put_contents( $this->wp_env_path, json_encode( $this->wp_json, JSON_PRETTY_PRINT ) );
+
+			echo "Reverted .wp-env.json \n";
+		}
+	}
+}
+
+
+$env = getenv();
+$update_wp_json = isset( $env['UPDATE_WP_JSON_FILE'] ) ? $env['UPDATE_WP_JSON_FILE'] : null;
+
+if ( is_null( $update_wp_json ) || $update_wp_json == false ) {
+	$wp_json = new UPDATE_WP_JSON();
+	$wp_json->revert();
+} else {
+	$wp_json = new UPDATE_WP_JSON();
+	$wp_json->update();
+}
diff --git a/plugins/woocommerce/tests/wp-cli.yml b/plugins/woocommerce/tests/wp-cli.yml
new file mode 100644
index 00000000000..3cf7565b3bc
--- /dev/null
+++ b/plugins/woocommerce/tests/wp-cli.yml
@@ -0,0 +1,2 @@
+apache_modules:
+  - mod_rewrite