diff --git a/.gitignore b/.gitignore
index 2e1a2004f..ef4ea964a 100644
--- a/.gitignore
+++ b/.gitignore
@@ -6,3 +6,4 @@
 __*__
 .idea
 datajoint.egg-info/
+*.pyc
diff --git a/datajoint/__init__.py b/datajoint/__init__.py
index c95425020..c3c35b4cf 100644
--- a/datajoint/__init__.py
+++ b/datajoint/__init__.py
@@ -1,14 +1,46 @@
+import logging
+import os
+
+__author__ = "Dimitri Yatsenko, Edgar Walker, and Fabian Sinz   at Baylor College of Medicine"
+__version__ = "0.2"
+__all__ = ['__author__', '__version__',
+           'Connection', 'Heading', 'Base', 'Not',
+           'AutoPopulate', 'TaskQueue', 'conn', 'DataJointError', 'blob']
+
+# ------------ define datajoint error before the import hierarchy is flattened ------------
+class DataJointError(Exception):
+    """
+    Base class for errors specific to DataJoint internal
+    operation.
+    """
+    pass
+
+
+
+# ----------- loads local configuration from file ----------------
+from .settings import Config, logger
+config = Config()
+local_config_file = os.environ.get(config['config.varname'], None)
+if local_config_file is None:
+    local_config_file = os.path.expanduser(config['config.file'])
+else:
+    local_config_file = os.path.expanduser(local_config_file)
+    config['config.file'] = local_config_file
+try:
+    logger.log(logging.INFO, "Loading local settings from {0:s}".format(local_config_file))
+    config.load(local_config_file)
+except:
+    logger.warn("Local config file {0:s} does not exist! Creating it.".format(local_config_file))
+    config.save(local_config_file)
+
+
+# ------------- flatten import hierarchy -------------------------
 from .connection import conn, Connection
-from .core import DataJointError
 from .base import Base
 from .task import TaskQueue
 from .autopopulate import AutoPopulate
 from . import blob
 from .relational import Not
 
-__author__ = "Dimitri Yatsenko and Edgar Walker at Baylor College of Medicine"
-__version__ = "0.2"
 
-__all__ = ['__author__', '__version__',
-           'Connection', 'Heading', 'Base', 'Not',
-           'AutoPopulate', 'TaskQueue', 'conn', 'DataJointError', 'blob']
+
diff --git a/datajoint/base.py b/datajoint/base.py
index 75dc7db2a..c30717b04 100644
--- a/datajoint/base.py
+++ b/datajoint/base.py
@@ -3,7 +3,8 @@
 from types import ModuleType
 import numpy as np
 from enum import Enum
-from .core import DataJointError, from_camel_case
+from .utils import from_camel_case
+from . import DataJointError
 from .relational import _Relational
 from .heading import Heading
 import logging
diff --git a/datajoint/blob.py b/datajoint/blob.py
index 69bd115b3..82ac9e338 100644
--- a/datajoint/blob.py
+++ b/datajoint/blob.py
@@ -1,7 +1,7 @@
 import zlib
 import collections
 import numpy as np
-from .core import DataJointError
+from . import DataJointError
 
 
 mxClassID = collections.OrderedDict(
diff --git a/datajoint/connection.py b/datajoint/connection.py
index 6226077e8..55d300f63 100644
--- a/datajoint/connection.py
+++ b/datajoint/connection.py
@@ -1,6 +1,7 @@
 import pymysql
 import re
-from .core import DataJointError, to_camel_case
+from .utils import to_camel_case
+from . import DataJointError
 import os
 from .heading import Heading
 from .base import prefix_to_role
diff --git a/datajoint/erd.py b/datajoint/erd.py
index ab3d4f269..a7e1bc024 100644
--- a/datajoint/erd.py
+++ b/datajoint/erd.py
@@ -8,7 +8,8 @@
 import matplotlib.pyplot as plt
 from matplotlib import transforms
 
