diff --git a/crates/kb-config/Cargo.toml b/crates/kb-config/Cargo.toml
new file mode 100644
index 0000000..000ccc2
--- /dev/null
+++ b/crates/kb-config/Cargo.toml
@@ -0,0 +1,17 @@
+[package]
+name          = "kb-config"
+version       = { workspace = true }
+edition       = { workspace = true }
+rust-version  = { workspace = true }
+license       = { workspace = true }
+repository    = { workspace = true }
+description   = "Config schema + XDG path resolution"
+
+[dependencies]
+kb-core      = { path = "../kb-core" }
+anyhow       = { workspace = true }
+thiserror    = { workspace = true }
+serde        = { workspace = true }
+serde_json   = { workspace = true }
+toml         = "0.8"
+dirs         = "5"
diff --git a/crates/kb-config/src/lib.rs b/crates/kb-config/src/lib.rs
new file mode 100644
index 0000000..40b35ec
--- /dev/null
+++ b/crates/kb-config/src/lib.rs
@@ -0,0 +1,330 @@
+//! `kb-config` — `Config` schema and XDG path resolution (§6).
+//!
+//! Layer order (`Config::load`): defaults → file → env (`KB_<SECTION>_<KEY>`).
+//! CLI overrides land later, applied by `kb-cli` after `Config::load`.
+
+use std::collections::HashMap;
+use std::path::{Path, PathBuf};
+
+use serde::{Deserialize, Serialize};
+
+#[derive(Clone, Debug, PartialEq, Serialize, Deserialize)]
+pub struct Config {
+    pub schema_version: u32,
+    pub workspace: WorkspaceCfg,
+    pub storage: StorageCfg,
+    pub indexing: IndexingCfg,
+    pub chunking: ChunkingCfg,
+    pub models: ModelsCfg,
+    pub search: SearchCfg,
+    pub rag: RagCfg,
+}
+
+#[derive(Clone, Debug, PartialEq, Serialize, Deserialize)]
+pub struct WorkspaceCfg {
+    pub root: String,
+    pub include: Vec<String>,
+    pub exclude: Vec<String>,
+}
+
+#[derive(Clone, Debug, PartialEq, Serialize, Deserialize)]
+pub struct StorageCfg {
+    pub data_dir: String,
+    pub sqlite: String,
+    pub vector_dir: String,
+    pub asset_dir: String,
+    pub artifact_dir: String,
+    pub model_dir: String,
+    pub runs_dir: String,
+    pub copy_threshold_mb: u64,
+}
+
+#[derive(Clone, Debug, PartialEq, Serialize, Deserialize)]
+pub struct IndexingCfg {
+    pub max_parallel_extractors: u32,
+    pub max_parallel_embeddings: u32,
+    pub watch_filesystem: bool,
+}
+
+#[derive(Clone, Debug, PartialEq, Serialize, Deserialize)]
+pub struct ChunkingCfg {
+    pub target_tokens: usize,
+    pub overlap_tokens: usize,
+    pub respect_markdown_headings: bool,
+    pub chunker_version: String,
+}
+
+#[derive(Clone, Debug, PartialEq, Serialize, Deserialize)]
+pub struct ModelsCfg {
+    pub embedding: EmbeddingModelCfg,
+    pub llm: LlmCfg,
+}
+
+#[derive(Clone, Debug, PartialEq, Serialize, Deserialize)]
+pub struct EmbeddingModelCfg {
+    pub provider: String,
+    pub model: String,
+    pub version: String,
+    pub dimensions: usize,
+    pub batch_size: usize,
+}
+
+#[derive(Clone, Debug, PartialEq, Serialize, Deserialize)]
+pub struct LlmCfg {
+    pub provider: String,
+    pub model: String,
+    pub context_tokens: usize,
+    pub endpoint: String,
+    pub temperature: f32,
+    pub seed: u64,
+}
+
+#[derive(Clone, Debug, PartialEq, Serialize, Deserialize)]
+pub struct SearchCfg {
+    pub default_k: usize,
+    pub hybrid_fusion: String,
+    pub rrf_k: u32,
+    pub snippet_chars: usize,
+}
+
+#[derive(Clone, Debug, PartialEq, Serialize, Deserialize)]
+pub struct RagCfg {
+    pub prompt_template_version: String,
+    pub score_gate: f32,
+    pub explain_default: bool,
+    pub max_context_tokens: usize,
+}
+
+impl Config {
+    /// Defaults per design §6.4.
