diff --git a/.gitignore b/.gitignore
index 68a2473..fbdecca 100644
--- a/.gitignore
+++ b/.gitignore
@@ -31,3 +31,4 @@ __pycache__
 settings.local.json
 .claude/worktrees/
 CLAUDE.local.md
+.sandcage.local.yml
diff --git a/.sandcage.yml b/.sandcage.yml
index 65a29b6..9a62796 100644
--- a/.sandcage.yml
+++ b/.sandcage.yml
@@ -10,8 +10,6 @@ packages:
 
 toolchains:
   rust: stable
-mounts:
-- ~/.ssh:/home/agent/.ssh:ro
 
 # mounts:
 #   - ~/.ssh:/home/agent/.ssh:ro
diff --git a/crates/sandcage/src/config.rs b/crates/sandcage/src/config.rs
index fb94136..6468ecf 100644
--- a/crates/sandcage/src/config.rs
+++ b/crates/sandcage/src/config.rs
@@ -225,13 +225,13 @@ pub fn load_trusted_projects(global_config_path: &Path) -> Vec<PathBuf> {
 /// 1. Compiled defaults (all `None`)
 /// 2. Global config from `global_config_path` (TOML, e.g. `~/.sandcage/config.toml`)
 /// 3. Project config from `project_config_path` (YAML, e.g. `.sandcage.yml`)
+/// 4. Local project config from `local_config_path` (YAML, e.g. `.sandcage.local.yml`)
 ///
-/// Later layers win: project values override global values, which override defaults.
-///
-/// Pass `None` for either path to skip that layer (e.g. when the file doesn't exist).
+/// Later layers win. Pass `None` for any path to skip that layer.
 pub fn resolve_config(
     global_config_path: Option<&Path>,
     project_config_path: Option<&Path>,
+    local_config_path: Option<&Path>,
 ) -> Result<SandcageConfig> {
     // Start with compiled defaults — all fields None.
     let mut figment = Figment::from(Serialized::defaults(SandcageConfig::default()));
@@ -249,6 +249,13 @@ pub fn resolve_config(
         figment = figment.merge(Serialized::defaults(project_cfg));
     }
 
+    if let Some(local_path) = local_config_path
+        && local_path.exists()
+    {
+        let local_cfg = load(local_path)?;
+        figment = figment.merge(Serialized::defaults(local_cfg));
+    }
+
     figment
         .extract()
         .map_err(|e| ConfigError::MergeFailed(Box::new(e)))
@@ -442,7 +449,7 @@ justfile: ./project.justfile
 
     #[test]
     fn resolve_defaults_only_all_none() {
-        let cfg = resolve_config(None, None).expect("resolve with no files");
+        let cfg = resolve_config(None, None, None).expect("resolve with no files");
         assert!(cfg.env.is_none());
         assert!(cfg.packages.is_none());
         assert!(cfg.toolchains.is_none());
@@ -462,7 +469,7 @@ EDITOR = "vim"
         let mut global_tmp = NamedTempFile::new().expect("create global tmpfile");
         write!(global_tmp, "{toml_content}").expect("write global tmpfile");
 
-        let cfg = resolve_config(Some(global_tmp.path()), None).expect("resolve global only");
+        let cfg = resolve_config(Some(global_tmp.path()), None, None).expect("resolve global only");
         assert_eq!(cfg.shell.as_deref(), Some("zsh"));
         let env = cfg.env.expect("env should be Some from global");
         assert_eq!(env.get("EDITOR").map(String::as_str), Some("vim"));
@@ -475,7 +482,7 @@ EDITOR = "vim"
         let mut project_tmp = NamedTempFile::new().expect("create project tmpfile");
         write!(project_tmp, "{yaml_content}").expect("write project tmpfile");
 
-        let cfg = resolve_config(None, Some(project_tmp.path())).expect("resolve project only");
+        let cfg = resolve_config(None, Some(project_tmp.path()), None).expect("resolve project only");
         assert_eq!(cfg.shell.as_deref(), Some("bash"));
         let pkgs = cfg.packages.expect("packages should be Some");
         assert_eq!(pkgs, vec!["ripgrep"]);
@@ -494,7 +501,7 @@ EDITOR = "vim"
         let mut project_tmp = NamedTempFile::new().expect("create project tmpfile");
         write!(project_tmp, "{project_yaml}").expect("write project tmpfile");
 
