diff --git a/docs/cli.md b/docs/cli.md
index b5913b69040..83c4775019e 100644
--- a/docs/cli.md
+++ b/docs/cli.md
@@ -987,6 +987,11 @@ poetry self remove poetry-plugin-export
 
 * `--dry-run`: Outputs the operations but will not execute anything (implicitly enables --verbose).
 
+### self init
+
+The `self init` command creates a local `.poetry` configuration directory for poetry. Poetry will
+use configuration and it's dependencies from this directory instead of the system default.
+
 ### self install
 
 The `self install` command ensures all additional packages specified are installed in the current
diff --git a/docs/configuration.md b/docs/configuration.md
index d9c074262c3..5b05d2cb238 100644
--- a/docs/configuration.md
+++ b/docs/configuration.md
@@ -125,6 +125,8 @@ Poetry uses the following default directories:
 - Windows: `%APPDATA%\pypoetry`
 - MacOS: `~/Library/Application Support/pypoetry`
 
+If there is a `.poetry` directory in the project directory, this will override the default configuration directory.
+
 You can override the Config directory by setting the `POETRY_CONFIG_DIR` environment variable.
 
 ### Data Directory
diff --git a/src/poetry/console/application.py b/src/poetry/console/application.py
index 8d325efde1f..b34f91f66ba 100644
--- a/src/poetry/console/application.py
+++ b/src/poetry/console/application.py
@@ -80,6 +80,7 @@ def _load() -> Command:
     "env use",
     # Self commands
     "self add",
+    "self init",
     "self install",
     "self lock",
     "self remove",
diff --git a/src/poetry/console/commands/self/init.py b/src/poetry/console/commands/self/init.py
new file mode 100644
index 00000000000..3df27695b1e
--- /dev/null
+++ b/src/poetry/console/commands/self/init.py
@@ -0,0 +1,57 @@
+from __future__ import annotations
+
+from pathlib import Path
+
+from cleo.helpers import option
+
+from poetry.console.commands.self.self_command import SelfCommand
+
+
+class SelfInitCommand(SelfCommand):
+    name = "self init"
+    description = """\
+Initializes a local .poetry directory to be used instead of the global poetry \
+configuration.\
+"""
+    options = [
+        option(
+            "project-dir",
+            None,
+            (
+                "The directory containing a pyproject.toml file to which the .poetry   "
+                "         directory will be added."
+            ),
+            flag=False,
+            default=None,
+        ),
+    ]
+    help = """\
+The <c1>self init</c1> command creates and initializes a .poetry directory that\
+contains poetry configuration specific for the project directory instead of using the\
+global poetry configuration.
+"""
+
+    loggers = ["poetry.repositories.pypi_repository", "poetry.inspection.info"]
+
+    def __init__(self):
+        self._system_pyproject = super().system_pyproject
+        super().__init__()
+
+    def handle(self) -> int:
+        project_dir = self.option("project-dir")
+        if project_dir is None:
+            project_dir = Path.cwd()
+        self._system_pyproject = Path(project_dir) / ".poetry" / "pyproject.toml"
+        if self.system_pyproject.exists():
+            self.line(f"Poetry settings already exist for project {project_dir}")
+            self.line_error("\nNo changes were applied.")
+            return 1
+
+        self.line(f"Initialising poetry settings for project {project_dir}")
+        self.system_pyproject.parent.mkdir(parents=True, exist_ok=True)
+        self.generate_system_pyproject()
+        return 0
+
+    @property
+    def system_pyproject(self) -> Path:
+        return self._system_pyproject
diff --git a/src/poetry/locations.py b/src/poetry/locations.py
index 2d3b25da722..7657a6a74a7 100644
--- a/src/poetry/locations.py
+++ b/src/poetry/locations.py
@@ -17,8 +17,9 @@
 
 DEFAULT_CACHE_DIR = user_cache_path(_APP_NAME, appauthor=False)
 CONFIG_DIR = Path(
-    os.getenv("POETRY_CONFIG_DIR")
-    or user_config_path(_APP_NAME, appauthor=False, roaming=True)
+    os.getenv("POETRY_CONFIG_DIR") or Path.cwd() / ".poetry"
+    if (Path.cwd() / ".poetry").exists()
+    else None or user_config_path(_APP_NAME, appauthor=False, roaming=True)
 )
 
 # platformdirs 2.0.0 corrected the OSX/macOS config directory from
diff --git a/tests/console/commands/self/test_init_plugins.py b/tests/console/commands/self/test_init_plugins.py
new file mode 100644
index 00000000000..8a711847744
--- /dev/null
+++ b/tests/console/commands/self/test_init_plugins.py
@@ -0,0 +1,64 @@
+from __future__ import annotations
+
+import os
+
+from pathlib import Path
+from typing import TYPE_CHECKING
+
+import pytest
+
+from poetry.core.utils.helpers import temporary_directory
+
+
+if TYPE_CHECKING:
+    from cleo.testers.command_tester import CommandTester
+
+    from tests.types import CommandTesterFactory
+
+
+@pytest.fixture()
+def tester(command_tester_factory: CommandTesterFactory) -> CommandTester:
+    return command_tester_factory("self init")
+
+
+def test_init_no_args(
+    tester: CommandTester,
+) -> None:
+    with temporary_directory() as tmp_dir:
+        current_dir = os.getcwd()
+        try:
+            os.chdir(tmp_dir)
+            tester.execute()
+            assert tester.io.fetch_output() == f"""\
+Initialising poetry settings for project {tmp_dir}
+"""
+            assert (Path(tmp_dir) / ".poetry" / "pyproject.toml").exists()
+            assert tester.status_code == 0
+        finally:
+            os.chdir(current_dir)
+
+
+def test_init_project_dir(
+    tester: CommandTester,
+) -> None:
+    with temporary_directory() as tmp_dir:
+        tester.execute(args=f"--project-dir {tmp_dir}")
+        assert tester.io.fetch_output() == f"""\
+Initialising poetry settings for project {tmp_dir}
+"""
+        assert (Path(tmp_dir) / ".poetry" / "pyproject.toml").exists()
+        assert tester.status_code == 0
+
+
+def test_init_project_dir_already_exists(
+    tester: CommandTester,
+) -> None:
+    with temporary_directory() as tmp_dir:
+        pyproject_file = Path(tmp_dir) / ".poetry" / "pyproject.toml"
+        pyproject_file.parent.mkdir()
+        pyproject_file.write_text("hello world")
+        tester.execute(args=f"--project-dir {tmp_dir}")
+        assert tester.io.fetch_output() == f"""\
+Poetry settings already exist for project {tmp_dir}
+"""
+        assert tester.status_code == 1