diff --git a/CHANGELOG.md b/CHANGELOG.md
index 9338542d..6288f3fc 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -5,6 +5,7 @@ Changelog
 
 * [Improved] Python 2.6 compatibility
 * [New] Python 3 compatibility
+* [New] Respects the `XDG_CONFIG_HOME` environment variable for storing your configuration file
 
 ### 1.0.3 (April 17, 2013)
 
diff --git a/README.md b/README.md
index f3c1d2ba..60040080 100644
--- a/README.md
+++ b/README.md
@@ -137,7 +137,7 @@ will replace your encrypted journal file by a Journal in plain text. You can als
 Advanced usages
 --------------
 
-The first time launched, _jrnl_ will create a file called `.jrnl_config` in your home directory.
+The first time launched, _jrnl_ will create a file configuration file at  `~/.jrnl_config` or, if the `XDG_CONFIG_HOME` environment variable is set, `$XDG_CONFIG_HOME/jrnl`.
 
 ### .jrnl_config
 
diff --git a/jrnl/jrnl.py b/jrnl/jrnl.py
index 72e97fa7..182eae00 100755
--- a/jrnl/jrnl.py
+++ b/jrnl/jrnl.py
@@ -31,7 +31,8 @@ __version__ = '1.0.0-rc1'
 __author__ = 'Manuel Ebert, Stephan Gabler'
 __license__ = 'MIT'
 
-CONFIG_PATH = os.environ.get('JRNL_CONFIG', os.path.expanduser('~/.jrnl_config'))
+xdg_config = os.environ.get('XDG_CONFIG_HOME')
+CONFIG_PATH = os.path.join(xdg_config, "jrnl") if xdg_config else os.path.expanduser('~/.jrnl_config'))
 PYCRYPTO = install.module_exists("Crypto")
 
 def parse_args():