diff --git a/lib/vagrant/environment.rb b/lib/vagrant/environment.rb
index ad9110db8..c6ecdee13 100644
--- a/lib/vagrant/environment.rb
+++ b/lib/vagrant/environment.rb
@@ -13,6 +13,7 @@ module Vagrant
   # access to the VMs, CLI, etc. all in the scope of this environment.
   class Environment
     DEFAULT_HOME = "~/.vagrant.d"
+    DEFAULT_LOCAL_DATA = ".vagrant"
     DEFAULT_RC = "~/.vagrantrc"
 
     # This is the global config, comprised of loading configuration from
@@ -34,6 +35,10 @@ module Vagrant
     # global state.
     attr_reader :home_path
 
+    # The directory to the directory where local, environment-specific
+    # data is stored.
+    attr_reader :local_data_path
+
     # The directory where temporary files for Vagrant go.
     attr_reader :tmp_path
 
@@ -58,10 +63,11 @@ module Vagrant
     def initialize(opts=nil)
       opts = {
         :cwd => nil,
-        :vagrantfile_name => nil,
+        :home_path => nil,
+        :local_data_path => nil,
         :lock_path => nil,
         :ui_class => nil,
-        :home_path => nil
+        :vagrantfile_name => nil
       }.merge(opts || {})
 
       # Set the default working directory to look for the vagrantfile
@@ -70,6 +76,9 @@ module Vagrant
       opts[:cwd] = Pathname.new(opts[:cwd])
       raise Errors::EnvironmentNonExistentCWD if !opts[:cwd].directory?
 
+      # Set the default ui class
+      opts[:ui_class] ||= UI::Silent
+
       # Set the Vagrantfile name up. We append "Vagrantfile" and "vagrantfile" so that
       # those continue to work as well, but anything custom will take precedence.
       opts[:vagrantfile_name] ||= []
@@ -77,15 +86,12 @@ module Vagrant
       opts[:vagrantfile_name] += ["Vagrantfile", "vagrantfile"]
 
       # Set instance variables for all the configuration parameters.
-      @cwd    = opts[:cwd]
+      @cwd              = opts[:cwd]
+      @home_path        = opts[:home_path]
+      @lock_path        = opts[:lock_path]
       @vagrantfile_name = opts[:vagrantfile_name]
-      @lock_path = opts[:lock_path]
-      @home_path = opts[:home_path]
+      @ui               = opts[:ui_class].new("vagrant")
 
-      ui_class = opts[:ui_class] || UI::Silent
-      @ui      = ui_class.new("vagrant")
-
-      @loaded = false
       @lock_acquired = false
 
       @logger = Log4r::Logger.new("vagrant::environment")
@@ -94,10 +100,22 @@ module Vagrant
 
       # Setup the home directory
       setup_home_path
-      @tmp_path = @home_path.join("tmp")
+      @tmp_path   = @home_path.join("tmp")
       @boxes_path = @home_path.join("boxes")
       @gems_path  = @home_path.join("gems")
 
+      # Setup the local data directory. If a configuration path is given,
+      # then it is expanded relative to the working directory. Otherwise,
+      # we use the default which is expanded relative to the root path.
+      @local_data_path = nil
+      if opts[:local_data_path]
+        @local_data_path = Pathname.new(File.expand_path(opts[:local_data_path], @cwd))
+      elsif !root_path.nil?
+        @local_data_path = root_path.join(DEFAULT_LOCAL_DATA)
+      end
+
+      setup_local_data_path
+
       # Setup the default private key
       @default_private_key_path = @home_path.join("insecure_private_key")
       copy_insecure_private_key
@@ -131,15 +149,6 @@ module Vagrant
       :virtualbox
     end
 
-    # The path to the `dotfile`, which contains the persisted UUID of
-    # the VM if it exists.
-    #
-    # @return [Pathname]
-    def dotfile_path
-      return nil if !root_path
-      root_path.join(config_global.vagrant.dotfile_name)
-    end
-
     # Returns the collection of boxes for the environment.
     #
     # @return [BoxCollection]
@@ -315,7 +324,7 @@ module Vagrant
     #
     # @return [DataStore]
     def local_data
-      @local_data ||= DataStore.new(dotfile_path)
+      @local_data ||= DataStore.new(@local_data_path.join("environment_data"))
     end
 
