diff --git a/docs/running_psalm/configuration.md b/docs/running_psalm/configuration.md
index 96053ac4d29..c619d28d668 100644
--- a/docs/running_psalm/configuration.md
+++ b/docs/running_psalm/configuration.md
@@ -11,6 +11,29 @@ Psalm uses an XML config file (by default, `psalm.xml`). A barebones example loo
 </psalm>
 ```
 
+Configuration file may be split into several files using [XInclude](https://www.w3.org/TR/xinclude/) tags (c.f. previous example):
+#### psalm.xml
+```xml
+<?xml version="1.0"?>
+<psalm
+    xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"
+    xmlns="https://getpsalm.org/schema/config"
+    xsi:schemaLocation="https://getpsalm.org/schema/config vendor/vimeo/psalm/config.xsd"
+    xmlns:xi="http://www.w3.org/2001/XInclude"
+>
+    <xi:include href="files.xml"/>
+</psalm>
+```
+#### files.xml
+```xml
+<?xml version="1.0" encoding="UTF-8"?>
+<projectFiles xmlns="https://getpsalm.org/schema/config">
+    <file name="Bar.php" />
+    <file name="Bat.php" />
+</projectFiles>
+```
+
+
 ## Optional `<psalm />` attributes
 
 ### Coding style
diff --git a/src/Psalm/Config.php b/src/Psalm/Config.php
index bc4ce3afb72..c610351eafb 100644
--- a/src/Psalm/Config.php
+++ b/src/Psalm/Config.php
@@ -7,6 +7,8 @@
 use function array_unique;
 use function class_exists;
 use Composer\Autoload\ClassLoader;
+use DOMDocument;
+
 use function count;
 use const DIRECTORY_SEPARATOR;
 use function dirname;
@@ -65,6 +67,10 @@
 use function trigger_error;
 use function unlink;
 use function version_compare;
+use function getcwd;
+use function chdir;
+use function simplexml_import_dom;
+use const LIBXML_NONET;
 
 class Config
 {
@@ -605,16 +611,31 @@ public static function loadFromXML($base_dir, $file_contents, $current_dir = nul
             $current_dir = $base_dir;
         }
 
-        self::validateXmlConfig($file_contents);
+        self::validateXmlConfig($base_dir, $file_contents);
 
         return self::fromXmlAndPaths($base_dir, $file_contents, $current_dir);
     }
 
+    private static function loadDomDocument(string $base_dir, string $file_contents): DOMDocument
+    {
+        $dom_document = new DOMDocument();
+
+        // there's no obvious way to set xml:base for a document when loading it from string
+        // so instead we're changing the current directory instead to be able to process XIncludes
+        $oldpwd = getcwd();
+        chdir($base_dir);
+
+        $dom_document->loadXML($file_contents, LIBXML_NONET);
+        $dom_document->xinclude(LIBXML_NONET);
+
+        chdir($oldpwd);
+        return $dom_document;
+    }
 
     /**
      * @throws ConfigException
      */
-    private static function validateXmlConfig(string $file_contents): void
+    private static function validateXmlConfig(string $base_dir, string $file_contents): void
     {
         $schema_path = dirname(dirname(__DIR__)) . '/config.xsd';
 
@@ -622,8 +643,7 @@ private static function validateXmlConfig(string $file_contents): void
             throw new ConfigException('Cannot locate config schema');
         }
 
-        $dom_document = new \DOMDocument();
-        $dom_document->loadXML($file_contents);
+        $dom_document = self::loadDomDocument($base_dir, $file_contents);
 
         $psalm_nodes = $dom_document->getElementsByTagName('psalm');
 
@@ -640,8 +660,7 @@ private static function validateXmlConfig(string $file_contents): void
             $psalm_node->setAttribute('xmlns', 'https://getpsalm.org/schema/config');
 
             $old_dom_document = $dom_document;
-            $dom_document = new \DOMDocument();
