diff --git a/README.md b/README.md
index 8d28f37e3f..64a0c80956 100644
--- a/README.md
+++ b/README.md
@@ -863,7 +863,7 @@ System-level environment variables (usually set automatically):
 
 ```bash
 # .env
-FORGE_CONFIG=/custom/config/dir        # Base directory for all Forge config files (default: ~/forge)
+FORGE_CONFIG=/custom/config/dir        # Base directory for all Forge config files (default: ~/.forge)
 FORGE_MAX_SEARCH_RESULT_BYTES=10240   # Maximum bytes for search results (default: 10240 - 10 KB)
 FORGE_HISTORY_FILE=/path/to/history    # Custom path for Forge history file (default: uses system default location)
 FORGE_BANNER="Your custom banner text" # Custom banner text to display on startup (default: Forge ASCII art)
diff --git a/crates/forge_config/src/reader.rs b/crates/forge_config/src/reader.rs
index 6ce724cbda..f0a6534c36 100644
--- a/crates/forge_config/src/reader.rs
+++ b/crates/forge_config/src/reader.rs
@@ -52,12 +52,26 @@ impl ConfigReader {
     /// Returns the base directory for all Forge config files.
     ///
     /// If the `FORGE_CONFIG` environment variable is set, its value is used
-    /// directly as the base path. Otherwise defaults to `~/forge`.
+    /// directly as the base path. Otherwise defaults to `~/.forge`.
+    /// Falls back to the legacy `~/forge` path if it exists and `~/.forge`
+    /// does not.
     pub fn base_path() -> PathBuf {
         if let Ok(path) = std::env::var("FORGE_CONFIG") {
             return PathBuf::from(path);
         }
-        dirs::home_dir().unwrap_or(PathBuf::from(".")).join("forge")
+
+        let home = dirs::home_dir().unwrap_or(PathBuf::from("."));
+        let path = home.join(".forge");
+        let legacy_path = home.join("forge");
+
+        // Prefer the new dotfile path, but fall back to legacy if only it exists
+        if !path.exists() && legacy_path.exists() {
+            tracing::info!("Using legacy path");
+            return legacy_path;
+        }
+
+        tracing::info!("Using new path");
+        path
     }
 
     /// Adds the provided TOML string as a config source without touching the
@@ -181,8 +195,8 @@ mod tests {
     #[test]
     fn test_base_path_falls_back_to_home_dir_when_env_var_absent() {
         let actual = ConfigReader::base_path();
-        // Without FORGE_CONFIG set the path must end with "forge"
-        assert_eq!(actual.file_name().unwrap(), "forge");
+        // Without FORGE_CONFIG set the path must end with ".forge"
+        assert_eq!(actual.file_name().unwrap(), ".forge");
     }
 
     #[test]
diff --git a/crates/forge_infra/src/env.rs b/crates/forge_infra/src/env.rs
index cb50e27558..1a89e7c965 100644
--- a/crates/forge_infra/src/env.rs
+++ b/crates/forge_infra/src/env.rs
@@ -213,8 +213,8 @@ mod tests {
     #[test]
     fn test_to_environment_falls_back_to_home_dir_when_env_var_absent() {
         let actual = to_environment(PathBuf::from("/any/cwd"));
-        // Without FORGE_CONFIG the base_path must end with "forge"
-        assert_eq!(actual.base_path.file_name().unwrap(), "forge");
+        // Without FORGE_CONFIG the base_path must end with ".forge"
+        assert_eq!(actual.base_path.file_name().unwrap(), ".forge");
     }
 
     #[test]