diff --git a/docs/changelog.md b/docs/changelog.md
index 4730abf66..0b7a9a5d5 100644
--- a/docs/changelog.md
+++ b/docs/changelog.md
@@ -38,6 +38,7 @@ As features stabilize some brief notes about them will accumulate here.
 * Emitting the tmux-style `ESC k TITLE ST` sequence via ConPTY breaks output for the pane [#2442](https://github.com/wez/wezterm/issues/2442)
 * Avoid using full path canonicalization for `--cwd` options [#2449](https://github.com/wez/wezterm/issues/2449)
 * Scroll to the bottom on mouse input when mouse reporting is enabled [#2447](https://github.com/wez/wezterm/issues/2447)
+* ssh: correctly expand `%h` ssh_config tokens [#2448](https://github.com/wez/wezterm/issues/2448)
 
 ### 20220807-113146-c2fee766
 
diff --git a/wezterm-ssh/src/config.rs b/wezterm-ssh/src/config.rs
index 4becf2c79..0d896b56b 100644
--- a/wezterm-ssh/src/config.rs
+++ b/wezterm-ssh/src/config.rs
@@ -521,9 +521,12 @@ impl Config {
             );
         }
 
+        let mut token_map = self.tokens.clone();
+        token_map.insert("%h".to_string(), host.to_string());
+
         for (k, v) in &mut result {
             if let Some(tokens) = self.should_expand_tokens(k) {
-                self.expand_tokens(v, tokens);
+                self.expand_tokens(v, tokens, &token_map);
             }
 
             if self.should_expand_environment(k) {
@@ -617,9 +620,9 @@ impl Config {
     }
 
     /// Perform token substitution
-    fn expand_tokens(&self, value: &mut String, tokens: &[&str]) {
+    fn expand_tokens(&self, value: &mut String, tokens: &[&str], token_map: &ConfigMap) {
         for &t in tokens {
-            if let Some(v) = self.tokens.get(t) {
+            if let Some(v) = token_map.get(t) {
                 *value = value.replace(t, v);
             } else if t == "%u" {
                 *value = value.replace(t, &self.resolve_local_user());
@@ -793,6 +796,65 @@ Config {
         );
     }
 
+    #[test]
+    fn hostname_expansion() {
+        let mut config = Config::new();
+
+        let mut fake_env = ConfigMap::new();
+        fake_env.insert("HOME".to_string(), "/home/me".to_string());
+        fake_env.insert("USER".to_string(), "me".to_string());
+        config.assign_environment(fake_env);
+
+        config.add_config_string(
+            r#"
+        Host foo0 foo1 foo2
+            HostName server-%h
+            "#,
+        );
+
+        let opts = config.for_host("foo0");
+        snapshot!(
+            opts,
+            r#"
+{
+    "hostname": "server-foo0",
+    "identityfile": "/home/me/.ssh/id_dsa /home/me/.ssh/id_ecdsa /home/me/.ssh/id_ed25519 /home/me/.ssh/id_rsa",
+    "port": "22",
+    "user": "me",
+    "userknownhostsfile": "/home/me/.ssh/known_hosts /home/me/.ssh/known_hosts2",
+}
+"#
+        );
+
+        let opts = config.for_host("foo1");
+        snapshot!(
+            opts,
+            r#"
+{
+    "hostname": "server-foo1",
+    "identityfile": "/home/me/.ssh/id_dsa /home/me/.ssh/id_ecdsa /home/me/.ssh/id_ed25519 /home/me/.ssh/id_rsa",
+    "port": "22",
+    "user": "me",
+    "userknownhostsfile": "/home/me/.ssh/known_hosts /home/me/.ssh/known_hosts2",
+}
+"#
+        );
+
+        let opts = config.for_host("foo2");
+        snapshot!(
+            opts,
+            r#"
+{
+    "hostname": "server-foo2",
+    "identityfile": "/home/me/.ssh/id_dsa /home/me/.ssh/id_ecdsa /home/me/.ssh/id_ed25519 /home/me/.ssh/id_rsa",
+    "port": "22",
+    "user": "me",
+    "userknownhostsfile": "/home/me/.ssh/known_hosts /home/me/.ssh/known_hosts2",
+}
+"#
+        );
+    }
+
     #[test]
     fn multiple_identityfile() {
         let mut config = Config::new();