diff --git a/CHANGELOG.md b/CHANGELOG.md
index 4a0380734..d37b0b861 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -15,6 +15,8 @@
 
 ### Under the Hood
 
+- Document serverless environment configuration for Python models (thanks @TangoEnSkai!) ([#1649](https://github.com/databricks/dbt-databricks/pull/1649) resolves [#1055](https://github.com/databricks/dbt-databricks/issues/1055))
+
 - Raise the `pytest-rerunfailures` lower bound to `>=16.2` and remove the `SchemaNameVarMixin` workaround so min-deps CI no longer pins 14.0, which leaked class-scoped dbt test fixtures across reruns (test-only, no runtime impact) ([#1618](https://github.com/databricks/dbt-databricks/pull/1618))
 - Bump `databricks-sql-connector` ceiling to `<4.4.1` and pin to 4.4.0, which requires `thrift>=0.24.0`; resolves CVE-2026-48586 (data amplification DoS), CVE-2026-41603 (TLS cert hostname bypass), and CVE-2026-43868 (memory allocation) ([#1623](https://github.com/databricks/dbt-databricks/pull/1623) resolves [#1622](https://github.com/databricks/dbt-databricks/issues/1622))
 - Reorganize `docs/` into `docs/flow/` and `docs/guides/`, and sync materialization flow diagrams with the current macros ([#1627](https://github.com/databricks/dbt-databricks/pull/1627))
diff --git a/README.md b/README.md
index 7b1762fad..6d9ccef53 100644
--- a/README.md
+++ b/README.md
@@ -75,6 +75,7 @@ These following quick starts will get you up and running with the `dbt-databrick
 - [Set up your dbt project with Databricks](https://docs.getdbt.com/guides/set-up-your-databricks-dbt-project)
 - Using dbt Cloud with Databricks ([Azure](https://docs.microsoft.com/en-us/azure/databricks/integrations/prep/dbt-cloud) | [AWS](https://docs.databricks.com/integrations/prep/dbt-cloud.html))
 - [Submitting Python models as Databricks Workflows](https://github.com/databricks/dbt-databricks/blob/main/docs/guides/workflow-job-submission.md)
+- [Configuring serverless environments for Python models](https://github.com/databricks/dbt-databricks/blob/main/docs/guides/workflow-job-submission.md#serverless-environments)
 - [Running a dbt project as a Databricks job](https://github.com/databricks/dbt-databricks/blob/main/docs/guides/databricks-jobs.md)
 - [Using Unity Catalog with dbt-databricks](https://github.com/databricks/dbt-databricks/blob/main/docs/guides/uc.md)
 - [Continuous integration in dbt](https://docs.getdbt.com/docs/deploy/continuous-integration)
diff --git a/docs/README.md b/docs/README.md
index 8dc9ed636..2fe3e8950 100644
--- a/docs/README.md
+++ b/docs/README.md
@@ -32,6 +32,6 @@ drift; treat them as starting points, not authoritative reference.
 - **[guides/databricks-jobs.md](guides/databricks-jobs.md)** — running a dbt project as a Databricks
   job.
 - **[guides/workflow-job-submission.md](guides/workflow-job-submission.md)** — submitting Python
-  models as long-lived Databricks Workflows.
+  models as long-lived Databricks Workflows, including serverless environment configuration.
 - **[guides/databricks-copy-into-macro-aws.md](guides/databricks-copy-into-macro-aws.md)** — loading
   S3 data into Delta with the `databricks_copy_into` macro.
diff --git a/docs/guides/workflow-job-submission.md b/docs/guides/workflow-job-submission.md
index 9d4a4c187..28d175a99 100644
--- a/docs/guides/workflow-job-submission.md
+++ b/docs/guides/workflow-job-submission.md
@@ -8,6 +8,9 @@ method, but allow for additional configuration.
 
 Some of that configuration can also be used for `job_cluster` models.
 
+For one-time serverless runs instead of a long-lived workflow, see
+[Serverless environments](#serverless-environments).
+
 ```python
 # my_model.py
 import pyspark.sql.types as T
@@ -110,6 +113,52 @@ dbt will generate a name based on the catalog, schema, and model identifier.
 - Similarly, you can define a reusable job cluster for the workflow and tell the task to use that
 - If none of those are in the configuration, the task cluster will be serverless
 
+#### Serverless environments
+
+Python models submitted with `serverless_cluster` can install dependencies in a
+[Databricks serverless environment](https://docs.databricks.com/aws/en/compute/serverless/dependencies).
+Set both `environment_key` and `environment_dependencies` in the model's YAML configuration:
+
+```yaml
+version: 2
+
+models:
+  - name: my_python_model
+    config:
+      submission_method: serverless_cluster
+      environment_key: dbt_env
+      environment_dependencies:
+        - pandas==2.2.3
+        - /Workspace/Shared/libraries/my_package-1.0.0-py3-none-any.whl
+```
+
+`environment_key` assigns the environment to the Python model task. When
+`environment_dependencies` is also set, dbt-databricks creates a serverless environment using
+environment version `4` and installs each listed PyPI package or workspace file.
+
+To control other environment settings, define the full Jobs API environment in
+`python_job_config.environments`. The key used by the task must match the key in that list:
+
+```yaml
+version: 2
+
+models:
+  - name: my_python_model
+    config:
+      submission_method: serverless_cluster
+      environment_key: dbt_env
+      python_job_config:
+        environments:
+          - environment_key: dbt_env
+            spec:
+              environment_version: "4"
+              dependencies:
+                - pandas==2.2.3
+```
+
+When `python_job_config.environments` contains an environment, it takes precedence over the
+environment that dbt-databricks would generate from `environment_dependencies`.
+
 ```yaml
 # Reusable job cluster config example