diff --git a/internal/configstore/config.go b/internal/configstore/config.go
index a69babb..8595554 100644
--- a/internal/configstore/config.go
+++ b/internal/configstore/config.go
@@ -261,6 +261,83 @@ func boolPtr(v bool) *bool {
 	return &b
 }
 
+// Merge returns a new Config that combines base with overlay. Overlay values
+// take precedence: non-empty scalars replace base values, and maps are merged
+// with overlay keys overriding base keys.
+func Merge(base, overlay Config) Config {
+	out := base.Clone()
+
+	if strings.TrimSpace(overlay.TargetImage) != "" {
+		out.TargetImage = overlay.TargetImage
+	}
+
+	for cmd, value := range overlay.CommandVolumes {
+		if value != nil {
+			out.CommandVolumes[cmd] = boolPtr(*value)
+		}
+	}
+
+	for host, spec := range overlay.CustomVolumes {
+		out.CustomVolumes[host] = spec
+	}
+
+	for key, value := range overlay.EnvVars {
+		out.EnvVars[key] = value
+	}
+
+	for key, image := range overlay.ProjectTargetImages {
+		out.ProjectTargetImages[key] = image
+	}
+
+	for projectKey, settings := range overlay.ProjectCommandVolumes {
+		existing := out.ProjectCommandVolumes[projectKey]
+		if existing == nil {
+			existing = make(map[string]*bool)
+		}
+		for cmd, value := range settings {
+			if value != nil {
+				existing[cmd] = boolPtr(*value)
+			}
+		}
+		out.ProjectCommandVolumes[projectKey] = existing
+	}
+
+	for projectKey, specs := range overlay.ProjectCustomVolumes {
+		existing := out.ProjectCustomVolumes[projectKey]
+		if existing == nil {
+			existing = make(map[string]string)
+		}
+		for key, value := range specs {
+			existing[key] = value
+		}
+		out.ProjectCustomVolumes[projectKey] = existing
+	}
+
+	for projectKey, disables := range overlay.ProjectVolumeDisables {
+		existing := out.ProjectVolumeDisables[projectKey]
+		if existing == nil {
+			existing = make(map[string]bool)
+		}
+		for key, value := range disables {
+			existing[key] = value
+		}
+		out.ProjectVolumeDisables[projectKey] = existing
+	}
+
+	for projectKey, envs := range overlay.ProjectEnvVars {
+		existing := out.ProjectEnvVars[projectKey]
+		if existing == nil {
+			existing = make(map[string]string)
+		}
+		for key, value := range envs {
+			existing[key] = value
+		}
+		out.ProjectEnvVars[projectKey] = existing
+	}
+
+	return out
+}
+
 // SetGlobalTargetImage records the default container image for leash-managed sessions.
 func (c *Config) SetGlobalTargetImage(image string) {
 	c.TargetImage = strings.TrimSpace(image)
diff --git a/internal/configstore/loadsave.go b/internal/configstore/loadsave.go
index 21a25e9..bf237ba 100644
--- a/internal/configstore/loadsave.go
+++ b/internal/configstore/loadsave.go
@@ -222,6 +222,32 @@ func decodeConfig(data []byte, path string, cfg *Config) error {
 	return nil
 }
 
+// LoadWithOverlay loads the global XDG configuration and then, if a
+// .leash.toml file exists in dir, merges it on top. The local file values
+// take precedence over the global config.
+func LoadWithOverlay(dir string) (Config, error) {
+	base, err := Load()
+	if err != nil {
+		return base, err
+	}
+	if strings.TrimSpace(dir) == "" {
+		return base, nil
+	}
+	localPath := GetLocalConfigPath(dir)
+	data, err := os.ReadFile(localPath)
+	if errors.Is(err, os.ErrNotExist) {
+		return base, nil
+	}
+	if err != nil {
+		return base, fmt.Errorf("read local config %s: %w", localPath, err)
+	}
+	overlay := New()
+	if err := decodeConfig(data, localPath, &overlay); err != nil {
+		return base, err
+	}
+	return Merge(base, overlay), nil
+}
+
 // Save atomically writes the configuration to disk.
 func Save(cfg Config) error {
 	cfg.ensureInitialized()
diff --git a/internal/configstore/loadsave_overlay_test.go b/internal/configstore/loadsave_overlay_test.go
new file mode 100644
index 0000000..5725e76
--- /dev/null
+++ b/internal/configstore/loadsave_overlay_test.go
@@ -0,0 +1,178 @@
+package configstore
+
+import (
+	"os"
+	"path/filepath"
+	"testing"
+)
+
+// These tests override XDG_CONFIG_HOME and HOME; run serially.
+
+func TestLoadWithOverlayNoLocalFile(t *testing.T) {
+	testSetEnv(t, "LEASH_HOME", "")
+	base := t.TempDir()
+	testSetEnv(t, "XDG_CONFIG_HOME", base)
+	setHome(t, filepath.Join(base, "home"))
+
+	// Write a global config with a target image.
+	cfgDir := filepath.Join(base, "leash")
+	if err := os.MkdirAll(cfgDir, 0o700); err != nil {
+		t.Fatal(err)
+	}
+	globalTOML := `[leash]
+target_image = "global-image"
+
+[leash.envvars]
+GH_CONFIG_DIR = "/root/.config/gh"
+`
+	if err := os.WriteFile(filepath.Join(cfgDir, configFileName), []byte(globalTOML), 0o600); err != nil {
+		t.Fatal(err)
+	}
+
+	// Load with a directory that has no .leash.toml.
+	projectDir := t.TempDir()
+	cfg, err := LoadWithOverlay(projectDir)
+	if err != nil {
+		t.Fatalf("LoadWithOverlay: %v", err)
+	}
+
+	if cfg.TargetImage != "global-image" {
+		t.Fatalf("TargetImage = %q, want %q", cfg.TargetImage, "global-image")
+	}
+	if cfg.EnvVars["GH_CONFIG_DIR"] != "/root/.config/gh" {
+		t.Fatalf("GH_CONFIG_DIR = %q, want %q", cfg.EnvVars["GH_CONFIG_DIR"], "/root/.config/gh")
+	}
+}
+
+func TestLoadWithOverlayMergesLocalFile(t *testing.T) {
+	testSetEnv(t, "LEASH_HOME", "")
+	base := t.TempDir()
+	testSetEnv(t, "XDG_CONFIG_HOME", base)
+	setHome(t, filepath.Join(base, "home"))
+
+	// Write global config.
+	cfgDir := filepath.Join(base, "leash")
+	if err := os.MkdirAll(cfgDir, 0o700); err != nil {
+		t.Fatal(err)
+	}
+	globalTOML := `[leash]
+target_image = "global-image"
+
+[leash.envvars]
+GH_CONFIG_DIR = "/root/.config/gh"
+SHARED_KEY = "global"
+`
+	if err := os.WriteFile(filepath.Join(cfgDir, configFileName), []byte(globalTOML), 0o600); err != nil {
+		t.Fatal(err)
+	}
+
+	// Write local override.
+	projectDir := t.TempDir()
+	localTOML := `[leash.envvars]
+ATLASSIAN_USER = "secret-user"
+SHARED_KEY = "local-override"
+`
+	if err := os.WriteFile(filepath.Join(projectDir, LocalConfigFileName), []byte(localTOML), 0o600); err != nil {
+		t.Fatal(err)
+	}
+
+	cfg, err := LoadWithOverlay(projectDir)
+	if err != nil {
+		t.Fatalf("LoadWithOverlay: %v", err)
+	}
+
+	// Global values preserved.