-        let cfg = resolve_config(Some(global_tmp.path()), Some(project_tmp.path()))
+        let cfg = resolve_config(Some(global_tmp.path()), Some(project_tmp.path()), None)
             .expect("resolve both");
         assert_eq!(cfg.shell.as_deref(), Some("bash"), "project shell should override global");
     }
@@ -512,7 +519,7 @@ EDITOR = "vim"
         let mut project_tmp = NamedTempFile::new().expect("create project tmpfile");
         write!(project_tmp, "{project_yaml}").expect("write project tmpfile");
 
-        let cfg = resolve_config(Some(global_tmp.path()), Some(project_tmp.path()))
+        let cfg = resolve_config(Some(global_tmp.path()), Some(project_tmp.path()), None)
             .expect("resolve partial overlap");
         assert_eq!(cfg.shell.as_deref(), Some("zsh"), "shell should come from global");
         let env = cfg.env.expect("env should be Some from global");
@@ -527,6 +534,7 @@ EDITOR = "vim"
         let cfg = resolve_config(
             Some(Path::new("/nonexistent/config.toml")),
             Some(Path::new("/nonexistent/.sandcage.yml")),
+            None,
         )
         .expect("nonexistent files should not error");
         assert!(cfg.shell.is_none());
@@ -567,7 +575,7 @@ agent_args:
         let mut project_tmp = NamedTempFile::new().expect("create project tmpfile");
         write!(project_tmp, "{project_yaml}").expect("write project tmpfile");
 
-        let cfg = resolve_config(Some(global_tmp.path()), Some(project_tmp.path()))
+        let cfg = resolve_config(Some(global_tmp.path()), Some(project_tmp.path()), None)
             .expect("resolve");
         let agent_args = cfg.agent_args.expect("agent_args should be Some");
         let claude_args = agent_args.get("claude").expect("claude args");
@@ -631,7 +639,7 @@ ssh_keys:
         write!(global_tmp, "{global_toml}").expect("write global tmpfile");
         let mut project_tmp = NamedTempFile::new().expect("create project tmpfile");
         write!(project_tmp, "{project_yaml}").expect("write project tmpfile");
-        let cfg = resolve_config(Some(global_tmp.path()), Some(project_tmp.path())).expect("resolve");
+        let cfg = resolve_config(Some(global_tmp.path()), Some(project_tmp.path()), None).expect("resolve");
         assert_eq!(cfg.ssh_mode.as_deref(), Some("volume"));
     }
 }
diff --git a/crates/sandcage/src/docker.rs b/crates/sandcage/src/docker.rs
index 6c88a7d..4ab80a5 100644
--- a/crates/sandcage/src/docker.rs
+++ b/crates/sandcage/src/docker.rs
@@ -492,7 +492,7 @@ pub fn build_images(force: bool) -> Result<()> {
     let project_config = project_dir.join(".sandcage.yml");
 
     // Global overrides are always trusted.
-    let global_cfg = crate::config::resolve_config(Some(&global_config), None)
+    let global_cfg = crate::config::resolve_config(Some(&global_config), None, None)
         .unwrap_or_default();
     let mut overrides = global_cfg.dockerfiles.unwrap_or_default();
 
diff --git a/crates/sandcage/src/init.rs b/crates/sandcage/src/init.rs
index 9bf38ca..0e815a5 100644
--- a/crates/sandcage/src/init.rs
+++ b/crates/sandcage/src/init.rs
@@ -72,6 +72,25 @@ pub fn preseed_with_home(home: &Path) -> Result<()> {
     Ok(())
 }
 