-from .core import DataJointError, to_camel_case
+from .utils import to_camel_case
+from . import DataJointError
 
 
 logger = logging.getLogger(__name__)
diff --git a/datajoint/heading.py b/datajoint/heading.py
index 0bdaeb11d..ca7495db0 100644
--- a/datajoint/heading.py
+++ b/datajoint/heading.py
@@ -8,7 +8,7 @@
 import re
 from collections import OrderedDict, namedtuple
 import numpy as np
-from .core import DataJointError
+from datajoint import DataJointError
 
 
 class Heading:
diff --git a/datajoint/relational.py b/datajoint/relational.py
index 9a7e343ef..f02edbc30 100644
--- a/datajoint/relational.py
+++ b/datajoint/relational.py
@@ -7,7 +7,7 @@
 import numpy as np
 import abc
 from copy import copy
-from .core import DataJointError
+from datajoint import DataJointError
 from .fetch import Fetch
 
 class _Relational(metaclass=abc.ABCMeta):
diff --git a/datajoint/settings.py b/datajoint/settings.py
index 0c26510f2..7977053a3 100644
--- a/datajoint/settings.py
+++ b/datajoint/settings.py
@@ -1,12 +1,88 @@
 """
 Settings for DataJoint.
 """
+from . import DataJointError
+import json
+import pprint
+
 __author__ = 'eywalker'
+import logging
+import collections
+
+
+validators = collections.defaultdict(lambda: lambda value: True)
 
-# Settings dictionary. Don't manipulate this directly
+default = {
+    'database.host': 'localhost',
+    'database.password': 'datajoint',
+    'database.user': 'datajoint',
+    #
+    'config.file': 'dj_local_conf.json',
+    'config.varname': 'DJ_LOCAL_CONF'
+}
 
-class Config(object):
+class Config(collections.MutableMapping):
     """
-    Configuration object
+    Stores datajoint settings. Behaves like a dictionary, but applies validator functions
+    when certain keys are set.
+
+    The default parameters are stored in datajoint.settings.default . If a local config file
+    exists, the settings specified in this file override the default settings.
+
     """
 
+    def __init__(self, *args, **kwargs):
+        self._conf = dict(default)
+        self.update(dict(*args, **kwargs))  # use the free update to set keys
+
+    def __getitem__(self, key):
+        return self._conf[key]
+
+    def __setitem__(self, key, value):
+        if validators[key](value):
+            self._conf[key] = value
+        else:
+            raise DataJointError(u'Validator for {0:s} did not pass'.format(key, ))
+
+    def __delitem__(self, key):
+        del self._conf[key]
+
+    def __iter__(self):
+        return iter(self._conf)
+
+    def __len__(self):
+        return len(self._conf)
+
+    def __str__(self):
+        return  pprint.pformat(self._conf, indent=4)
+
+    def __repr__(self):
+        return self.__str__()
+
+    def save(self, filename=None):
+        """
+        Saves the settings in JSON format to the given file path.
+        :param filename: filename of the local JSON settings file. If None, the local config file is used.
+        """
+        if filename is None:
+            import datajoint as dj
+            filename = dj.config['config.file']
+        with open(filename, 'w') as fid:
+            json.dump(self._conf, fid)
+
+    def load(self, filename):
+        """
+        Updates the setting from config file in JSON format.
+
+        :param filename=None: filename of the local JSON settings file. If None, the local config file is used.
+        """
+        if filename is None:
+            import datajoint as dj
+            filename = dj.config['config.file']
+        with open(filename, 'r') as fid:
+            self.update(json.load(fid))
+
+
+#############################################################################
+logger = logging.getLogger()
+logger.setLevel(logging.DEBUG) #set package wide logger level TODO:make this respond to environmental variable
diff --git a/datajoint/core.py b/datajoint/utils.py
similarity index 75%
rename from datajoint/core.py
rename to datajoint/utils.py
index c92eda23b..9d1bf85de 100644
--- a/datajoint/core.py
+++ b/datajoint/utils.py
@@ -1,22 +1,11 @@
 import re
-import logging
 # package-wide settings that control execution
 