+    pub fn defaults() -> Self {
+        Self {
+            schema_version: 1,
+            workspace: WorkspaceCfg {
+                root: "~/KnowledgeBase".to_string(),
+                include: vec!["**/*.md".to_string()],
+                exclude: vec![
+                    ".git/**".to_string(),
+                    "node_modules/**".to_string(),
+                    ".obsidian/**".to_string(),
+                ],
+            },
+            storage: StorageCfg {
+                data_dir: "${XDG_DATA_HOME:-~/.local/share}/kb".to_string(),
+                sqlite: "{data_dir}/kb.sqlite".to_string(),
+                vector_dir: "{data_dir}/lancedb".to_string(),
+                asset_dir: "{data_dir}/assets".to_string(),
+                artifact_dir: "{data_dir}/artifacts".to_string(),
+                model_dir: "{data_dir}/models".to_string(),
+                runs_dir: "{data_dir}/runs".to_string(),
+                copy_threshold_mb: 100,
+            },
+            indexing: IndexingCfg {
+                max_parallel_extractors: 2,
+                max_parallel_embeddings: 1,
+                watch_filesystem: false,
+            },
+            chunking: ChunkingCfg {
+                target_tokens: 500,
+                overlap_tokens: 80,
+                respect_markdown_headings: true,
+                chunker_version: "md-heading-v1".to_string(),
+            },
+            models: ModelsCfg {
+                embedding: EmbeddingModelCfg {
+                    provider: "fastembed".to_string(),
+                    model: "multilingual-e5-small".to_string(),
+                    version: "v1".to_string(),
+                    dimensions: 384,
+                    batch_size: 64,
+                },
+                llm: LlmCfg {
+                    provider: "ollama".to_string(),
+                    model: "qwen2.5:14b-instruct".to_string(),
+                    context_tokens: 32768,
+                    endpoint: "http://127.0.0.1:11434".to_string(),
+                    temperature: 0.0,
+                    seed: 0,
+                },
+            },
+            search: SearchCfg {
+                default_k: 10,
+                hybrid_fusion: "rrf".to_string(),
+                rrf_k: 60,
+                snippet_chars: 220,
+            },
+            rag: RagCfg {
+                prompt_template_version: "rag-v1".to_string(),
+                score_gate: 0.30,
+                explain_default: false,
+                max_context_tokens: 8000,
+            },
+        }
+    }
+
+    /// Read config from disk and merge env overrides on top of it. If the
+    /// file is missing, defaults are used (so `kb doctor` runs with no
+    /// prior `kb init`).
+    pub fn load(path: Option<&Path>) -> anyhow::Result<Self> {
+        let from_disk = match path {
+            Some(p) if p.exists() => Self::from_file(p)?,
+            Some(_) => Self::defaults(),
+            None => {
+                let p = Self::xdg_config_path();
+                if p.exists() {
+                    Self::from_file(&p)?
+                } else {
+                    Self::defaults()
+                }
+            }
+        };
+        let env: HashMap<String, String> = std::env::vars().collect();
+        Ok(from_disk.apply_env(&env))
+    }
+
+    pub fn from_file(path: &Path) -> anyhow::Result<Self> {
+        let text = std::fs::read_to_string(path)?;
+        let cfg: Self = toml::from_str(&text)?;
+        Ok(cfg)
+    }
+
+    /// Apply `KB_<SECTION>_<KEY>` env overrides. Unknown keys are ignored.
+    pub fn apply_env(mut self, env: &HashMap<String, String>) -> Self {
+        for (k, v) in env {
+            if !k.starts_with("KB_") {
+                continue;
+            }
+            // Match a small, intentional whitelist for P0 — full env→config
+            // mapping lands when the rest of the schema is wired up.
+            match k.as_str() {
+                "KB_WORKSPACE_ROOT" => self.workspace.root = v.clone(),
+                "KB_RAG_SCORE_GATE" => {
+                    if let Ok(f) = v.parse::<f32>() {
+                        self.rag.score_gate = f;
+                    }
+                }
+                "KB_RAG_EXPLAIN_DEFAULT" => {
+                    self.rag.explain_default = matches!(v.as_str(), "1" | "true" | "yes");
+                }
+                "KB_SEARCH_DEFAULT_K" => {
+                    if let Ok(k) = v.parse::<usize>() {
+                        self.search.default_k = k;
+                    }
+                }
+                _ => {}
+            }
+        }
+        self
+    }
+
+    /// `~/.config/kb/config.toml` (honors `XDG_CONFIG_HOME`).
