diff --git a/tests/base.py b/tests/base.py
index 5e1befe..497d706 100755
--- a/tests/base.py
+++ b/tests/base.py
@@ -1307,7 +1307,7 @@
                 # processed
                 self.eventQueuesJoin()
                 self.sched.run_handler_lock.acquire()
-                if (not self.merge_client.build_sets and
+                if (not self.merge_client.jobs and
                     all(self.eventQueuesEmpty()) and
                     self.haveAllBuildsReported() and
                     self.areAllBuildsWaiting()):
@@ -1376,3 +1376,19 @@
         """ % os.path.abspath(path))
         f.close()
         self.config.set('zuul', 'tenant_config', f.name)
+
+    def addCommitToRepo(self, project, message, files, branch='master'):
+        path = os.path.join(self.upstream_root, project)
+        repo = git.Repo(path)
+        repo.head.reference = branch
+        zuul.merger.merger.reset_repo_to_head(repo)
+        for fn, content in files.items():
+            fn = os.path.join(path, fn)
+            with open(fn, 'w') as f:
+                f.write(content)
+            repo.index.add([fn])
+        commit = repo.index.commit(message)
+        repo.heads[branch].commit = commit
+        repo.head.reference = branch
+        repo.git.clean('-x', '-f', '-d')
+        repo.heads[branch].checkout()
diff --git a/tests/fixtures/config/in-repo/common.yaml b/tests/fixtures/config/in-repo/common.yaml
new file mode 100644
index 0000000..96aebd6
--- /dev/null
+++ b/tests/fixtures/config/in-repo/common.yaml
@@ -0,0 +1,36 @@
+pipelines:
+  - name: check
+    manager: IndependentPipelineManager
+    source:
+      gerrit
+    trigger:
+      gerrit:
+        - event: patchset-created
+    success:
+      gerrit:
+        verified: 1
+    failure:
+      gerrit:
+        verified: -1
+
+  - name: tenant-one-gate
+    manager: DependentPipelineManager
+    success-message: Build succeeded (tenant-one-gate).
+    source:
+      gerrit
+    trigger:
+      gerrit:
+        - event: comment-added
+          approval:
+            - approved: 1
+    success:
+      gerrit:
+        verified: 2
+        submit: true
+    failure:
+      gerrit:
+        verified: -2
+    start:
+      gerrit:
+        verified: 0
+    precedence: high
diff --git a/tests/fixtures/config/in-repo/main.yaml b/tests/fixtures/config/in-repo/main.yaml
new file mode 100644
index 0000000..df7dadd
--- /dev/null
+++ b/tests/fixtures/config/in-repo/main.yaml
@@ -0,0 +1,8 @@
+tenants:
+  - name: tenant-one
+    include:
+      - common.yaml
+    source:
+      gerrit:
+        repos:
+          - org/project
diff --git a/tests/fixtures/config/in-repo/zuul.conf b/tests/fixtures/config/in-repo/zuul.conf
new file mode 100644
index 0000000..14708aa
--- /dev/null
+++ b/tests/fixtures/config/in-repo/zuul.conf
@@ -0,0 +1,36 @@
+[gearman]
+server=127.0.0.1
+
+[zuul]
+tenant_config=tests/fixtures/config/in-repo/main.yaml
+url_pattern=http://logs.example.com/{change.number}/{change.patchset}/{pipeline.name}/{job.name}/{build.number}
+job_name_in_report=true
+
+[merger]
+git_dir=/tmp/zuul-test/git
+git_user_email=zuul@example.com
+git_user_name=zuul
+zuul_url=http://zuul.example.com/p
+
+[swift]
+authurl=https://identity.api.example.org/v2.0/
+user=username
+key=password
+tenant_name=" "
+
+default_container=logs
+region_name=EXP
+logserver_prefix=http://logs.example.org/server.app/
+
+[connection gerrit]
+driver=gerrit
+server=review.example.com
+user=jenkins
+sshkey=none
+
+[connection smtp]
+driver=smtp
+server=localhost
+port=25
+default_from=zuul@example.com
+default_to=you@example.com
diff --git a/tests/test_v3.py b/tests/test_v3.py
index 2e16742..69e66a0 100644
--- a/tests/test_v3.py
+++ b/tests/test_v3.py
@@ -15,6 +15,7 @@
 # under the License.
 
