diff --git a/bumpversion/__init__.py b/bumpversion/__init__.py
index e0e5099..44389af 100644
--- a/bumpversion/__init__.py
+++ b/bumpversion/__init__.py
@@ -3,13 +3,17 @@
 from __future__ import unicode_literals
 
 try:
-    from configparser import RawConfigParser, NoOptionError
+    # Python 3 or pip-installed "configparser" on Python 2
+    from configparser import RawConfigParser, ConfigParser, NoOptionError
 except ImportError:
-    from ConfigParser import RawConfigParser, NoOptionError
+    # On Py2, "SafeConfigParser" is the same as "ConfigParser" on Py3
+    from ConfigParser import RawConfigParser, SafeConfigParser as ConfigParser, NoOptionError
 
 try:
+    # Python 2
     from StringIO import StringIO
-except:
+except ImportError:
+    # Python 3
     from io import StringIO
 
 import argparse
@@ -614,13 +618,6 @@ def main(original_args=None):
     if 'current_version' in vcs_info:
         defaults['current_version'] = vcs_info['current_version']
 
-    config = RawConfigParser('')
-
-    # don't transform keys to lowercase (which would be the default)
-    config.optionxform = lambda option: option
-
-    config.add_section('bumpversion')
-
     explicit_config = hasattr(known_args, 'config_file')
 
     if explicit_config:
@@ -631,6 +628,17 @@ def main(original_args=None):
     else:
         config_file = '.bumpversion.cfg'
 
+    # setup.cfg supports interpolation - for compatibility we must do the same.
+    if os.path.basename(config_file) == 'setup.cfg':
+        config = ConfigParser('')
+    else:
+        config = RawConfigParser('')
+
+    # don't transform keys to lowercase (which would be the default)
+    config.optionxform = lambda option: option
+
+    config.add_section('bumpversion')
+
     config_file_exists = os.path.exists(config_file)
 
     part_configs = {}
diff --git a/tests/test_cli.py b/tests/test_cli.py
index d8e1049..f65200e 100644
--- a/tests/test_cli.py
+++ b/tests/test_cli.py
@@ -11,12 +11,13 @@
 
 import six
 import subprocess
-from os import environ
+from datetime import datetime
+from os import curdir, makedirs, chdir, environ
+from os.path import join, curdir, dirname
 from shlex import split as shlex_split
 from textwrap import dedent
 from functools import partial
 
-
 from bumpversion import main, DESCRIPTION, WorkingDirectoryIsDirtyException, \
     split_args_in_optional_and_positional
 
@@ -1947,6 +1948,36 @@ def test_regression_new_version_cli_in_files(tmpdir, capsys):
     assert "__version__ = '0.9.3'" == tmpdir.join("myp___init__.py").read()
     assert "current_version = 0.9.3" in tmpdir.join(".bumpversion.cfg").read()
 
+def test_correct_interpolation_for_setup_cfg_files(tmpdir, configfile):
+    '''
+    Reported here: https://github.com/c4urself/bump2version/issues/21
+    '''
+    tmpdir.chdir()
+    tmpdir.join("file.py").write("XX-XX-XXXX v. X.X.X")
+    tmpdir.chdir()
+
+    if configfile == "setup.cfg":
+        tmpdir.join(configfile).write(dedent("""
+            [bumpversion]
+            current_version = 0.7.2
+            files = file.py
+            search = XX-XX-XXXX v. X.X.X
+            replace = {now:%%m-%%d-%%Y} v. {new_version}
+            """).strip())
+    else:
+        tmpdir.join(configfile).write(dedent("""
+            [bumpversion]
+            current_version = 0.7.2
+            files = file.py
+            search = XX-XX-XXXX v. X.X.X
+            replace = {now:%m-%d-%Y} v. {new_version}
+            """).strip())
+
+    main(["major"])
+
+    assert datetime.now().strftime('%m-%d-%Y') + ' v. 1.0.0' == tmpdir.join("file.py").read()
+    assert "current_version = 1.0.0" in tmpdir.join(configfile).read()
+
 
 class TestSplitArgsInOptionalAndPositional:
     def test_all_optional(self):