-            $dom_document->loadXML($old_dom_document->saveXML());
+            $dom_document = self::loadDomDocument($base_dir, $old_dom_document->saveXML());
         }
 
         // Enable user error handling
@@ -674,7 +693,9 @@ private static function fromXmlAndPaths(string $base_dir, string $file_contents,
     {
         $config = new static();
 
-        $config_xml = new SimpleXMLElement($file_contents);
+        $dom_document = self::loadDomDocument($base_dir, $file_contents);
+
+        $config_xml = simplexml_import_dom($dom_document);
 
         $booleanAttributes = [
             'useDocblockTypes' => 'use_docblock_types',
diff --git a/tests/Config/ConfigTest.php b/tests/Config/ConfigTest.php
index bf97520060d..443807b8798 100644
--- a/tests/Config/ConfigTest.php
+++ b/tests/Config/ConfigTest.php
@@ -1195,6 +1195,20 @@ public function testTemplatedFiles()
         }
     }
 
+    /** @return void */
+    public function testModularConfig()
+    {
+        $root = __DIR__ . '/../fixtures/ModularConfig';
+        $config = Config::loadFromXMLFile($root . '/psalm.xml', $root);
+        $this->assertEquals(
+            [
+                realpath($root . '/Bar.php'),
+                realpath($root . '/Bat.php')
+            ],
+            $config->getProjectFiles()
+        );
+    }
+
     public function tearDown(): void
     {
         parent::tearDown();
diff --git a/tests/fixtures/ModularConfig/Bar.php b/tests/fixtures/ModularConfig/Bar.php
new file mode 100644
index 00000000000..16245ebd252
--- /dev/null
+++ b/tests/fixtures/ModularConfig/Bar.php
@@ -0,0 +1,23 @@
+<?php
+namespace Vimeo\Test\DummyProject;
+
+class Bar
+{
+    use SomeTrait;
+
+    /** @var string */
+    public $x;
+
+    public function __construct()
+    {
+        $this->x = 'hello';
+    }
+}
+
+/**
+ * @return void
+ */
+function someFunction()
+{
+    echo 'here';
+}
diff --git a/tests/fixtures/ModularConfig/Bat.php b/tests/fixtures/ModularConfig/Bat.php
new file mode 100644
index 00000000000..d88e03c9d37
--- /dev/null
+++ b/tests/fixtures/ModularConfig/Bat.php
@@ -0,0 +1,13 @@
+<?php
+namespace Vimeo\Test\DummyProject;
+
+class Bat
+{
+    public function __construct()
+    {
+        $a = new Bar();
+
+        someFunction();
+        someOtherFunction();
+    }
+}
diff --git a/tests/fixtures/ModularConfig/SomeTrait.php b/tests/fixtures/ModularConfig/SomeTrait.php
new file mode 100644
index 00000000000..0e09e8a4023
--- /dev/null
+++ b/tests/fixtures/ModularConfig/SomeTrait.php
@@ -0,0 +1,14 @@
+<?php
+namespace Vimeo\Test\DummyProject;
+
+trait SomeTrait
+{
+}
+
+/**
+ * @return void
+ */
+function someOtherFunction()
+{
+    echo 'here';
+}
diff --git a/tests/fixtures/ModularConfig/files.xml b/tests/fixtures/ModularConfig/files.xml
new file mode 100644
index 00000000000..31cdc7cefad
--- /dev/null
+++ b/tests/fixtures/ModularConfig/files.xml
@@ -0,0 +1,5 @@
+<?xml version="1.0" encoding="UTF-8"?>
+<projectFiles xmlns="https://getpsalm.org/schema/config">
+    <file name="Bar.php" />
+    <file name="Bat.php" />
+</projectFiles>
diff --git a/tests/fixtures/ModularConfig/psalm.xml b/tests/fixtures/ModularConfig/psalm.xml
new file mode 100644
index 00000000000..ded23a9be02
--- /dev/null
+++ b/tests/fixtures/ModularConfig/psalm.xml
@@ -0,0 +1,10 @@
+<?xml version="1.0"?>
+<psalm
+    totallyTyped="true"
+    xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"
+    xmlns="https://getpsalm.org/schema/config"
+    xsi:schemaLocation="https://getpsalm.org/schema/config vendor/vimeo/psalm/config.xsd"
+    xmlns:xi="http://www.w3.org/2001/XInclude"
+>
+    <xi:include href="files.xml"/>
+</psalm>