diff --git a/README.md b/README.md
index 7dc644ab..e485bc5e 100644
--- a/README.md
+++ b/README.md
@@ -320,6 +320,56 @@ rules:
       ...
 ```
 
+### Extending Rulesets
+
+A ruleset can extend another ruleset, in which case the two files will be
+recursively merged. Extended rulesets can themselves extend additional rulesets
+up to 20 rulesets deep.
+
+Extend a ruleset by including an "extends" top-level key which identifies a URL
+or file path:
+
+```JavaScript
+{
+  "extends": "https://raw.githubusercontent.com/todogroup/repolinter/master/rulesets/default.json"
+  "rules": {
+    # disable CI check
+    "integrates-with-ci": {
+      "level": "off"
+    }
+  }
+}
+```
+
+```YAML
+extends: https://raw.githubusercontent.com/todogroup/repolinter/master/rulesets/default.json
+rules:
+  # disable CI check
+  integrates-with-ci
+    level: off
+    ...
+```
+
+Relative paths are resolved relative to the location used to access the
+extending file.  For example, if repolinter is invoked as:
+
+```
+repolinter -u http://example.com/custom-rules.yaml
+```
+
+And that ruleset includes `extends: "./default.yaml"`, the path will be resolved
+relative to the original URL as `http://example.com/default.yaml`.  If instead
+repolinter is invoked as:
+
+```
+repolinter -r /etc/repolinter/custom-rules.yaml
+```
+
+And that ruleset includes `extends: "./default.yaml"`, the path will be resolved
+relative to the original file path as `/etc/repolinter/default.yaml`.
+
+YAML and JSON rulesets can be extended from either format.
+
 ## API
 
 Repolinter also includes an extensible JavaScript API:
diff --git a/tests/lib/absolute-override.yaml b/tests/lib/absolute-override.yaml
new file mode 100644
index 00000000..67542262
--- /dev/null
+++ b/tests/lib/absolute-override.yaml
@@ -0,0 +1,6 @@
+$schema: "../../rulesets/schema.json"
+extends: "http://localhost:9000/default.json"
+version: 2
+rules:
+  test-file-exists:
+    level: off
diff --git a/tests/lib/config_tests.js b/tests/lib/config_tests.js
new file mode 100644
index 00000000..956ee8f3
--- /dev/null
+++ b/tests/lib/config_tests.js
@@ -0,0 +1,129 @@
+// Copyright 2017 TODO Group. All rights reserved.
+// SPDX-License-Identifier: Apache-2.0
+
+const chai = require('chai')
+const chaiAsPromised = require('chai-as-promised')
+const expect = chai.expect
+const path = require('path')
+const fs = require('fs')
+const ServerMock = require('mock-http-server')
+
+chai.use(chaiAsPromised)
+
+describe('lib', () => {
+  describe('config', function () {
+    const Config = require('../../lib/config')
+
+    this.timeout(10000)
+
+    describe('isAbsoluteURL', () => {
+      it('should identify absolute URLs', async () => {
+        expect(Config.isAbsoluteURL('http://example.com/')).to.equals(true)
+        expect(Config.isAbsoluteURL('https://example.com/')).to.equals(true)
+        expect(Config.isAbsoluteURL('ftp://example.com/')).to.equals(true)
+      })
+
+      it('should identify relative URLs', async () => {
+        expect(Config.isAbsoluteURL('foo')).to.equals(false)
+        expect(Config.isAbsoluteURL('/foo')).to.equals(false)
+        expect(Config.isAbsoluteURL('file:/foo')).to.equals(false)
+        expect(Config.isAbsoluteURL('file:///foo')).to.equals(false)
+        expect(Config.isAbsoluteURL('c:\\foo')).to.equals(false)
+      })
+    })
+
+    describe('findConfig', () => {
+      it('should find config file in directory', async () => {
+        const localConfig = path.join(__dirname, 'repolinter.yaml')
+        expect(Config.findConfig(__dirname)).to.equals(localConfig)
+      })
+      it('should return default file when no config present', async () => {
+        const parent = path.join(__dirname, '..')
