diff --git a/.env.example b/.env.example
new file mode 100644
index 00000000..02bb8abf
--- /dev/null
+++ b/.env.example
@@ -0,0 +1,5 @@
+NODE_ENV=development
+PORT=4040
+JWT_SECRET=0a6b944d-d2fb-46fc-a85e-0295c986cd9f
+MONGO_HOST=mongodb://localhost/express-mongoose-es6-rest-api-development
+MONGO_PORT=27017
diff --git a/.gitignore b/.gitignore
index f1956130..d70e27f4 100644
--- a/.gitignore
+++ b/.gitignore
@@ -46,3 +46,6 @@ node_modules
 
 # Optional REPL history
 .node_repl_history
+
+# .env
+.env
diff --git a/.istanbul.yml b/.istanbul.yml
index deb39607..b67186b0 100644
--- a/.istanbul.yml
+++ b/.istanbul.yml
@@ -1,6 +1,6 @@
 verbose: false
 instrumentation:
-  excludes: ['dist/**', 'coverage/**', 'gulpfile.babel.js', 'config/env/development.js', 'config/env/production.js']
+  excludes: ['dist/**', 'coverage/**', 'gulpfile.babel.js']
   include-all-sources: true
 reporting:
     print: summary
@@ -22,4 +22,4 @@ check:
         statements: 50
         lines: 50
         branches: 30
-        functions: 20
\ No newline at end of file
+        functions: 20
diff --git a/config/config.js b/config/config.js
new file mode 100644
index 00000000..3ca2c9ff
--- /dev/null
+++ b/config/config.js
@@ -0,0 +1,44 @@
+import Joi from 'joi';
+
+// require and configure dotenv, will load vars in .env in PROCESS.ENV
+require('dotenv').config();
+
+// define validation for all the env vars
+const envVarsSchema = Joi.object({
+  NODE_ENV: Joi.string()
+    .allow(['development', 'production', 'test', 'provision'])
+    .default('development'),
+  PORT: Joi.number()
+    .default(4040),
+  MONGOOSE_DEBUG: Joi.boolean()
+    .when('NODE_ENV', {
+      is: Joi.string().equal('development'),
+      then: Joi.boolean().default(true),
+      otherwise: Joi.boolean().default(false)
+    }),
+  JWT_SECRET: Joi.string().required()
+    .description('JWT Secret required to sign'),
+  MONGO_HOST: Joi.string().required()
+    .description('Mongo DB host url'),
+  MONGO_PORT: Joi.number()
+    .default(27017)
+}).unknown()
+  .required();
+
+const { error, value: envVars } = Joi.validate(process.env, envVarsSchema);
+if (error) {
+  throw new Error(`Config validation error: ${error.message}`);
+}
+
+const config = {
+  env: envVars.NODE_ENV,
+  port: envVars.PORT,
+  mongooseDebug: envVars.MONGOOSE_DEBUG,
+  jwtSecret: envVars.JWT_SECRET,
+  mongo: {
+    host: envVars.MONGO_HOST,
+    port: envVars.MONGO_PORT
+  }
+};
+
+export default config;
diff --git a/config/env/development.js b/config/env/development.js
deleted file mode 100644
index f9f95e98..00000000
--- a/config/env/development.js
+++ /dev/null
@@ -1,9 +0,0 @@
-const devConfig = {
-  env: 'development',
-  MONGOOSE_DEBUG: true,
-  jwtSecret: '0a6b944d-d2fb-46fc-a85e-0295c986cd9f',
-  db: 'mongodb://localhost/express-mongoose-es6-rest-api-development',
-  port: 4040
-};
-
-export default devConfig;
diff --git a/config/env/index.js b/config/env/index.js
deleted file mode 100644
index 6d9e0812..00000000
--- a/config/env/index.js
+++ /dev/null
@@ -1,10 +0,0 @@
-import path from 'path';
-
-const env = process.env.NODE_ENV || 'development';
-const config = require(`./${env}`); // eslint-disable-line import/no-dynamic-require
-
-const defaults = {
-  root: path.join(__dirname, '/..')
-};
-
-export default Object.assign(defaults, config);
diff --git a/config/env/production.js b/config/env/production.js
deleted file mode 100644
index 879cad6b..00000000
--- a/config/env/production.js
+++ /dev/null
@@ -1,8 +0,0 @@
-const prodConfig = {
-  env: 'production',
-  jwtSecret: '0a6b944d-d2fb-46fc-a85e-0295c986cd9f',
-  db: 'mongodb://localhost/express-mongoose-es6-rest-api-production',
-  port: 4040
-};
-
-export default prodConfig;
diff --git a/config/env/test.js b/config/env/test.js
deleted file mode 100644
index f168c4e9..00000000
--- a/config/env/test.js
+++ /dev/null
@@ -1,8 +0,0 @@
-const testConfig = {
-  env: 'test',
-  jwtSecret: '0a6b944d-d2fb-46fc-a85e-0295c986cd9f',
-  db: 'mongodb://localhost/express-mongoose-es6-rest-api-test',
-  port: 4040
-};
-
-export default testConfig;
diff --git a/config/express.js b/config/express.js
index 3d058ada..555d3a63 100644
--- a/config/express.js
+++ b/config/express.js
@@ -11,7 +11,7 @@ import expressValidation from 'express-validation';
 import helmet from 'helmet';
 import winstonInstance from './winston';
 import routes from '../server/routes/index.route';
-import config from './env';
+import config from './config';
 import APIError from '../server/helpers/APIError';
 