 # setup root logger
-logger = logging.getLogger()
-logger.setLevel(logging.DEBUG) #set package wide logger level TODO:make this respond to environmental variable
+from . import DataJointError
 
 
-class Settings:
-    pass
-    # verbose = True
 
-class DataJointError(Exception):
-    """
-    Base class for errors specific to DataJoint internal
-    operation.
-    """
-    pass
 
 
 def to_camel_case(s):
diff --git a/setup.py b/setup.py
index 95adc3dfc..fa72134a9 100644
--- a/setup.py
+++ b/setup.py
@@ -10,6 +10,6 @@
     description='An object-relational mapping and relational algebra to facilitate data definition and data manipulation in MySQL databases.',
     url='https://github.com/datajoint/datajoint-python',
     packages=['datajoint'],
-    requires=['numpy', 'pymysql', 'networkx', 'matplotlib', 'sphinx_rtd_theme', 'mock']
+    requires=['numpy', 'pymysql', 'networkx', 'matplotlib', 'sphinx_rtd_theme', 'mock', 'json']
     # todo: add license (check license of used packages)
 )
diff --git a/tests/test_base.py b/tests/test_base.py
index 4c9f2c98f..42e11bacf 100644
--- a/tests/test_base.py
+++ b/tests/test_base.py
@@ -10,7 +10,7 @@
 from . import BASE_CONN, CONN_INFO, PREFIX, cleanup
 from datajoint.connection import Connection
 from nose.tools import assert_raises, assert_equal, assert_regexp_matches, assert_false, assert_true
-from datajoint.core import DataJointError
+from datajoint import DataJointError
 
 
 def setup():
diff --git a/tests/test_connection.py b/tests/test_connection.py
index 9eff46937..b54ad82a8 100644
--- a/tests/test_connection.py
+++ b/tests/test_connection.py
@@ -7,7 +7,7 @@
 from . import (CONN_INFO, PREFIX, BASE_CONN, cleanup)
 from nose.tools import assert_true, assert_raises, assert_equal
 import datajoint as dj
-from datajoint.core import DataJointError
+from datajoint.utils import DataJointError
 
 
 def setup():
diff --git a/tests/test_core.py b/tests/test_core.py
index 3b259793a..bfbfb0dd2 100644
--- a/tests/test_core.py
+++ b/tests/test_core.py
@@ -5,7 +5,8 @@
 __author__ = 'eywalker'
 from . import (CONN_INFO, PREFIX, BASE_CONN, cleanup)
 from nose.tools import assert_true, assert_raises, assert_equal
-from datajoint.core import to_camel_case, from_camel_case, DataJointError
+from datajoint.utils import to_camel_case, from_camel_case
+from datajoint import DataJointError
 
 
 def setup():
diff --git a/tests/test_settings.py b/tests/test_settings.py
new file mode 100644
index 000000000..988c19b3f
--- /dev/null
+++ b/tests/test_settings.py
@@ -0,0 +1,32 @@
+import os
+
+__author__ = 'Fabian Sinz'
+
+from nose.tools import assert_true, assert_raises, assert_equal
+import datajoint as dj
+
+def nested_dict_compare(d1, d2):
+    for k, v in d1.items():
+        if k not in d2:
+            return False
+        else:
+            if isinstance(v, dict):
+                tmp = nested_dict_compare(v, d2[k])
+                if not tmp: return False
+            else:
+                if not v == d2[k]: return False
+    else:
+        return True
+
+def test_load_save():
+    old = dj.config['config.file']
+    dj.config['config.file'] = 'tmp.json'
+    dj.config.save()
+    conf = dj.Config()
+    conf.load('tmp.json')
+    assert_true(nested_dict_compare(conf, dj.config), 'Two config files do not match.')
+    dj.config['config.file'] = old
+    os.remove('tmp.json')
+
+
+