+	if cfg.TargetImage != "global-image" {
+		t.Fatalf("TargetImage = %q, want %q", cfg.TargetImage, "global-image")
+	}
+	if cfg.EnvVars["GH_CONFIG_DIR"] != "/root/.config/gh" {
+		t.Fatalf("GH_CONFIG_DIR = %q, want %q", cfg.EnvVars["GH_CONFIG_DIR"], "/root/.config/gh")
+	}
+
+	// Local values added.
+	if cfg.EnvVars["ATLASSIAN_USER"] != "secret-user" {
+		t.Fatalf("ATLASSIAN_USER = %q, want %q", cfg.EnvVars["ATLASSIAN_USER"], "secret-user")
+	}
+
+	// Local overrides global.
+	if cfg.EnvVars["SHARED_KEY"] != "local-override" {
+		t.Fatalf("SHARED_KEY = %q, want %q", cfg.EnvVars["SHARED_KEY"], "local-override")
+	}
+}
+
+func TestLoadWithOverlayLocalOverridesTargetImage(t *testing.T) {
+	testSetEnv(t, "LEASH_HOME", "")
+	base := t.TempDir()
+	testSetEnv(t, "XDG_CONFIG_HOME", base)
+	setHome(t, filepath.Join(base, "home"))
+
+	cfgDir := filepath.Join(base, "leash")
+	if err := os.MkdirAll(cfgDir, 0o700); err != nil {
+		t.Fatal(err)
+	}
+	globalTOML := `[leash]
+target_image = "global-image"
+`
+	if err := os.WriteFile(filepath.Join(cfgDir, configFileName), []byte(globalTOML), 0o600); err != nil {
+		t.Fatal(err)
+	}
+
+	projectDir := t.TempDir()
+	localTOML := `[leash]
+target_image = "local-image"
+`
+	if err := os.WriteFile(filepath.Join(projectDir, LocalConfigFileName), []byte(localTOML), 0o600); err != nil {
+		t.Fatal(err)
+	}
+
+	cfg, err := LoadWithOverlay(projectDir)
+	if err != nil {
+		t.Fatalf("LoadWithOverlay: %v", err)
+	}
+
+	if cfg.TargetImage != "local-image" {
+		t.Fatalf("TargetImage = %q, want %q", cfg.TargetImage, "local-image")
+	}
+}
+
+func TestLoadWithOverlayEmptyDirSkipsLocal(t *testing.T) {
+	testSetEnv(t, "LEASH_HOME", "")
+	base := t.TempDir()
+	testSetEnv(t, "XDG_CONFIG_HOME", base)
+	setHome(t, filepath.Join(base, "home"))
+
+	cfg, err := LoadWithOverlay("")
+	if err != nil {
+		t.Fatalf("LoadWithOverlay: %v", err)
+	}
+	// Should just return defaults with no error.
+	if cfg.TargetImage != "" {
+		t.Fatalf("expected empty TargetImage, got %q", cfg.TargetImage)
+	}
+}
+
+func TestLoadWithOverlayBadLocalTOMLReturnsError(t *testing.T) {
+	testSetEnv(t, "LEASH_HOME", "")
+	base := t.TempDir()
+	testSetEnv(t, "XDG_CONFIG_HOME", base)
+	setHome(t, filepath.Join(base, "home"))
+
+	projectDir := t.TempDir()
+	if err := os.WriteFile(filepath.Join(projectDir, LocalConfigFileName), []byte("not valid {{{ toml"), 0o600); err != nil {
+		t.Fatal(err)
+	}
+
+	_, err := LoadWithOverlay(projectDir)
+	if err == nil {
+		t.Fatal("expected error for invalid local TOML")
+	}
+}
+
+func TestGetLocalConfigPath(t *testing.T) {
+	t.Parallel()
+	got := GetLocalConfigPath("/some/project")
+	want := filepath.Join("/some/project", LocalConfigFileName)
+	if got != want {
+		t.Fatalf("GetLocalConfigPath = %q, want %q", got, want)
+	}
+}
diff --git a/internal/configstore/merge_test.go b/internal/configstore/merge_test.go
new file mode 100644
index 0000000..6e27b1b
--- /dev/null
+++ b/internal/configstore/merge_test.go
@@ -0,0 +1,143 @@