+        const defaultConfig = path.join(
+          __dirname,
+          '../../rulesets/default.json'
+        )
+        expect(Config.findConfig(parent)).to.equals(defaultConfig)
+      })
+    })
+
+    describe('loadConfig', async () => {
+      const server = new ServerMock({ host: 'localhost', port: 9000 }, {})
+      const serveDirectory = dir => ({
+        method: 'GET',
+        path: '*',
+        reply: {
+          status: 200,
+          body: request =>
+            fs.readFileSync(path.resolve(dir, request.pathname.substring(1)))
+        }
+      })
+      beforeEach(done => server.start(done))
+      afterEach(done => server.stop(done))
+
+      it('should load local config file', async () => {
+        const actual = await Config.loadConfig(
+          path.join(__dirname, 'default.json')
+        )
+        expect(actual.rules).to.have.property('test-file-exists')
+        expect(actual.rules['test-file-exists'].level).to.equals('error')
+      })
+
+      it('should load URL config file', async () => {
+        server.on(serveDirectory(__dirname))
+        const actual = await Config.loadConfig(
+          'http://localhost:9000/default.json'
+        )
+        expect(actual.rules).to.have.property('test-file-exists')
+        expect(actual.rules['test-file-exists'].level).to.equals('error')
+      })
+
+      it('should handle relative file extends', async () => {
+        const actual = await Config.loadConfig(
+          path.join(__dirname, 'repolinter.yaml')
+        )
+        expect(actual.rules).to.have.property('test-file-exists')
+        expect(actual.rules['test-file-exists'].level).to.equals('error')
+      })
+
+      it('should handle relative URL extends', async () => {
+        server.on(serveDirectory(__dirname))
+        const actual = await Config.loadConfig(
+          'http://localhost:9000/repolinter.yaml'
+        )
+        expect(actual.rules).to.have.property('test-file-exists')
+        expect(actual.rules['test-file-exists'].level).to.equals('error')
+      })
+
+      it('should handle absolute URL extends', async () => {
+        server.on(serveDirectory(__dirname))
+        const actual = await Config.loadConfig(
+          path.join(__dirname, 'absolute-override.yaml')
+        )
+        expect(actual.rules).to.have.property('test-file-exists')
+        expect(actual.rules['test-file-exists'].level).to.equals('off')
+      })
+
+      it('should throw error on non existant file', async () => {
+        expect(Config.loadConfig('/does-not-exist')).to.eventually.throw(
+          'ENOENT'
+        )
+      })
+
+      it('should throw error on non existant URL', async () => {
+        server.on(serveDirectory(__dirname))
+        expect(
+          Config.loadConfig('http://localhost:9000/404')
+        ).to.eventually.throw('404')
+      })
+    })
+
+    describe('validateConfig', () => {
+      // already tested as part of the repolinter api tests in tests/api
+    })
+
+    describe('parseConfig', () => {
+      // already tested as part of the repolinter api tests in tests/api
+    })
+  })
+})
diff --git a/tests/lib/default.json b/tests/lib/default.json
new file mode 100644
index 00000000..078b9916
--- /dev/null
+++ b/tests/lib/default.json
@@ -0,0 +1,16 @@
+{
+  "$schema": "../../rulesets/schema.json",
+  "version": 2,
+  "axioms": {},
+  "rules": {
+    "test-file-exists": {
+      "level": "error",
+      "rule": {
+        "type": "file-existence",
+        "options": {
+          "globsAny": ["text_file_for_test.txt"]
+        }
+      }
+    }
+  }
+}
diff --git a/tests/lib/repolinter.yaml b/tests/lib/repolinter.yaml
new file mode 100644
index 00000000..d207119e
--- /dev/null
+++ b/tests/lib/repolinter.yaml
@@ -0,0 +1,3 @@
+$schema: "../../rulesets/schema.json"
+extends: "./default.json"
+version: 2