Fix remote var outputs

tests/util/test_util_hooks.py

@@ -388,6 +388,51 @@ def test_populate_environment_with_terraform_remote_vars(
         assert local_env["TF_REMOTE_LOCAL_KEY"] == "value"
         assert local_env["TF_REMOTE_LOCAL_ANOTHER_KEY"] == "another_value"
 
+    @mock.patch("builtins.open", new_callable=mock.mock_open)
+    @mock.patch("tfworker.util.hooks.os.path.isfile", return_value=True)
+    @mock.patch(
+        "tfworker.util.hooks.get_state_item",
+        side_effect=[
+            '{"value":"staging","type":"string"}',
+            '{"value":true,"type":"bool"}',
+            '{"value":{"key":"val"},"type":"object"}',
+            '{"value":["a","b","c"],"type":"list"}',
+        ],
+    )
+    def test_populate_environment_with_terraform_remote_vars_realistic_json(
+        self, mock_get_state_item, mock_isfile, mock_open
+    ):
+        """Test that remote vars correctly extract values from Terraform's JSON output format."""
+        mock_terraform_locals = """
+            local_key = data.terraform_remote_state.remote1.outputs.environment
+            local_flag = data.terraform_remote_state.remote2.outputs.enabled
+            local_config = data.terraform_remote_state.remote3.outputs.config
+            local_items = data.terraform_remote_state.remote4.outputs.items
+        """
+        mock_open.return_value.read.return_value = mock_terraform_locals
+
+        local_env = {}
+        hooks._populate_environment_with_terraform_remote_vars(
+            local_env, "working_dir", "terraform_path", False, None
+        )
+
+        # Simple string should be unquoted
+        assert "TF_REMOTE_LOCAL_KEY" in local_env.keys()
+        assert local_env["TF_REMOTE_LOCAL_KEY"] == "staging"
+
+        # Boolean should be uppercase
+        assert "TF_REMOTE_LOCAL_FLAG" in local_env.keys()
+        assert local_env["TF_REMOTE_LOCAL_FLAG"] == "TRUE"
+
+        # Complex object should be JSON-encoded and shlex-escaped
+        assert "TF_REMOTE_LOCAL_CONFIG" in local_env.keys()
+        # shlex.quote wraps JSON in single quotes
+        assert local_env["TF_REMOTE_LOCAL_CONFIG"] == """'{"key":"val"}'"""
+
+        # List should be JSON-encoded and shlex-escaped
+        assert "TF_REMOTE_LOCAL_ITEMS" in local_env.keys()
+        assert local_env["TF_REMOTE_LOCAL_ITEMS"] == """'["a","b","c"]'"""
+
     def test_populate_environment_with_extra_vars(self):
         local_env = {}
         extra_vars = {"extra_key": "extra_value"}

tfworker/util/hooks.py

@@ -328,9 +328,24 @@ def _populate_environment_with_terraform_remote_vars(
             item = m.group("item")
             state = m.group("state")
             state_item = m.group("state_item")
-            state_value = get_state_item(
+            state_value_json = get_state_item(
                 working_dir, local_env, terraform_path, state, state_item, backend
             )
+
+            # Parse the Terraform output JSON to extract just the value field
+            # Terraform output format is: {"value": <actual_value>, "type": <type>, "sensitive": <bool>}
+            try:
+                state_output = json.loads(state_value_json)
+                # Extract just the value field from the Terraform output structure
+                if isinstance(state_output, dict) and "value" in state_output:
+                    state_value = state_output["value"]
+                else:
+                    # Fallback to the raw value if it's not in the expected format
+                    state_value = state_value_json
+            except (json.JSONDecodeError, TypeError):
+                # If parsing fails, use the raw value
+                state_value = state_value_json
+
             _set_hook_env_var(
                 local_env, TFHookVarType.REMOTE, item, state_value, b64_encode
             )
@@ -406,7 +421,8 @@ def _set_hook_env_var(
         value_str = str(value).upper()
     elif isinstance(value, (dict, list, tuple)):
         try:
-            value_str = json.dumps(value)
+            # Use compact JSON formatting to match the rest of the codebase
+            value_str = json.dumps(value, separators=(",", ":"))
         except Exception:
             value_str = str(value)
     else: