Java system properties and environment variables

• System properties are set on the Java command line using the -Dpropertyname=value syntax. They can also be added at runtime using System.setProperty(String key, String value) or via the various System.getProperties().load() methods.
  To get a specific system property you can use System.getProperty(String key) or System.getProperty(String key, String def).

• Environment variables are set in the OS, e.g. in Linux export HOME=/Users/myusername or on Windows SET WINDIR=C:\Windows etc, and, unlike properties, may not be set at runtime.
  To get a specific environment variable you can use System.getenv(String name).

I think the difference between the two boils down to access. Environment variables are accessible by any process and Java system properties are only accessible by the process they are added to.

Also as Bohemian stated, env variables are set in the OS (however they 'can' be set through Java) and system properties are passed as command line options or set via setProperty().