 import logging
+import textwrap
 
 from tests.base import (
     ZuulTestCase,
@@ -62,3 +63,30 @@
 
         self.assertEqual(A.reported, 2, "Activity in tenant two should"
                          "not affect tenant one")
+
+    def test_in_repo_config(self):
+        in_repo_conf = textwrap.dedent(
+            """
+            projects:
+              - name: org/project
+                tenant-one-gate:
+                  - project-test1
+            """)
+
+        self.addCommitToRepo('org/project', 'add zuul conf',
+                             {'.zuul.yaml': in_repo_conf})
+
+        self.setup_config('config/in-repo/zuul.conf')
+        self.sched.reconfigure(self.config)
+
+        A = self.fake_gerrit.addFakeChange('org/project', 'master', 'A')
+        A.addApproval('CRVW', 2)
+        self.fake_gerrit.addEvent(A.addApproval('APRV', 1))
+        self.waitUntilSettled()
+        self.assertEqual(self.getJobFromHistory('project-test1').result,
+                         'SUCCESS')
+        self.assertEqual(A.data['status'], 'MERGED')
+        self.assertEqual(A.reported, 2,
+                         "A should report start and success")
+        self.assertIn('tenant-one-gate', A.messages[1],
+                      "A should transit tenant-one gate")
diff --git a/zuul/layoutvalidator.py b/zuul/layoutvalidator.py
index e7bddba..0adb78c 100644
--- a/zuul/layoutvalidator.py
+++ b/zuul/layoutvalidator.py
@@ -37,7 +37,7 @@
 
     def validateTenantSource(self, value, path=[]):
         # TODOv3(jeblair): validate against connections
-        self.tenant_source.schema(value)
+        self.tenant_source(value)
 
     def getSchema(self, data, connections=None):
         tenant = {v.Required('name'): str,
diff --git a/zuul/merger/client.py b/zuul/merger/client.py
index 950c385..ce04795 100644
--- a/zuul/merger/client.py
+++ b/zuul/merger/client.py
@@ -14,6 +14,7 @@
 
 import json
 import logging
+import threading
 from uuid import uuid4
 
 import gear
@@ -55,6 +56,18 @@
         self.__merge_client.onBuildCompleted(job)
 
 
+class MergeJob(gear.Job):
+    def __init__(self, *args, **kw):
+        super(MergeJob, self).__init__(*args, **kw)
+        self.__event = threading.Event()
+
+    def setComplete(self):
+        self.__event.set()
+
+    def wait(self, timeout=300):
+        return self.__event.wait(timeout)
+
+
 class MergeClient(object):
     log = logging.getLogger("zuul.MergeClient")
 
@@ -71,26 +84,28 @@
         self.gearman.addServer(server, port)
         self.log.debug("Waiting for gearman")
         self.gearman.waitForServer()
-        self.build_sets = {}
+        self.jobs = set()
 
     def stop(self):
         self.gearman.shutdown()
 
     def areMergesOutstanding(self):
-        if self.build_sets:
+        if self.jobs:
             return True
         return False
 
     def submitJob(self, name, data, build_set,
                   precedence=zuul.model.PRECEDENCE_NORMAL):
         uuid = str(uuid4().hex)
-        job = gear.Job(name,
+        job = MergeJob(name,
                        json.dumps(data),
                        unique=uuid)
+        job.build_set = build_set
         self.log.debug("Submitting job %s with data %s" % (job, data))
-        self.build_sets[uuid] = build_set
+        self.jobs.add(job)
         self.gearman.submitJob(job, precedence=precedence,
                                timeout=300)
+        return job
 
     def mergeChanges(self, items, build_set,
                      precedence=zuul.model.PRECEDENCE_NORMAL):
@@ -103,21 +118,29 @@
                     url=url)
         self.submitJob('merger:update', data, build_set, precedence)
 
+    def getFiles(self, project, url, branch, files,
+                 precedence=zuul.model.PRECEDENCE_HIGH):
+        data = dict(project=project,
+                    url=url,
+                    branch=branch,
+                    files=files)
+        job = self.submitJob('merger:cat', data, None, precedence)
+        return job
+
     def onBuildCompleted(self, job):
-        build_set = self.build_sets.get(job.unique)
-        if build_set:
-            data = getJobData(job)
-            zuul_url = data.get('zuul_url')
-            merged = data.get('merged', False)
-            updated = data.get('updated', False)
-            commit = data.get('commit')
-            self.log.info("Merge %s complete, merged: %s, updated: %s, "
-                          "commit: %s" %
-                          (job, merged, updated, build_set.commit))
-            self.sched.onMergeCompleted(build_set, zuul_url,
+        data = getJobData(job)
+        zuul_url = data.get('zuul_url')
+        merged = data.get('merged', False)
+        updated = data.get('updated', False)
+        commit = data.get('commit')
+        job.files = data.get('files', {})
+        self.log.info("Merge %s complete, merged: %s, updated: %s, "
+                      "commit: %s" %
+                      (job, merged, updated, commit))
+        job.setComplete()
+        if job.build_set:
+            self.sched.onMergeCompleted(job.build_set, zuul_url,
                                         merged, updated, commit)
-            # The test suite expects the build_set to be removed from
-            # the internal dict after the wake flag is set.
-            del self.build_sets[job.unique]
-        else:
-            self.log.error("Unable to find build set for uuid %s" % job.unique)
+        # The test suite expects the job to be removed from the
+        # internal account after the wake flag is set.
+        self.jobs.remove(job)
diff --git a/zuul/merger/merger.py b/zuul/merger/merger.py
index c6ae35d..b7e1842 100644
--- a/zuul/merger/merger.py
+++ b/zuul/merger/merger.py
@@ -184,6 +184,17 @@
         origin = repo.remotes.origin
         origin.update()
 
