diff --git a/src/promptforge/core/config.py b/src/promptforge/core/config.py
new file mode 100644
index 0000000..cbd6289
--- /dev/null
+++ b/src/promptforge/core/config.py
@@ -0,0 +1,73 @@
+import os
+from pathlib import Path
+from typing import Any, Dict, Optional
+from functools import lru_cache
+
+import yaml
+from pydantic import BaseModel, Field
+
+
+class ProviderConfig(BaseModel):
+    api_key: Optional[str] = None
+    model: str = "gpt-4"
+    temperature: float = 0.7
+    base_url: Optional[str] = None
+
+
+class RegistryConfig(BaseModel):
+    local_path: str = "~/.promptforge/registry"
+    remote_url: str = "https://registry.promptforge.io"
+
+
+class DefaultsConfig(BaseModel):
+    provider: str = "openai"
+    output_format: str = "text"
+
+
+class ValidationConfig(BaseModel):
+    strict_mode: bool = False
+    max_retries: int = 3
+
+
+class Config(BaseModel):
+    providers: Dict[str, ProviderConfig] = Field(default_factory=dict)
+    registry: RegistryConfig = Field(default_factory=RegistryConfig)
+    defaults: DefaultsConfig = Field(default_factory=DefaultsConfig)
+    validation: ValidationConfig = Field(default_factory=ValidationConfig)
+
+
+def _expand_env_vars(value: Any) -> Any:
+    if isinstance(value, str):
+        if value.startswith("${") and value.endswith("}"):
+            env_var = value[2:-1]
+            return os.environ.get(env_var, value)
+    return value
+
+
+def _process_config(config_dict: Dict[str, Any]) -> Dict[str, Any]:
+    processed = {}
+    for key, value in config_dict.items():
+        if isinstance(value, dict):
+            processed[key] = _process_config(value)
+        else:
+            processed[key] = _expand_env_vars(value)
+    return processed
+
+
+def load_config(config_path: Optional[Path] = None) -> Config:
+    if config_path is None:
+        config_path = Path.cwd() / "configs" / "promptforge.yaml"
+
+    if not config_path.exists():
+        return Config()
+
+    with open(config_path, 'r') as f:
+        raw_config = yaml.safe_load(f) or {}
+
+    processed_config = _process_config(raw_config)
+    return Config(**processed_config)
+
+
+@lru_cache()
+def get_config() -> Config:
+    return load_config()
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