     # The root path is the path where the top-most (loaded last)
@@ -433,6 +442,25 @@ module Vagrant
       end
     end
 
+    # This creates the local data directory and show an error if it
+    # couldn't properly be created.
+    def setup_local_data_path
+      if @local_data_path.nil?
+        @logger.warn("No local data path is set. Local data cannot be stored.")
+        return
+      end
+
+      @logger.info("Local data path: #{@local_data_path}")
+
+      begin
+        @logger.debug("Creating: #{@local_data_path}")
+        FileUtils.mkdir_p(@local_data_path)
+      rescue Errno::EACCES
+        raise Errors::LocalDataDirectoryNotAccessible,
+          :local_data_path => @local_data_path.to_s
+      end
+    end
+
     protected
 
     # This method copies the private key into the home directory if it
diff --git a/lib/vagrant/errors.rb b/lib/vagrant/errors.rb
index 690afa86d..f4961b45e 100644
--- a/lib/vagrant/errors.rb
+++ b/lib/vagrant/errors.rb
@@ -230,6 +230,10 @@ module Vagrant
       error_key(:port_collision_resume)
     end
 
+    class LocalDataDirectoryNotAccessible < VagrantError
+      error_key(:local_data_dir_not_accessible)
+    end
+
     class MachineGuestNotReady < VagrantError
       error_key(:machine_guest_not_ready)
     end
diff --git a/templates/locales/en.yml b/templates/locales/en.yml
index 8712e41fd..6adf62cf4 100644
--- a/templates/locales/en.yml
+++ b/templates/locales/en.yml
@@ -85,6 +85,13 @@ en:
         You specified: %{home_path}
       interrupted: |-
         Vagrant exited after cleanup due to external interrupt.
+      local_data_dir_not_accessible: |-
+        The directory Vagrant will use to store local environment-specific
+        state is not accessible. The directory specified as the local data
+        directory must be both readable and writable for the user that is
+        running Vagrant.
+
+        Local data directory: %{local_data_path}
       machine_guest_not_ready: |-
         Guest-specific operations were attempted on a machine that is not
         ready for guest communication. This should not happen and a bug
diff --git a/test/unit/vagrant/environment_test.rb b/test/unit/vagrant/environment_test.rb
index 6ab1e29be..b4e1e4b8a 100644
--- a/test/unit/vagrant/environment_test.rb
+++ b/test/unit/vagrant/environment_test.rb
@@ -23,19 +23,22 @@ describe Vagrant::Environment do
 
   describe "current working directory" do
     it "is the cwd by default" do
-      with_temp_env("VAGRANT_CWD" => nil) do
-        described_class.new.cwd.should == Pathname.new(Dir.pwd)
+      temp_dir = Tempdir.new.path
+      Dir.chdir(temp_dir) do
+        with_temp_env("VAGRANT_CWD" => nil) do
+          described_class.new.cwd.should == Pathname.new(Dir.pwd)
+        end
       end
     end
 
     it "is set to the cwd given" do
-      directory = File.dirname(__FILE__)
+      directory = Tempdir.new.path
       instance = described_class.new(:cwd => directory)
       instance.cwd.should == Pathname.new(directory)
     end
 
     it "is set to the environmental variable VAGRANT_CWD" do
-      directory = File.dirname(__FILE__)
+      directory = Tempdir.new.path
       instance = with_temp_env("VAGRANT_CWD" => directory) do
         described_class.new
       end
@@ -72,6 +75,24 @@ describe Vagrant::Environment do
     end
   end
 
+  describe "local data path" do
+    it "is set to the proper default" do
+      default = instance.root_path.join(described_class::DEFAULT_LOCAL_DATA)
+      instance.local_data_path.should == default
+    end
+
+    it "is expanded relative to the cwd" do
+      instance = described_class.new(:local_data_path => "foo")
+      instance.local_data_path.should == instance.cwd.join("foo")
+    end
+
+    it "is set to the given value" do
+      dir = Tempdir.new.path
+      instance = described_class.new(:local_data_path => dir)
+      instance.local_data_path.to_s.should == dir
+    end
+  end
+
   describe "default provider" do
     it "should return virtualbox" do
       instance.default_provider.should == :virtualbox