diff --git a/README.md b/README.md
index 25db1ecb..488ac197 100644
--- a/README.md
+++ b/README.md
@@ -94,7 +94,7 @@ Selectable menus will be available when using `kubie ctx` and `kubie ns`.
 * `kubie update` will check the latest kubie version and update your local installation if needed
 
 ## Settings
-You can customize kubie's behavior with the `~/.kube/kubie.yaml` file. The settings available and their defaults are
+You can customize kubie's behavior with the `~/.config/kubie/config.yaml` file. The settings available and their defaults are
 available below.
 
 ```yaml
@@ -165,7 +165,7 @@ behavior:
 
 # Optional start and stop hooks
 hooks:
-    # A command hook to run when a CTX is started.  
+    # A command hook to run when a CTX is started.
     # This example re-labels your terminal window
     # Default: none
     start_ctx: >
diff --git a/src/settings.rs b/src/settings.rs
index 4e2b1813..11f1f93d 100644
--- a/src/settings.rs
+++ b/src/settings.rs
@@ -1,5 +1,5 @@
 use std::collections::HashSet;
-use std::fs::File;
+use std::fs::{self, File};
 use std::io::BufReader;
 use std::path::{Path, PathBuf};
 
@@ -14,6 +14,11 @@ lazy_static! {
         .to_str()
         .expect("home directory contains non unicode characters")
         .to_string();
+    static ref CONFIG_DIR: String = dirs::config_dir()
+        .expect("could not get config_dir")
+        .to_str()
+        .expect("config_dir contains non unicode characters")
+        .to_string();
 }
 
 #[inline]
@@ -21,6 +26,11 @@ fn home_dir() -> &'static str {
     &HOME_DIR
 }
 
+#[inline]
+fn config_dir() -> &'static str {
+    &CONFIG_DIR
+}
+
 pub fn expanduser(path: &str) -> String {
     if let Some(stripped) = path.strip_prefix("~/") {
         format!("{}/{}", home_dir(), stripped)
@@ -45,7 +55,18 @@ pub struct Settings {
 
 impl Settings {
     pub fn path() -> String {
-        format!("{}/.kube/kubie.yaml", home_dir())
+        let legacy_path = format!("{}/.kube/kubie.yaml", home_dir());
+        let xdg_dir = format!("{}/kubie", config_dir());
+        let xdg_path = format!("{}/config.yaml", xdg_dir);
+
+        if Path::new(&legacy_path).exists() {
+            legacy_path
+        } else if !Path::new(&xdg_dir).is_dir() {
+            fs::create_dir_all(xdg_dir).expect("could not create config directory");
+            xdg_path
+        } else {
+            xdg_path
+        }
     }
 
     pub fn load() -> Result<Settings> {
@@ -60,7 +81,8 @@ impl Settings {
             Settings::default()
         };
 
-        // Very important to exclude kubie's own config file ~/.kube/kubie.yaml from the results.
+        // Very important to exclude kubie's own config file from the results
+        // it is ~/.config/kubie/config.yaml by default
         settings.configs.exclude.push(settings_path_str);
         Ok(settings)
     }