+package configstore
+
+import (
+	"testing"
+)
+
+func TestMergeEmptyOverlayReturnsBase(t *testing.T) {
+	t.Parallel()
+	base := New()
+	base.TargetImage = "base-image"
+	base.EnvVars["KEY"] = "base-val"
+	base.CommandVolumes["codex"] = boolPtr(true)
+	base.CustomVolumes["~/data"] = "/workspace/data:ro"
+
+	result := Merge(base, New())
+
+	if result.TargetImage != "base-image" {
+		t.Fatalf("TargetImage = %q, want %q", result.TargetImage, "base-image")
+	}
+	if result.EnvVars["KEY"] != "base-val" {
+		t.Fatalf("EnvVars[KEY] = %q, want %q", result.EnvVars["KEY"], "base-val")
+	}
+	if result.CommandVolumes["codex"] == nil || !*result.CommandVolumes["codex"] {
+		t.Fatal("expected codex volume to be true")
+	}
+	if result.CustomVolumes["~/data"] != "/workspace/data:ro" {
+		t.Fatal("expected custom volume preserved")
+	}
+}
+
+func TestMergeOverlayOverridesScalars(t *testing.T) {
+	t.Parallel()
+	base := New()
+	base.TargetImage = "base-image"
+
+	overlay := New()
+	overlay.TargetImage = "overlay-image"
+
+	result := Merge(base, overlay)
+
+	if result.TargetImage != "overlay-image" {
+		t.Fatalf("TargetImage = %q, want %q", result.TargetImage, "overlay-image")
+	}
+}
+
+func TestMergeEnvVarsMerged(t *testing.T) {
+	t.Parallel()
+	base := New()
+	base.EnvVars["SHARED"] = "base"
+	base.EnvVars["BASE_ONLY"] = "from-base"
+
+	overlay := New()
+	overlay.EnvVars["SHARED"] = "overlay"
+	overlay.EnvVars["OVERLAY_ONLY"] = "from-overlay"
+
+	result := Merge(base, overlay)
+
+	if result.EnvVars["SHARED"] != "overlay" {
+		t.Fatalf("SHARED = %q, want %q", result.EnvVars["SHARED"], "overlay")
+	}
+	if result.EnvVars["BASE_ONLY"] != "from-base" {
+		t.Fatalf("BASE_ONLY = %q, want %q", result.EnvVars["BASE_ONLY"], "from-base")
+	}
+	if result.EnvVars["OVERLAY_ONLY"] != "from-overlay" {
+		t.Fatalf("OVERLAY_ONLY = %q, want %q", result.EnvVars["OVERLAY_ONLY"], "from-overlay")
+	}
+}
+
+func TestMergeCommandVolumesOverridden(t *testing.T) {
+	t.Parallel()
+	base := New()
+	base.CommandVolumes["codex"] = boolPtr(true)
+	base.CommandVolumes["claude"] = boolPtr(true)
+
+	overlay := New()
+	overlay.CommandVolumes["codex"] = boolPtr(false)
+
+	result := Merge(base, overlay)
+
+	if result.CommandVolumes["codex"] == nil || *result.CommandVolumes["codex"] {
+		t.Fatal("expected codex volume to be false from overlay")
+	}
+	if result.CommandVolumes["claude"] == nil || !*result.CommandVolumes["claude"] {
+		t.Fatal("expected claude volume preserved from base")
+	}
+}
+
+func TestMergeProjectEnvVarsMerged(t *testing.T) {
+	t.Parallel()
+	base := New()
+	base.ProjectEnvVars["/proj"] = map[string]string{
+		"BASE_KEY": "base-val",
+		"SHARED":   "base",
+	}
+
+	overlay := New()
+	overlay.ProjectEnvVars["/proj"] = map[string]string{
+		"SHARED":      "overlay",
+		"OVERLAY_KEY": "overlay-val",
+	}
+
+	result := Merge(base, overlay)
+
+	envs := result.ProjectEnvVars["/proj"]
+	if envs["BASE_KEY"] != "base-val" {
+		t.Fatalf("BASE_KEY = %q, want %q", envs["BASE_KEY"], "base-val")