 const app = express();
diff --git a/gulpfile.babel.js b/gulpfile.babel.js
index 2e40ddb4..53155cb3 100644
--- a/gulpfile.babel.js
+++ b/gulpfile.babel.js
@@ -8,13 +8,13 @@ const plugins = gulpLoadPlugins();
 
 const paths = {
   js: ['./**/*.js', '!dist/**', '!node_modules/**', '!coverage/**'],
-  nonJs: ['./package.json', './.gitignore'],
+  nonJs: ['./package.json', './.gitignore', './.env'],
   tests: './server/tests/*.js'
 };
 
 // Clean up dist and coverage directory
 gulp.task('clean', () =>
-  del.sync(['dist/**', 'coverage/**', '!dist', '!coverage'])
+  del.sync(['dist/**', 'dist/.*', 'coverage/**', '!dist', '!coverage'])
 );
 
 // Copy non-js files to dist
diff --git a/index.js b/index.js
index f56c7d42..7bd9ba17 100644
--- a/index.js
+++ b/index.js
@@ -1,6 +1,8 @@
 import mongoose from 'mongoose';
 import util from 'util';
-import config from './config/env';
+
+// config should be imported before importing any other file
+import config from './config/config';
 import app from './config/express';
 
 const debug = require('debug')('express-mongoose-es6-rest-api:index');
@@ -12,7 +14,8 @@ Promise = require('bluebird'); // eslint-disable-line no-global-assign
 mongoose.Promise = Promise;
 
 // connect to mongo db
-mongoose.connect(config.db, { server: { socketOptions: { keepAlive: 1 } } });
+const mongoUri = `${config.mongo.host}:${config.mongo.port}`;
+mongoose.connect(mongoUri, { server: { socketOptions: { keepAlive: 1 } } });
 mongoose.connection.on('error', () => {
   throw new Error(`unable to connect to database: ${config.db}`);
 });
diff --git a/package.json b/package.json
index ec94fa02..1444a8d8 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "express-mongoose-es6-rest-api",
-  "version": "1.0.0",
+  "version": "2.0.0",
   "description": "A Boilerplate application for building REST APIs using express, mongoose in ES6 with code coverage",
   "author": "Kunal Kapadia <kunalkapadia12@gmail.com>",
   "main": "index.js",
@@ -47,6 +47,7 @@
     "cookie-parser": "1.4.3",
     "cors": "2.8.1",
     "debug": "^2.4.5",
+    "dotenv": "^4.0.0",
     "express": "4.14.0",
     "express-jwt": "5.1.0",
     "express-validation": "1.0.1",
diff --git a/server/controllers/auth.controller.js b/server/controllers/auth.controller.js
index 2ea47632..f8403e76 100644
--- a/server/controllers/auth.controller.js
+++ b/server/controllers/auth.controller.js
@@ -1,7 +1,7 @@
 import jwt from 'jsonwebtoken';
 import httpStatus from 'http-status';
 import APIError from '../helpers/APIError';
-import config from '../../config/env';
+import config from '../../config/config';
 
 // sample user, used for authentication
 const user = {
diff --git a/server/routes/auth.route.js b/server/routes/auth.route.js
index cdf37b63..6ccf23a2 100644
--- a/server/routes/auth.route.js
+++ b/server/routes/auth.route.js
@@ -3,7 +3,7 @@ import validate from 'express-validation';
 import expressJwt from 'express-jwt';
 import paramValidation from '../../config/param-validation';
 import authCtrl from '../controllers/auth.controller';
-import config from '../../config/env';
+import config from '../../config/config';
 
 const router = express.Router(); // eslint-disable-line new-cap
 
diff --git a/server/tests/auth.test.js b/server/tests/auth.test.js
index 9b781d99..f2711021 100644
--- a/server/tests/auth.test.js
+++ b/server/tests/auth.test.js
@@ -3,7 +3,7 @@ import httpStatus from 'http-status';
 import jwt from 'jsonwebtoken';
 import chai, { expect } from 'chai';
 import app from '../../index';
-import config from '../../config/env';
+import config from '../../config/config';
 
 chai.config.includeStack = true;
 
diff --git a/yarn.lock b/yarn.lock
index f79019a0..9c67e441 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -1397,6 +1397,10 @@ dont-sniff-mimetype@1.0.0:
   version "1.0.0"
   resolved "https://registry.yarnpkg.com/dont-sniff-mimetype/-/dont-sniff-mimetype-1.0.0.tgz#5932890dc9f4e2f19e5eb02a20026e5e5efc8f58"
 
+dotenv@^4.0.0:
+  version "4.0.0"
+  resolved "https://registry.yarnpkg.com/dotenv/-/dotenv-4.0.0.tgz#864ef1379aced55ce6f95debecdce179f7a0cd1d"
+
 duplexer2@0.0.2:
   version "0.0.2"
   resolved "https://registry.yarnpkg.com/duplexer2/-/duplexer2-0.0.2.tgz#c614dcf67e2fb14995a91711e5a617e8a60a31db"