When you start a new conversation with Claude, it begins with a blank slate. This creates a familiar challenge: you need to explain your project structure, your team's conventions, and the specific rules for working with your codebase every single time. If you are working on a large project like a documentation framework or a web application, this context-setting can take several exchanges before you can get to the actual work.

Configuration files solve this context problem by providing Claude with persistent information about your project. Instead of explaining the same details repeatedly, you create files that Claude automatically reads at the start of each session. Think of these files as a project manual that travels with your code.

In this lesson, you will learn about three different types of configuration files that work together at your project's root level. You will see how to document your project's structure using CLAUDE.md, how to set permissions using .claude/settings.json, and how to manage local preferences with .claude/settings.local.json. We will use the Docusaurus repository as our real-world example throughout this lesson.

The CLAUDE.md file serves as your project's introduction to Claude. When you place this file in your project's root directory, Claude automatically reads it at the beginning of each conversation. This file should answer the fundamental questions: What is this project? How is it organized? What technologies does it use?

The name CLAUDE.md follows a convention similar to README.md, but while a README is written for human developers browsing your repository, CLAUDE.md is specifically crafted to give Claude the context it needs to work effectively with your codebase. You write it in Markdown format, making it easy to read and maintain.

Here is what makes CLAUDE.md powerful: it lives alongside your code in version control (the system that tracks changes to your code over time, like git). When team members clone the repository, they get the configuration automatically. When the project evolves, you update the CLAUDE.md file just like you would update documentation. This keeps the context synchronized with your actual codebase.

To make these concepts concrete, we will work with the Docusaurus repository. Docusaurus is a documentation website generator built by Meta, and it is an excellent example because it demonstrates real-world complexity. The project is a monorepo (a single repository containing multiple related packages instead of spreading them across separate repositories) containing multiple npm packages that work together, along with an example website that showcases the framework's capabilities.

The repository structure looks like this: the core Docusaurus engine lives in packages/docusaurus/; various plugins are organized as packages/docusaurus-plugin-content-docs/, packages/docusaurus-plugin-sitemap/, and similar directories; while themes live in packages/docusaurus-theme-classic/ and related folders. The website/ directory contains a full Docusaurus site that serves as both documentation and a demonstration of the framework's features.

This complexity makes Docusaurus perfect for learning about configuration. If Claude does not understand that this is a monorepo with interdependent packages, it might give you advice that works for a simple single-package project but fails in this context. The file solves this by establishing the architectural context upfront.

A well-structured CLAUDE.md file has three key sections that build upon each other. Let's create one for the Docusaurus project to see how these sections work together.

The Project Overview section comes first and provides a high-level description. You want to capture what the project does and any important organizational details in just a few sentences. For Docusaurus, you would write something that immediately tells Claude this is a documentation generator, it is built with React, and it uses a monorepo structure.

The Architecture section breaks down the project's organization; this is where you explain how different parts of the codebase relate to each other. For a monorepo like Docusaurus, you need to identify where the core functionality lives, how plugins are organized, where themes are stored, and where example or test sites exist.

The Tech Stack section lists the key technologies and their versions when version constraints matter. This helps Claude understand what language features are available, what testing frameworks you are using, and what build tools are in play.

Here is how these sections come together for Docusaurus:

While CLAUDE.md provides information about your project, the .claude/settings.json file controls what Claude can actually do. This file defines permissions using an allow and deny structure, giving you precise control over which commands Claude can execute and which files it can access. Think of it like access badges at work: some badges grant general building access, while others are restricted from certain rooms.

The permissions system works with two lists. The allow list specifies operations that are permitted, while the deny list blocks specific operations even if they would otherwise be allowed. The deny list takes precedence, which means you can create broad permissions with specific exceptions.

For the Docusaurus project, you would create a .claude/settings.json file that looks like this:

Let's break down what each permission means. The Bash(git status) permission allows Claude to check the of your repository, which is useful for understanding what files have changed. The permission allows to run any command, using the asterisk as a wildcard (just like searching for to find all PDF files). This means , , and would all be allowed.

Sometimes you need configuration that is specific to your development environment but should not be shared with your team. The .claude/settings.local.json file serves this purpose. This file follows the same structure as .claude/settings.json but contains settings that are personal to you or specific to your local machine.

The most common use case for local settings is environment variables. You might want to enable debug logging while you are developing, or you might need to set a specific API endpoint that points to your local server instead of production. These settings should not be committed to version control because they are not relevant to other team members.

Here is what a .claude/settings.local.json file might look like for someone working on Docusaurus:

This sets the DEBUG environment variable to true, which might enable additional logging in the Docusaurus build process. Another developer on the team might not want this extra logging, so they would not create this file, or they might set DEBUG to false in their own local configuration.

The key principle here is that .claude/settings.local.json should be listed in your .gitignore file (a file that tells git which files to ignore and not track). This prevents it from being committed to version control. Each developer can create their own local settings file without affecting anyone else on the team. The shared configuration in represents the team's agreed-upon permissions, while local settings represent individual preferences.

Now that you have seen all three configuration files, it is important to understand how they work together. When Claude starts a conversation in your project, it reads these files from your project root in a specific order. Think of it like a layered set of information: project documentation provides context, team settings establish shared rules, and local settings accommodate individual needs.

First, Claude reads the CLAUDE.md file from your project root. This provides the foundational context about what the project is and how it is structured.

Next, Claude loads .claude/settings.json if it exists. This file contains the team's shared configuration, including the permission rules that everyone working on the project should follow. These settings become the baseline for how Claude can interact with your codebase.

Finally, Claude checks for .claude/settings.local.json. If this file exists, it provides additional settings specific to your development environment. This is where you put configurations that are personal to you, like debug flags or local development endpoints.

This system lets you balance shared team standards with individual needs. All three files live at your project root and serve complementary purposes: the CLAUDE.md file ensures everyone has the same understanding of the project structure; the .claude/settings.json file ensures consistent permissions across the team; the .claude/settings.local.json file lets developers add their own environment-specific settings.

You have now learned about the three configuration files that give Claude persistent context about your projects. The CLAUDE.md file provides descriptive information: what your project does, how it is organized, and what technologies it uses. The .claude/settings.json file sets team-wide permissions that control what operations Claude can perform. The .claude/settings.local.json file allows individual developers to add personal settings without affecting the shared configuration.

These files work together in a system. Claude reads CLAUDE.md for project context, loads .claude/settings.json for baseline permissions, and then checks for .claude/settings.local.json for any environment-specific settings. The result is a system in which you can maintain shared standards while accommodating individual needs.

In the upcoming practice exercises, you will create these configuration files for different types of projects. You will learn to identify what information belongs in each file and how to structure permissions effectively. Remember that on CodeSignal, the environment comes with everything pre-configured, but you will be practicing these skills so you can apply them to your own projects outside of the learning platform.