diff --git a/internal/compiler/v3/compiler_v3.go b/internal/compiler/v3/compiler_v3.go
new file mode 100644
index 00000000..85e68d90
--- /dev/null
+++ b/internal/compiler/v3/compiler_v3.go
@@ -0,0 +1,98 @@
+package v3
+
+import (
+	"bytes"
+	"context"
+	"fmt"
+	"strings"
+	"sync"
+
+	"github.com/go-task/task/v2/internal/compiler"
+	"github.com/go-task/task/v2/internal/execext"
+	"github.com/go-task/task/v2/internal/logger"
+	"github.com/go-task/task/v2/internal/taskfile"
+	"github.com/go-task/task/v2/internal/templater"
+)
+
+var _ compiler.Compiler = &CompilerV3{}
+
+type CompilerV3 struct {
+	Dir string
+
+	TaskfileVars *taskfile.Vars
+
+	Logger *logger.Logger
+
+	dynamicCache   map[string]string
+	muDynamicCache sync.Mutex
+}
+
+func (c *CompilerV3) GetVariables(t *taskfile.Task, call taskfile.Call) (*taskfile.Vars, error) {
+	result := compiler.GetEnviron()
+	result.Set("TASK", taskfile.Var{Static: t.Task})
+
+	rangeFunc := func(k string, v taskfile.Var) error {
+		tr := templater.Templater{Vars: result, RemoveNoValue: true}
+		v = taskfile.Var{
+			Static: tr.Replace(v.Static),
+			Sh:     tr.Replace(v.Sh),
+		}
+		if err := tr.Err(); err != nil {
+			return err
+		}
+		static, err := c.HandleDynamicVar(v)
+		if err != nil {
+			return err
+		}
+		result.Set(k, taskfile.Var{Static: static})
+		return nil
+	}
+
+	if err := c.TaskfileVars.Range(rangeFunc); err != nil {
+		return nil, err
+	}
+	if err := call.Vars.Range(rangeFunc); err != nil {
+		return nil, err
+	}
+	if err := t.Vars.Range(rangeFunc); err != nil {
+		return nil, err
+	}
+
+	return result, nil
+}
+
+func (c *CompilerV3) HandleDynamicVar(v taskfile.Var) (string, error) {
+	if v.Static != "" || v.Sh == "" {
+		return v.Static, nil
+	}
+
+	c.muDynamicCache.Lock()
+	defer c.muDynamicCache.Unlock()
+
+	if c.dynamicCache == nil {
+		c.dynamicCache = make(map[string]string, 30)
+	}
+	if result, ok := c.dynamicCache[v.Sh]; ok {
+		return result, nil
+	}
+
+	var stdout bytes.Buffer
+	opts := &execext.RunCommandOptions{
+		Command: v.Sh,
+		Dir:     c.Dir,
+		Stdout:  &stdout,
+		Stderr:  c.Logger.Stderr,
+	}
+	if err := execext.RunCommand(context.Background(), opts); err != nil {
+		return "", fmt.Errorf(`task: Command "%s" in taskvars file failed: %s`, opts.Command, err)
+	}
+
+	// Trim a single trailing newline from the result to make most command
+	// output easier to use in shell commands.
+	result := strings.TrimSuffix(stdout.String(), "\n")
+
+	c.dynamicCache[v.Sh] = result
+	c.Logger.VerboseErrf(logger.Magenta, `task: dynamic variable: '%s' result: '%s'`, v.Sh, result)
+
+	return result, nil
+}
diff --git a/internal/templater/templater.go b/internal/templater/templater.go
index b905b1ba..85de72fb 100644
--- a/internal/templater/templater.go
+++ b/internal/templater/templater.go
@@ -2,6 +2,7 @@ package templater
 
 import (
 	"bytes"
+	"strings"
 	"text/template"
 
 	"github.com/go-task/task/v2/internal/taskfile"
@@ -12,7 +13,8 @@ import (
 // happen will be assigned to r.err, and consecutive calls to funcs will just
 // return the zero value.
 type Templater struct {
-	Vars *taskfile.Vars
+	Vars          *taskfile.Vars
+	RemoveNoValue bool
 
 	cacheMap map[string]interface{}
 	err      error
@@ -42,6 +44,9 @@ func (r *Templater) Replace(str string) string {
 		r.err = err
 		return ""
 	}
+	if r.RemoveNoValue {
+		return strings.ReplaceAll(b.String(), "<no value>", "")
+	}
 	return b.String()
 }
 
diff --git a/task.go b/task.go
index 0e3eb327..836fd027 100644
--- a/task.go
+++ b/task.go
@@ -12,6 +12,7 @@ import (
 
 	"github.com/go-task/task/v2/internal/compiler"
 	compilerv2 "github.com/go-task/task/v2/internal/compiler/v2"
+	compilerv3 "github.com/go-task/task/v2/internal/compiler/v3"
 	"github.com/go-task/task/v2/internal/execext"
 	"github.com/go-task/task/v2/internal/logger"
 	"github.com/go-task/task/v2/internal/output"
@@ -131,9 +132,9 @@ func (e *Executor) Setup() error {
 		Color:   e.Color,
 	}
 
-	v, err := strconv.ParseFloat(e.Taskfile.Version, 64)
+	v, err := e.parsedVersion()
 	if err != nil {
-		return fmt.Errorf(`task: Could not parse taskfile version "%s": %v`, e.Taskfile.Version, err)
+
 	}
 
 	if v < 2 {
@@ -154,12 +155,20 @@ func (e *Executor) Setup() error {
 		e.Logger.Color = false
 	}
 
-	e.Compiler = &compilerv2.CompilerV2{
-		Dir:          e.Dir,
-		Taskvars:     e.taskvars,
-		TaskfileVars: e.Taskfile.Vars,
-		Expansions:   e.Taskfile.Expansions,
-		Logger:       e.Logger,
+	if v < 3 {
+		e.Compiler = &compilerv2.CompilerV2{
+			Dir:          e.Dir,
+			Taskvars:     e.taskvars,
+			TaskfileVars: e.Taskfile.Vars,
+			Expansions:   e.Taskfile.Expansions,
+			Logger:       e.Logger,
+		}
+	} else {
+		e.Compiler = &compilerv3.CompilerV3{
+			Dir:          e.Dir,
+			TaskfileVars: e.Taskfile.Vars,
+			Logger:       e.Logger,
+		}
 	}
 
 	if v < 2.1 && e.Taskfile.Output != "" {
@@ -231,6 +240,14 @@ func (e *Executor) Setup() error {
 	return nil
 }
 
+func (e *Executor) parsedVersion() (float64, error) {
+	v, err := strconv.ParseFloat(e.Taskfile.Version, 64)
+	if err != nil {
+		return 0, fmt.Errorf(`task: Could not parse taskfile version "%s": %v`, e.Taskfile.Version, err)
+	}
+	return v, nil
+}
+
 // RunTask runs a task by its name
 func (e *Executor) RunTask(ctx context.Context, call taskfile.Call) error {
 	t, err := e.CompiledTask(call)
diff --git a/task_test.go b/task_test.go
index c752e95b..ef985361 100644
--- a/task_test.go
+++ b/task_test.go
@@ -107,6 +107,20 @@ func TestVarsV2(t *testing.T) {
 	tt.Run(t)
 }
 
