diff --git a/internal/devconfig/config.go b/internal/devconfig/config.go
index 1151deb14a3..e67c7558d5b 100644
--- a/internal/devconfig/config.go
+++ b/internal/devconfig/config.go
@@ -141,8 +141,15 @@ func Find(path string) (*Config, error) {
 
 // searchDir looks for a config file in dir. It does not search parent
 // directories.
+//
+// It first looks for devbox.json directly in dir, and then falls back to
+// dir/.config/devbox.json. The latter lets projects keep their root directory
+// tidy by storing the config under .config. See jetify-com/devbox#2792.
 func searchDir(dir string) (*Config, error) {
-	try := []string{configfile.DefaultName}
+	try := []string{
+		configfile.DefaultName,
+		filepath.Join(configfile.ConfigSubdir, configfile.DefaultName),
+	}
 	for _, name := range try {
 		path := filepath.Join(dir, name)
 		slog.Debug("trying config file", "path", path)
diff --git a/internal/devconfig/config_test.go b/internal/devconfig/config_test.go
index 9f747796156..9b22060aabe 100644
--- a/internal/devconfig/config_test.go
+++ b/internal/devconfig/config_test.go
@@ -95,6 +95,63 @@ func TestOpenError(t *testing.T) {
 	})
 }
 
+// TestConfigSubdir verifies that Devbox discovers a config file stored in a
+// .config subdirectory, so that projects can keep devbox.json out of their
+// root directory. See jetify-com/devbox#2792.
+func TestConfigSubdir(t *testing.T) {
+	t.Run("Open", func(t *testing.T) {
+		root, _, _ := mkNestedDirs(t)
+		configDir := mkConfigSubdir(t, root)
+		if _, err := Init(configDir); err != nil {
+			t.Fatalf("Init(%q) error: %v", configDir, err)
+		}
+
+		cfg, err := Open(root)
+		if err != nil {
+			t.Fatalf("Open(%q) error: %v", root, err)
+		}
+		gotDir := filepath.Dir(cfg.Root.AbsRootPath)
+		if gotDir != configDir {
+			t.Errorf("filepath.Dir(cfg.Root.AbsRootPath) = %q, want %q", gotDir, configDir)
+		}
+	})
+	t.Run("RootConfigTakesPrecedence", func(t *testing.T) {
+		root, _, _ := mkNestedDirs(t)
+		if _, err := Init(root); err != nil {
+			t.Fatalf("Init(%q) error: %v", root, err)
+		}
+		configDir := mkConfigSubdir(t, root)
+		if _, err := Init(configDir); err != nil {
+			t.Fatalf("Init(%q) error: %v", configDir, err)
+		}
+
+		cfg, err := Open(root)
+		if err != nil {
+			t.Fatalf("Open(%q) error: %v", root, err)
+		}
+		gotDir := filepath.Dir(cfg.Root.AbsRootPath)
+		if gotDir != root {
+			t.Errorf("filepath.Dir(cfg.Root.AbsRootPath) = %q, want %q", gotDir, root)
+		}
+	})
+	t.Run("FindFromChildDir", func(t *testing.T) {
+		root, child, _ := mkNestedDirs(t)
+		configDir := mkConfigSubdir(t, root)
+		if _, err := Init(configDir); err != nil {
+			t.Fatalf("Init(%q) error: %v", configDir, err)
+		}
+
+		cfg, err := Find(child)
+		if err != nil {
+			t.Fatalf("Find(%q) error: %v", child, err)
+		}
+		gotDir := filepath.Dir(cfg.Root.AbsRootPath)
+		if gotDir != configDir {
+			t.Errorf("filepath.Dir(cfg.Root.AbsRootPath) = %q, want %q", gotDir, configDir)
+		}
+	})
+}
+
 func TestFind(t *testing.T) {
 	t.Run("StartInSameDir", func(t *testing.T) {
 		root, child, _ := mkNestedDirs(t)
@@ -297,6 +354,19 @@ func mkNestedDirs(t *testing.T) (root, child, nested string) {
 	return root, child, nested
 }
 
+// mkConfigSubdir creates a .config subdirectory inside dir and returns its
+// path, for tests that store devbox.json under .config.
+func mkConfigSubdir(t *testing.T, dir string) string {
+	t.Helper()
+
+	configDir := filepath.Join(dir, configfile.ConfigSubdir)
+	perm := fs.FileMode(0o777)
+	if err := os.MkdirAll(configDir, perm); err != nil {
+		t.Fatalf("os.MkdirAll(%q, %O) error: %v", configDir, perm, err)
+	}
+	return configDir
+}
+
 func TestAliases(t *testing.T) {
 	dir := t.TempDir()
 	cfgJSON := `{
diff --git a/internal/devconfig/configfile/file.go b/internal/devconfig/configfile/file.go
index 6857f037ce7..16ef70558af 100644
--- a/internal/devconfig/configfile/file.go
+++ b/internal/devconfig/configfile/file.go
@@ -21,6 +21,12 @@ import (
 
 const (
 	DefaultName = "devbox.json"
+
+	// ConfigSubdir is a subdirectory that Devbox also searches for a config
+	// file. It lets projects keep their root directory tidy by placing
+	// devbox.json inside a .config directory (e.g. .config/devbox.json)
+	// instead of at the top level. See jetify-com/devbox#2792.
+	ConfigSubdir = ".config"
 )
 
 // ConfigFile defines a devbox environment as JSON.