+fn ensure_gitignore_entry(project_dir: &Path, entry: &str) -> Result<()> {
+    let gitignore_path = project_dir.join(".gitignore");
+    let content = std::fs::read_to_string(&gitignore_path).unwrap_or_default();
+    if content.lines().any(|line| line.trim() == entry) {
+        return Ok(());
+    }
+    let separator = if content.is_empty() || content.ends_with('\n') { "" } else { "\n" };
+    let addition = format!("{separator}{entry}\n");
+    std::fs::OpenOptions::new()
+        .create(true)
+        .append(true)
+        .open(&gitignore_path)
+        .and_then(|mut f| {
+            use std::io::Write;
+            f.write_all(addition.as_bytes())
+        })
+        .map_err(|e| InitError::WriteFileFailed(gitignore_path, e))
+}
+
 fn create_dir_all(path: &Path) -> Result<()> {
     std::fs::create_dir_all(path)
         .map_err(|e| InitError::CreateDirFailed(path.to_path_buf(), e))
@@ -179,6 +198,8 @@ pub fn scaffold_project(path: &Path) -> Result<()> {
     std::fs::write(&config_path, &yaml)
         .map_err(|e| InitError::WriteFileFailed(config_path.clone(), e))?;
 
+    ensure_gitignore_entry(path, ".sandcage.local.yml")?;
+
     println!(
         "sandcage: initialised {} (detected ecosystem: {})",
         config_path.display(),
diff --git a/crates/sandcage/src/main.rs b/crates/sandcage/src/main.rs
index de66fc7..b548490 100644
--- a/crates/sandcage/src/main.rs
+++ b/crates/sandcage/src/main.rs
@@ -122,9 +122,11 @@ fn run_agent(service: &str, path: Option<PathBuf>, shell_override: bool, agent_a
     let home = dirs::home_dir().ok_or(init::InitError::NoHomeDir)?;
     let global_config = home.join(".sandcage").join("config.toml");
     let project_config = workspace.join(".sandcage.yml");
+    let local_config = workspace.join(".sandcage.local.yml");
     let cfg = config::resolve_config(
         Some(&global_config),
         Some(&project_config),
+        Some(&local_config),
     )?;
 
     eprintln!("sandcage: service \u{2192} {service}");
diff --git a/crates/sandcage/src/setup.rs b/crates/sandcage/src/setup.rs
index 3e73078..ad0fa07 100644
--- a/crates/sandcage/src/setup.rs
+++ b/crates/sandcage/src/setup.rs
@@ -581,16 +581,12 @@ pub fn run_ssh_setup(global: bool, yes: bool, refresh: bool, bind: bool) -> Resu
     }
 
     // Determine config target
-    let (config_path, is_global) = if global {
-        (home.join(".sandcage").join("config.toml"), true)
+    let (config_path, config_label, is_global) = if global {
+        (home.join(".sandcage").join("config.toml"), "~/.sandcage/config.toml", true)
     } else {
         let cwd = std::env::current_dir()
             .map_err(|e| SetupError::ReadDirFailed(PathBuf::from("."), e))?;
-        let project_config = cwd.join(".sandcage.yml");
-        if !project_config.exists() {
-            return Err(SetupError::NoProjectConfig);
-        }
-        (project_config, false)
+        (cwd.join(".sandcage.local.yml"), ".sandcage.local.yml", false)
     };
 
     // Write config
@@ -608,11 +604,6 @@ pub fn run_ssh_setup(global: bool, yes: bool, refresh: bool, bind: bool) -> Resu
     eprintln!("sandcage: populating SSH volume...");
     populate_ssh_volume(&selected_entries, &ssh_blocks, include_known_hosts)?;
 
-    let config_label = if is_global {
-        "~/.sandcage/config.toml"
-    } else {
-        ".sandcage.yml"
-    };
     eprintln!("sandcage: SSH keys copied to volume 'sandcage-ssh'");
     eprintln!("sandcage: configuration saved to {config_label}");
 
@@ -627,7 +618,7 @@ fn run_ssh_refresh(global: bool, ssh_dir: &Path) -> Result<()> {
     } else {
         let cwd = std::env::current_dir()
             .map_err(|e| SetupError::ReadDirFailed(PathBuf::from("."), e))?;
-        cwd.join(".sandcage.yml")
+        cwd.join(".sandcage.local.yml")
     };
 
     if !config_path.exists() {