+func TestVarsV3(t *testing.T) {
+	tt := fileContentTest{
+		Dir:    "testdata/vars/v3",
+		Target: "default",
+		Files: map[string]string{
+			"missing-var.txt":  "\n",
+			"var-order.txt":    "ABCDEF\n",
+			"dependent-sh.txt": "123456\n",
+			"with-call.txt":    "Hi, ABC123!\n",
+		},
+	}
+	tt.Run(t)
+}
+
 func TestMultilineVars(t *testing.T) {
 	for _, dir := range []string{"testdata/vars/v2/multiline"} {
 		tt := fileContentTest{
diff --git a/testdata/checksum/Taskfile.yml b/testdata/checksum/Taskfile.yml
index 1c620a71..d2de1086 100644
--- a/testdata/checksum/Taskfile.yml
+++ b/testdata/checksum/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   build:
diff --git a/testdata/cyclic/Taskfile.yml b/testdata/cyclic/Taskfile.yml
index 0da55536..83cf39db 100644
--- a/testdata/cyclic/Taskfile.yml
+++ b/testdata/cyclic/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   task-1:
diff --git a/testdata/deps/Taskfile.yml b/testdata/deps/Taskfile.yml
index 411eeb91..bc2aa71c 100644
--- a/testdata/deps/Taskfile.yml
+++ b/testdata/deps/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   default:
diff --git a/testdata/dir/Taskfile.yml b/testdata/dir/Taskfile.yml
index f17dd9fe..8e740dbe 100644
--- a/testdata/dir/Taskfile.yml
+++ b/testdata/dir/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   whereami:
diff --git a/testdata/dir/explicit_doesnt_exist/Taskfile.yml b/testdata/dir/explicit_doesnt_exist/Taskfile.yml
index 1b6fb7d1..0f0fb52c 100644
--- a/testdata/dir/explicit_doesnt_exist/Taskfile.yml
+++ b/testdata/dir/explicit_doesnt_exist/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   whereami:
diff --git a/testdata/dir/explicit_exists/Taskfile.yml b/testdata/dir/explicit_exists/Taskfile.yml
index 0ab53b26..a1797562 100644
--- a/testdata/dir/explicit_exists/Taskfile.yml
+++ b/testdata/dir/explicit_exists/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   whereami:
diff --git a/testdata/dry/Taskfile.yml b/testdata/dry/Taskfile.yml
index b4e932ed..81c7e0d1 100644
--- a/testdata/dry/Taskfile.yml
+++ b/testdata/dry/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   build:
diff --git a/testdata/dry_checksum/Taskfile.yml b/testdata/dry_checksum/Taskfile.yml
index 057816b3..f58cf0ef 100644
--- a/testdata/dry_checksum/Taskfile.yml
+++ b/testdata/dry_checksum/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   default:
diff --git a/testdata/env/Taskfile.yml b/testdata/env/Taskfile.yml
index d5a7419d..cb88f95e 100644
--- a/testdata/env/Taskfile.yml
+++ b/testdata/env/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 vars:
   BAZ:
diff --git a/testdata/expand/Taskfile.yml b/testdata/expand/Taskfile.yml
index 7398407c..967490ac 100644
--- a/testdata/expand/Taskfile.yml
+++ b/testdata/expand/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   pwd:
diff --git a/testdata/generates/Taskfile.yml b/testdata/generates/Taskfile.yml
index 9f05cfd0..4dc6e9ec 100644
--- a/testdata/generates/Taskfile.yml
+++ b/testdata/generates/Taskfile.yml
@@ -1,4 +1,7 @@
-version: '2'
+version: '3'
+
+vars:
+  BUILD_DIR: $pwd
 
 tasks:
   abs.txt:
diff --git a/testdata/generates/Taskvars.yml b/testdata/generates/Taskvars.yml
deleted file mode 100644
index 0907174f..00000000
--- a/testdata/generates/Taskvars.yml
+++ /dev/null
@@ -1 +0,0 @@
-BUILD_DIR: $pwd
diff --git a/testdata/ignore_errors/Taskfile.yml b/testdata/ignore_errors/Taskfile.yml
index 1d7dc8b5..31b82a70 100644
--- a/testdata/ignore_errors/Taskfile.yml
+++ b/testdata/ignore_errors/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   task-should-pass:
diff --git a/testdata/includes_call_root_task/Taskfile.yml b/testdata/includes_call_root_task/Taskfile.yml
index 41e60ad0..26373378 100644
--- a/testdata/includes_call_root_task/Taskfile.yml
+++ b/testdata/includes_call_root_task/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 includes:
   included: Taskfile2.yml
diff --git a/testdata/includes_call_root_task/Taskfile2.yml b/testdata/includes_call_root_task/Taskfile2.yml
index 99d5cb3a..b520bc4b 100644
--- a/testdata/includes_call_root_task/Taskfile2.yml
+++ b/testdata/includes_call_root_task/Taskfile2.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   call-root:
diff --git a/testdata/includes_deps/Taskfile.yml b/testdata/includes_deps/Taskfile.yml
index e6d4d186..bed642bb 100644
--- a/testdata/includes_deps/Taskfile.yml
+++ b/testdata/includes_deps/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 includes:
   included: Taskfile2.yml
diff --git a/testdata/includes_deps/Taskfile2.yml b/testdata/includes_deps/Taskfile2.yml
index 27eb2b97..c5e704a7 100644
--- a/testdata/includes_deps/Taskfile2.yml
+++ b/testdata/includes_deps/Taskfile2.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   default:
diff --git a/testdata/includes_empty/Taskfile.yml b/testdata/includes_empty/Taskfile.yml
index 2d24e533..a58ab424 100644
--- a/testdata/includes_empty/Taskfile.yml
+++ b/testdata/includes_empty/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 includes:
   included: Taskfile2.yml
diff --git a/testdata/includes_empty/Taskfile2.yml b/testdata/includes_empty/Taskfile2.yml
index 825285aa..7e984ef7 100644
--- a/testdata/includes_empty/Taskfile2.yml
+++ b/testdata/includes_empty/Taskfile2.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 vars:
   FILE: file.txt
diff --git a/testdata/params/Taskfile.yml b/testdata/params/Taskfile.yml
index f8d9a91a..06cbe488 100644
--- a/testdata/params/Taskfile.yml
+++ b/testdata/params/Taskfile.yml
@@ -1,4 +1,8 @@
-version: '2'
+version: '3'
+
+vars:
+  PORTUGUESE_HELLO_WORLD: Olá, mundo!
+  GERMAN: Hello
 
 tasks:
   default:
diff --git a/testdata/params/Taskvars.yml b/testdata/params/Taskvars.yml
deleted file mode 100644
index af0a0efb..00000000
--- a/testdata/params/Taskvars.yml
+++ /dev/null
@@ -1,2 +0,0 @@
-PORTUGUESE_HELLO_WORLD: Olá, mundo!
-GERMAN: "Hello"
diff --git a/testdata/precondition/Taskfile.yml b/testdata/precondition/Taskfile.yml
index eedc588f..669eb9d8 100644
--- a/testdata/precondition/Taskfile.yml
+++ b/testdata/precondition/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   foo:
diff --git a/testdata/status/Taskfile.yml b/testdata/status/Taskfile.yml
index 57900efc..7923c426 100644
--- a/testdata/status/Taskfile.yml
+++ b/testdata/status/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   gen-foo:
diff --git a/testdata/summary/Taskfile.yml b/testdata/summary/Taskfile.yml
index 3e4d4640..7b857f76 100644
--- a/testdata/summary/Taskfile.yml
+++ b/testdata/summary/Taskfile.yml
@@ -1,4 +1,4 @@
-version: '2'
+version: '3'
 
 tasks:
   task-with-summary:
diff --git a/testdata/vars/v3/.gitignore b/testdata/vars/v3/.gitignore
new file mode 100644
index 00000000..2211df63
--- /dev/null
+++ b/testdata/vars/v3/.gitignore
@@ -0,0 +1 @@
+*.txt
diff --git a/testdata/vars/v3/Taskfile.yml b/testdata/vars/v3/Taskfile.yml
new file mode 100644
index 00000000..4c581115
--- /dev/null
+++ b/testdata/vars/v3/Taskfile.yml
@@ -0,0 +1,46 @@
+version: '3'
+
+vars:
+  VAR_A: A
+  VAR_B: '{{.VAR_A}}B'
+  VAR_C: '{{.VAR_B}}C'
+
+  VAR_1: {sh: echo 1}
+  VAR_2: {sh: 'echo "{{.VAR_1}}2"'}
+  VAR_3: {sh: 'echo "{{.VAR_2}}3"'}
+
+tasks:
+  default:
+    - task: missing-var
+    - task: var-order
+    - task: dependent-sh
+    - task: with-call
+
+  missing-var: echo '{{.NON_EXISTING_VAR}}' > missing-var.txt
+
+  var-order:
+    vars:
+      VAR_D: '{{.VAR_C}}D'
+      VAR_E: '{{.VAR_D}}E'
+      VAR_F: '{{.VAR_E}}F'
+    cmds:
+      - echo '{{.VAR_F}}' > var-order.txt
+
+  dependent-sh:
+    vars:
+      VAR_4: {sh: 'echo "{{.VAR_3}}4"'}
+      VAR_5: {sh: 'echo "{{.VAR_4}}5"'}
+      VAR_6: {sh: 'echo "{{.VAR_5}}6"'}
+    cmds:
+      - echo '{{.VAR_6}}' > dependent-sh.txt
+
+  with-call:
+    - task: called-task
+      vars:
+        ABC123: '{{.VAR_C}}{{.VAR_3}}'
+
+  called-task:
+    vars:
+      MESSAGE: Hi, {{.ABC123}}!
+    cmds:
+      - echo "{{.MESSAGE}}" > with-call.txt
diff --git a/variables.go b/variables.go
index a2ef97d8..569f56ed 100644
--- a/variables.go
+++ b/variables.go
@@ -23,7 +23,12 @@ func (e *Executor) CompiledTask(call taskfile.Call) (*taskfile.Task, error) {
 		return nil, err
 	}
 
-	r := templater.Templater{Vars: vars}
+	v, err := e.parsedVersion()
+	if err != nil {
+		return nil, err
+	}
+
+	r := templater.Templater{Vars: vars, RemoveNoValue: v >= 3.0}
 
 	new := taskfile.Task{
 		Task:        origTask.Task,