diff --git a/CONTRIBUTING.md b/CONTRIBUTING.md
index 3a0f32c209..4053f29964 100644
--- a/CONTRIBUTING.md
+++ b/CONTRIBUTING.md
@@ -118,10 +118,12 @@ This generates a bunch of classes required by IntelliJ for compiling the rest of
 3. Create a copy of the `envs/dev.env.example` 
 
     ```shell script
-    cp envs/dev.env.example envs/dev.env
+    cp envs/dev.env.example .env
     ```
 
-4. Modify the property values in the file `envs/dev.env` to point to your local running instance of MongoDB and Redis.
+This command creates a `.env` file in the `app/server` folder. All run scripts pick up environment configuration from this file.
+
+4. Modify the property values in the file `.env` to point to your local running instance of MongoDB and Redis.
 
 5. In order to create the final JAR for the Appsmith server, run the command:
 ```