+    def getFiles(self, branch, files):
+        ret = {}
+        repo = self.createRepoObject()
+        for fn in files:
+            tree = repo.heads[branch].commit.tree
+            if fn in tree:
+                ret[fn] = tree[fn].data_stream.read()
+            else:
+                ret[fn] = None
+        return ret
+
 
 class Merger(object):
     log = logging.getLogger("zuul.Merger")
@@ -342,3 +353,7 @@
             if not commit:
                 return None
         return commit.hexsha
+
+    def getFiles(self, project, url, branch, files):
+        repo = self.getRepo(project, url)
+        return repo.getFiles(branch, files)
diff --git a/zuul/merger/server.py b/zuul/merger/server.py
index 30cd732..813c602 100644
--- a/zuul/merger/server.py
+++ b/zuul/merger/server.py
@@ -68,6 +68,7 @@
     def register(self):
         self.worker.registerFunction("merger:merge")
         self.worker.registerFunction("merger:update")
+        self.worker.registerFunction("merger:cat")
 
     def stop(self):
         self.log.debug("Stopping")
@@ -90,6 +91,9 @@
                     elif job.name == 'merger:update':
                         self.log.debug("Got update job: %s" % job.unique)
                         self.update(job)
+                    elif job.name == 'merger:cat':
+                        self.log.debug("Got cat job: %s" % job.unique)
+                        self.cat(job)
                     else:
                         self.log.error("Unable to handle job %s" % job.name)
                         job.sendWorkFail()
@@ -113,3 +117,13 @@
         result = dict(updated=True,
                       zuul_url=self.zuul_url)
         job.sendWorkComplete(json.dumps(result))
+
+    def cat(self, job):
+        args = json.loads(job.arguments)
+        self.merger.updateRepo(args['project'], args['url'])
+        files = self.merger.getFiles(args['project'], args['url'],
+                                     args['branch'], args['files'])
+        result = dict(updated=True,
+                      files=files,
+                      zuul_url=self.zuul_url)
+        job.sendWorkComplete(json.dumps(result))
diff --git a/zuul/scheduler.py b/zuul/scheduler.py
index 06c54cf..5ae9e9b 100644
--- a/zuul/scheduler.py
+++ b/zuul/scheduler.py
@@ -353,6 +353,7 @@
                 raise Exception("Unable to read tenant config file at %s" %
                                 config_path)
         with open(config_path) as config_file:
+            self.log.info("Loading configuration from %s" % (config_path,))
             data = yaml.load(config_file)
         base = os.path.dirname(os.path.realpath(config_path))
 
@@ -368,8 +369,11 @@
                     fn = os.path.join(base, fn)
                 fn = os.path.expanduser(fn)
                 with open(fn) as config_file:
+                    self.log.info("Loading configuration from %s" % (fn,))
                     incdata = yaml.load(config_file)
                     extend_dict(tenant_config, incdata)
+            incdata = self._parseTenantInRepoLayouts(conf_tenant)
+            extend_dict(tenant_config, incdata)
             tenant.layout = self._parseLayout(base, tenant_config, connections)
         return abide
 
@@ -583,6 +587,39 @@
 
         return layout
 
+    def _parseTenantInRepoLayouts(self, conf_tenant):
+        config = {}
+        jobs = []
+        for source_name, conf_source in conf_tenant.get('source', {}).items():
+            # TODOv3(jeblair,jhesketh): sources should just be
+            # set up at the start of the zuul.conf parsing
+            if source_name not in self.sources:
+                self.sources[source_name] = self._getSourceDriver(
+                    source_name)
+            for conf_repo in conf_source.get('repos'):
+                source = self.sources[source_name]
+                project = source.getProject(conf_repo)
+                url = source.getGitUrl(project)
+                # TODOv3(jeblair): config should be branch specific
+                job = self.merger.getFiles(project.name, url, 'master',
+                                           files=['.zuul.yaml'])
+                job.project = project
+                jobs.append(job)
+        for job in jobs:
+            self.log.debug("Waiting for cat job %s" % (job,))
+            job.wait()
+            if job.files.get('.zuul.yaml'):
+                self.log.info("Loading configuration from %s/.zuul.yaml" %
+                              (job.project,))
+                incdata = self._parseInRepoLayout(job.files['.zuul.yaml'])
+                extend_dict(config, incdata)
+        return config
+
+    def _parseInRepoLayout(self, data):
+        # TODOv3(jeblair): this should implement some rules to protect
+        # aspects of the config that should not be changed in-repo
+        return yaml.load(data)
+
     def setLauncher(self, launcher):
         self.launcher = launcher