+    pub fn xdg_config_path() -> PathBuf {
+        if let Ok(custom) = std::env::var("XDG_CONFIG_HOME") {
+            if !custom.is_empty() {
+                return PathBuf::from(custom).join("kb").join("config.toml");
+            }
+        }
+        match dirs::config_dir() {
+            Some(d) => d.join("kb").join("config.toml"),
+            None => PathBuf::from("./kb/config.toml"),
+        }
+    }
+
+    /// `~/.local/share/kb` (honors `XDG_DATA_HOME`).
+    pub fn xdg_data_dir() -> PathBuf {
+        if let Ok(custom) = std::env::var("XDG_DATA_HOME") {
+            if !custom.is_empty() {
+                return PathBuf::from(custom).join("kb");
+            }
+        }
+        match dirs::data_dir() {
+            Some(d) => d.join("kb"),
+            None => PathBuf::from("./kb-data"),
+        }
+    }
+
+    /// `~/.cache/kb` (honors `XDG_CACHE_HOME`).
+    pub fn xdg_cache_dir() -> PathBuf {
+        if let Ok(custom) = std::env::var("XDG_CACHE_HOME") {
+            if !custom.is_empty() {
+                return PathBuf::from(custom).join("kb");
+            }
+        }
+        match dirs::cache_dir() {
+            Some(d) => d.join("kb"),
+            None => PathBuf::from("./kb-cache"),
+        }
+    }
+
+    /// `~/.local/state/kb` (honors `XDG_STATE_HOME`).
+    pub fn xdg_state_dir() -> PathBuf {
+        if let Ok(custom) = std::env::var("XDG_STATE_HOME") {
+            if !custom.is_empty() {
+                return PathBuf::from(custom).join("kb");
+            }
+        }
+        // `dirs` doesn't expose state_dir on all platforms; fall back to
+        // `$HOME/.local/state/kb` if XDG_STATE_HOME is unset.
+        if let Some(home) = dirs::home_dir() {
+            return home.join(".local").join("state").join("kb");
+        }
+        PathBuf::from("./kb-state")
+    }
+}
+
+#[cfg(test)]
+mod tests {
+    use super::*;
+
+    #[test]
+    fn defaults_are_serde_roundtrip_stable() {
+        let c = Config::defaults();
+        let toml_text = toml::to_string(&c).unwrap();
+        let back: Config = toml::from_str(&toml_text).unwrap();
+        assert_eq!(c, back);
+    }
+
+    #[test]
+    fn defaults_match_design_64_score_gate() {
+        let c = Config::defaults();
+        assert_eq!(c.rag.score_gate, 0.30);
+        assert_eq!(c.chunking.target_tokens, 500);
+        assert_eq!(c.models.embedding.dimensions, 384);
+        assert_eq!(c.search.rrf_k, 60);
+    }
+
+    #[test]
+    fn env_override_score_gate() {
+        let mut env = HashMap::new();
+        env.insert("KB_RAG_SCORE_GATE".to_string(), "0.5".to_string());
+        let c = Config::defaults().apply_env(&env);
+        assert!((c.rag.score_gate - 0.5).abs() < 1e-6);
+    }
+
+    #[test]
+    fn env_override_search_k() {
+        let mut env = HashMap::new();
+        env.insert("KB_SEARCH_DEFAULT_K".to_string(), "25".to_string());
+        let c = Config::defaults().apply_env(&env);
+        assert_eq!(c.search.default_k, 25);
+    }
+
+    #[test]
+    fn xdg_paths_honor_env() {
+        // Must restore env after the test to avoid polluting other tests.
+        let prev = std::env::var("XDG_CONFIG_HOME").ok();
+        // SAFETY: tests in this module run sequentially; we restore below.
+        unsafe {
+            std::env::set_var("XDG_CONFIG_HOME", "/tmp/kbtest-xdg-config");
+        }
+        let p = Config::xdg_config_path();
+        assert_eq!(p, PathBuf::from("/tmp/kbtest-xdg-config/kb/config.toml"));
+        // SAFETY: scope-local restore.
+        unsafe {
+            match prev {
+                Some(v) => std::env::set_var("XDG_CONFIG_HOME", v),
+                None => std::env::remove_var("XDG_CONFIG_HOME"),
+            }
+        }
+    }
+}