diff --git a/local_code_assistant/tests/test_config.py b/local_code_assistant/tests/test_config.py
new file mode 100644
index 0000000..7fc86d3
--- /dev/null
+++ b/local_code_assistant/tests/test_config.py
@@ -0,0 +1,122 @@
+"""Tests for Local Code Assistant configuration."""
+
+import pytest
+from pathlib import Path
+from unittest.mock import Mock, patch
+
+from local_code_assistant.services.config import ConfigService
+
+
+class TestConfigService:
+    """Tests for the configuration service."""
+
+    def test_default_ollama_base_url(self):
+        """Test default Ollama base URL."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            assert config.ollama_base_url == "http://localhost:11434"
+
+    def test_default_ollama_model(self):
+        """Test default Ollama model."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            assert config.ollama_model == "codellama"
+
+    def test_default_ollama_timeout(self):
+        """Test default Ollama timeout."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            assert config.ollama_timeout == 8000
+
+    def test_env_override_ollama_url(self):
+        """Test environment variable override for Ollama URL."""
+        env = {'OLLAMA_BASE_URL': 'http://custom:9000'}
+        with patch.dict('os.environ', env, clear=False):
+            config = ConfigService("/nonexistent")
+            assert config.ollama_base_url == 'http://custom:9000'
+
+    def test_env_override_ollama_model(self):
+        """Test environment variable override for model."""
+        env = {'OLLAMA_MODEL': 'custom-model'}
+        with patch.dict('os.environ', env, clear=False):
+            config = ConfigService("/nonexistent")
+            assert config.ollama_model == 'custom-model'
+
+    def test_env_override_timeout(self):
+        """Test environment variable override for timeout."""
+        env = {'OLLAMA_TIMEOUT': '120'}
+        with patch.dict('os.environ', env, clear=False):
+            config = ConfigService("/nonexistent")
+            assert config.ollama_timeout == 120
+
+    def test_streaming_default(self):
+        """Test default streaming setting."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            assert config.streaming is True
+
+    def test_default_language(self):
+        """Test default programming language."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            assert config.default_language == "python"
+
+    def test_temperature_default(self):
+        """Test default temperature."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            assert config.temperature == 0.2
+
+    def test_max_tokens_default(self):
+        """Test default max tokens."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            assert config.max_tokens == 4000
+
+    def test_syntax_highlighting_default(self):
+        """Test default syntax highlighting."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            assert config.syntax_highlighting is True
+
+    def test_clipboard_enabled_default(self):
+        """Test default clipboard setting."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            assert config.clipboard_enabled is True
+
+    def test_set_ollama_base_url(self):
+        """Test setting Ollama base URL."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            config.ollama_base_url = "http://new:9000"
+            assert config.ollama_base_url == "http://new:9000"
+
+    def test_set_ollama_model(self):
+        """Test setting Ollama model."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            config.ollama_model = "new-model"
+            assert config.ollama_model == "new-model"
+
+    def test_get_nested_config(self):
+        """Test getting nested configuration values."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            value = config.get("ollama.base_url")
+            assert value == "http://localhost:11434"
+
+    def test_get_missing_config(self):
+        """Test getting missing configuration with default."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            value = config.get("nonexistent.key", "default")
+            assert value == "default"
+
+    def test_set_nested_config(self):
+        """Test setting nested configuration values."""
+        with patch('os.getenv', return_value=None):
+            config = ConfigService("/nonexistent")
+            config.set("new.setting", "value")
+            value = config.get("new.setting")
+            assert value == "value"
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