+	}
+	if envs["SHARED"] != "overlay" {
+		t.Fatalf("SHARED = %q, want %q", envs["SHARED"], "overlay")
+	}
+	if envs["OVERLAY_KEY"] != "overlay-val" {
+		t.Fatalf("OVERLAY_KEY = %q, want %q", envs["OVERLAY_KEY"], "overlay-val")
+	}
+}
+
+func TestMergeDoesNotMutateBase(t *testing.T) {
+	t.Parallel()
+	base := New()
+	base.EnvVars["KEY"] = "original"
+
+	overlay := New()
+	overlay.EnvVars["KEY"] = "changed"
+
+	_ = Merge(base, overlay)
+
+	if base.EnvVars["KEY"] != "original" {
+		t.Fatalf("base was mutated: EnvVars[KEY] = %q", base.EnvVars["KEY"])
+	}
+}
+
+func TestMergeEmptyOverlayTargetImagePreservesBase(t *testing.T) {
+	t.Parallel()
+	base := New()
+	base.TargetImage = "keep-me"
+
+	overlay := New()
+	// overlay.TargetImage is empty — should not override
+
+	result := Merge(base, overlay)
+	if result.TargetImage != "keep-me" {
+		t.Fatalf("TargetImage = %q, want %q", result.TargetImage, "keep-me")
+	}
+}
diff --git a/internal/configstore/path.go b/internal/configstore/path.go
index 0b0bdc2..4aaf028 100644
--- a/internal/configstore/path.go
+++ b/internal/configstore/path.go
@@ -9,6 +9,11 @@ import (
 
 const configFileName = "config.toml"
 
+// LocalConfigFileName is the name of the project-local override file that
+// users can place in their working directory to layer additional configuration
+// (e.g. secrets) on top of the global XDG config.
+const LocalConfigFileName = ".leash.toml"
+
 // GetConfigPath resolves the leash configuration directory and file path using
 // XDG rules with a fallback to ~/.config/leash/config.toml.
 func GetConfigPath() (string, string, error) {
@@ -39,6 +44,12 @@ func GetConfigPath() (string, string, error) {
 	return dir, filepath.Join(dir, configFileName), nil
 }
 
+// GetLocalConfigPath returns the path to the project-local override file
+// within the given directory.
+func GetLocalConfigPath(dir string) string {
+	return filepath.Join(dir, LocalConfigFileName)
+}
+
 func buildConfigDir(base string) string {
 	return filepath.Join(base, "leash")
 }
diff --git a/internal/runner/mount_state.go b/internal/runner/mount_state.go
index 1dafc2b..b8ac440 100644
--- a/internal/runner/mount_state.go
+++ b/internal/runner/mount_state.go
@@ -31,7 +31,7 @@ func (r *runner) initMountState(ctx context.Context, cwd string) error {
 	}
 
 	interactive := r.promptInteractive()
-	cfgData, err := configstore.Load()
+	cfgData, err := configstore.LoadWithOverlay(cwd)
 	if err != nil {
 		return fmt.Errorf("load leash config: %w", err)
 	}
diff --git a/internal/runner/runner.go b/internal/runner/runner.go
index d8726e1..24c15f2 100644
--- a/internal/runner/runner.go
+++ b/internal/runner/runner.go
@@ -896,7 +896,7 @@ func loadConfig(callerDir string, opts options) (config, map[string]configstore.
 		cfg.policyOverride = false
 	}
 
-	cfgData, err := configstore.Load()
+	cfgData, err := configstore.LoadWithOverlay(callerDir)
 	if err != nil {
 		return config{}, nil, fmt.Errorf("load leash config: %w", err)
 	}