diff --git a/Cargo.lock b/Cargo.lock
index 01850ab4f756..722787f1fa35 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -2017,6 +2017,15 @@ dependencies = [
  "crypto-common",
 ]
 
+[[package]]
+name = "directories"
+version = "4.0.1"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "f51c5d4ddabd36886dd3e1438cb358cdcb0d7c499cb99cb4ac2e38e18b5cb210"
+dependencies = [
+ "dirs-sys",
+]
+
 [[package]]
 name = "dirs"
 version = "2.0.2"
@@ -2741,6 +2750,7 @@ dependencies = [
  "chain",
  "chain_sync",
  "ctrlc",
+ "directories",
  "fil_types",
  "forest_address",
  "forest_bigint",
diff --git a/README.md b/README.md
index ca06eba6b38c..22c26163e815 100644
--- a/README.md
+++ b/README.md
@@ -76,6 +76,12 @@ bootstrap_peers = ["<multiaddress>"]
 
 Example of a [multiaddress](https://github.com/multiformats/multiaddr): `"/ip4/54.186.82.90/tcp/1347/p2p/12D3K1oWKNF7vNFEhnvB45E9mw2B5z6t419W3ziZPLdUDVnLLKGs"`
 
+Forest will look for config files in the following order and priority:
+ * Paths passed to the command line via the `--config` flag.
+ * The environment variable `FOREST_CONFIG_PATH`, if no config was passed through command line arguments.
+ * If none of the above are found, Forest will look in the systems default configuration directory (`$XDG_CONFIG_HOME` on Linux systems).
+ * After all locations are exhausted and a config file is not found, a default configuration is assumed and used.
+
 ### Logging
 
 The Forest logger uses [Rust's log filtering options](https://doc.rust-lang.org/1.1.0/log/index.html#filtering-results) with the `RUST_LOG` environment variable.
diff --git a/forest/Cargo.toml b/forest/Cargo.toml
index 458c19b6598c..277498ed846c 100644
--- a/forest/Cargo.toml
+++ b/forest/Cargo.toml
@@ -60,6 +60,7 @@ ticker = "0.1"
 byte-unit = "4.0"
 rug = "1.13"
 toml = "0.5"
+directories = "4.0.1"
 
 [dependencies.jsonrpc-v2]
 version = "0.10"
diff --git a/forest/src/cli/mod.rs b/forest/src/cli/mod.rs
index 2cd6666131ad..e1ed442d941d 100644
--- a/forest/src/cli/mod.rs
+++ b/forest/src/cli/mod.rs
@@ -25,8 +25,10 @@ pub(super) use self::sync_cmd::SyncCommands;
 pub(super) use self::wallet_cmd::WalletCommands;
 
 use byte_unit::Byte;
+use directories::ProjectDirs;
 use fil_types::FILECOIN_PRECISION;
 use jsonrpc_v2::Error as JsonRpcError;
+use log::{info, warn};
 use num_bigint::BigInt;
 use rug::float::ParseFloatError;
 use rug::Float;
@@ -158,17 +160,7 @@ impl CliOpts {
                 // Parse and return the configuration file
                 read_toml(&toml)?
             }
-            None => {
-                // Check ENV VAR for config file
-                if let Ok(config_file) = std::env::var("FOREST_CONFIG_PATH") {
-                    // Read from config file
-                    let toml = read_file_to_string(&PathBuf::from(&config_file))?;
-                    // Parse and return the configuration file
-                    read_toml(&toml)?
-                } else {
-                    Config::default()
-                }
-            }
+            None => find_default_config().unwrap_or_default(),
         };
         if let Some(genesis_file) = &self.genesis {
             cfg.genesis_file = Some(genesis_file.to_owned());
@@ -224,6 +216,53 @@ impl CliOpts {
     }
 }
 
+fn find_default_config() -> Option<Config> {
+    if let Ok(config_file) = std::env::var("FOREST_CONFIG_PATH") {
+        info!(
+            "FOREST_CONFIG_PATH is set! Using configuration at {}",
+            config_file
+        );
+        let path = PathBuf::from(config_file);
+        if path.exists() {
+            return read_config_or_none(path);
+        }
+    };
+
+    if let Some(dir) = ProjectDirs::from("com", "ChainSafe", "Forest") {
+        let mut config_dir = dir.config_dir().to_path_buf();
+        config_dir.push("config.toml");
+        if config_dir.exists() {
+            info!("Found config file at {}", config_dir.display());
+            return read_config_or_none(config_dir);
+        }
+    }
+
+    warn!("No configuration found! Using default");
+
+    None
+}
+
+fn read_config_or_none(path: PathBuf) -> Option<Config> {
+    let toml = match read_file_to_string(&path) {
+        Ok(t) => t,
+        Err(e) => {
+            warn!("An error occured while reading configuration file at {}. Resorting to default configuration. Error was {}", path.display(), e);
+            return None;
+        }
+    };
+
+    match read_toml(&toml) {
+        Ok(cfg) => Some(cfg),
+        Err(e) => {
+            warn!(
+                "Error reading configuration, opting to default. Error was {} ",
+                e
+            );
+            None
+        }
+    }
+}
+
 /// Blocks current thread until ctrl-c is received
 pub async fn block_until_sigint() {
     let (ctrlc_send, ctrlc_oneshot) = futures::channel::oneshot::channel();