diff --git a/README.md b/README.md
index 5f5854c0..96220456 100644
--- a/README.md
+++ b/README.md
@@ -202,6 +202,8 @@ This and other settings can be adjusted in the [configuration](#configuration) a
    cd serena
    ```
 2. Optionally create a config file from the template and adjust it according to your preferences.
+   You can either place it in your user directory (`~/.serena/serena_config.yml`) or into 
+   the Serena installation directory:
    ```shell
    cp src/serena/resources/serena_config.template.yml serena_config.yml
    ```
@@ -279,7 +281,11 @@ Run with parameter `--help` to get a list of available options.
 
 Serena's behavior (active tools and prompts as well as logging configuration, etc.) is configured in four places:
 
-1. The `serena_config.yml` for general settings that apply to all clients and projects
+1. The `serena_config.yml` for general settings that apply to all clients and projects.
+   Serena will look for this file in your user directory under `.serena/serena_config.yml`
+   or within the Serena installation directory.
+   If you do not explicitly create the file, it will be auto-generated in the former location
+   when you first run Serena.
 2. In the arguments passed to the `serena-mcp-server` in your client's config (see below), 
    which will apply to all sessions started by the respective client. In particular, the [context](#contexts) parameter
    should be set appropriately for Serena to be best adjusted to existing tools and capabilities of your client.
diff --git a/src/serena/agent.py b/src/serena/agent.py
index 2dec85d6..8cfa79a6 100644
--- a/src/serena/agent.py
+++ b/src/serena/agent.py
@@ -287,8 +287,20 @@ class SerenaConfig:
 
     @classmethod
     def _determine_config_file_path(cls) -> str:
-        config_file = cls.CONFIG_FILE_DOCKER if is_running_in_docker() else cls.CONFIG_FILE
-        return os.path.join(REPO_ROOT, config_file)
+        """
+        :return: the location where the Serena configuration file is stored/should be stored
+        """
+        if is_running_in_docker():
+            return os.path.join(REPO_ROOT, cls.CONFIG_FILE_DOCKER)
+        else:
+            candidates = [
+                str(Path.home() / SERENA_MANAGED_DIR_NAME / cls.CONFIG_FILE),
+                os.path.join(REPO_ROOT, cls.CONFIG_FILE),
+            ]
+            for candidate in candidates:
+                if os.path.exists(candidate):
+                    return candidate
+            return candidates[0]
 
     @classmethod
     def _load_commented_yaml(cls, config_file: str, generate_if_missing: bool = True) -> CommentedMap: