diff --git a/lspserver/include/lspserver/LSPBinder.h b/lspserver/include/lspserver/LSPBinder.h
index 7320319f5..36f71ac3f 100644
--- a/lspserver/include/lspserver/LSPBinder.h
+++ b/lspserver/include/lspserver/LSPBinder.h
@@ -7,13 +7,33 @@
 #include <llvm/ADT/StringMap.h>
 #include <llvm/Support/JSON.h>
 
+#include <type_traits>
+
 namespace lspserver {
 
+namespace detail {
+
 template <typename T>
-llvm::Expected<T> parseParam(const llvm::json::Value &Raw,
-                             llvm::StringRef PayloadName,
-                             llvm::StringRef PayloadKind) {
+typename std::enable_if_t<std::is_default_constructible_v<T>, T>
+valueOrUninitialized(const std::optional<T> &OptionalDefault) {
   T Result;
+  if (OptionalDefault) {
+    Result = OptionalDefault.value();
+  }
+  return Result;
+}
+
+template <typename T>
+typename std::enable_if_t<!std::is_default_constructible_v<T>, T>
+valueOrUninitialized(const std::optional<T> &OptionalDefault) {
+  return OptionalDefault.value();
+}
+
+template <typename T>
+llvm::Expected<T> parseParamWithOptionalDefault(
+    const llvm::json::Value &Raw, llvm::StringRef PayloadName,
+    llvm::StringRef PayloadKind, std::optional<T> OptionalDefault = {}) {
+  T Result = valueOrUninitialized(OptionalDefault);
   llvm::json::Path::Root Root;
   if (!fromJSON(Raw, Result, Root)) {
     elog("Failed to decode {0} {1}: {2}", PayloadName, PayloadKind,
@@ -31,6 +51,25 @@ llvm::Expected<T> parseParam(const llvm::json::Value &Raw,
   }
   return Result;
 }
+
+} // namespace detail
+
+template <typename T>
+typename std::enable_if_t<std::is_default_constructible_v<T>, llvm::Expected<T>>
+parseParam(const llvm::json::Value &Raw, llvm::StringRef PayloadName,
+           llvm::StringRef PayloadKind) {
+  return detail::parseParamWithOptionalDefault<T>(Raw, PayloadName,
+                                                  PayloadKind);
+}
+
+template <typename T>
+llvm::Expected<T>
+parseParamWithDefault(const llvm::json::Value &Raw, llvm::StringRef PayloadName,
+                      llvm::StringRef PayloadKind, T Default) {
+  return detail::parseParamWithOptionalDefault<T>(Raw, PayloadName, PayloadKind,
+                                                  Default);
+}
+
 struct HandlerRegistry {
   using JSON = llvm::json::Value;
   template <typename HandlerT>
diff --git a/nixd/include/nixd/Server/Controller.h b/nixd/include/nixd/Server/Controller.h
index e7355fee0..0af96afdc 100644
--- a/nixd/include/nixd/Server/Controller.h
+++ b/nixd/include/nixd/Server/Controller.h
@@ -41,6 +41,12 @@
 
 namespace nixd {
 
+struct OptionalValue {
+  std::optional<llvm::json::Value> Value;
+};
+
+bool fromJSON(const llvm::json::Value &E, OptionalValue &R, llvm::json::Path P);
+
 /// The server instance, nix-related language features goes here
 class Controller : public lspserver::LSPServer {
 public:
@@ -122,6 +128,10 @@ class Controller : public lspserver::LSPServer {
 
   std::mutex ConfigLock;
 
+  // When the server starts, DefaultConfig is set to the
+  // parsed contents of .nixd.json if it exists. This is used
+  // as the default when parsing workspace/configuration.
+  configuration::TopLevel DefaultConfig;
   configuration::TopLevel Config; // GUARDED_BY(ConfigLock)
 
   std::shared_ptr<const std::string> getDraft(lspserver::PathRef File) const;
@@ -135,7 +145,7 @@ class Controller : public lspserver::LSPServer {
       PublishDiagnostic;
 
   llvm::unique_function<void(const lspserver::ConfigurationParams &,
-                             lspserver::Callback<configuration::TopLevel>)>
+                             lspserver::Callback<OptionalValue>)>
       WorkspaceConfiguration;
 
   std::mutex DiagStatusLock;
@@ -255,9 +265,10 @@ class Controller : public lspserver::LSPServer {
   static llvm::Expected<configuration::TopLevel>
   parseConfig(llvm::StringRef JSON);
 
-  /// Try to update the server config from json encoded file \p File
-  /// Won't touch config field if exceptions encountered
-  void readJSONConfig(lspserver::PathRef File = ".nixd.json") noexcept;
+  /// Try to update the default config from json encoded file \p File
+  /// Won't touch default config field if exceptions encountered
+  /// Returns true if the default config is set and false otherwise.
+  bool readJSONConfigToDefault(lspserver::PathRef File = ".nixd.json") noexcept;
 
   void onWorkspaceDidChangeConfiguration(
       const lspserver::DidChangeConfigurationParams &) {
diff --git a/nixd/lib/Server/Controller.cpp b/nixd/lib/Server/Controller.cpp
index 675f2009d..47d017b52 100644
--- a/nixd/lib/Server/Controller.cpp
+++ b/nixd/lib/Server/Controller.cpp
@@ -15,6 +15,7 @@
 
 #include "lspserver/Connection.h"
 #include "lspserver/DraftStore.h"
+#include "lspserver/LSPBinder.h"
 #include "lspserver/Logger.h"
 #include "lspserver/Path.h"
 #include "lspserver/Protocol.h"
@@ -204,9 +205,15 @@ void Controller::fetchConfig() {
         lspserver::ConfigurationParams{
             std::vector<lspserver::ConfigurationItem>{
                 lspserver::ConfigurationItem{.section = "nixd"}}},
-        [this](llvm::Expected<configuration::TopLevel> Response) {
+        [this](llvm::Expected<OptionalValue> Response) {
           if (Response) {
-            updateConfig(std::move(Response.get()));
+            llvm::Expected<configuration::TopLevel> ResponseConfig =
+                lspserver::parseParamWithDefault<configuration::TopLevel>(
+                    Response.get().Value.value(), "workspace/configuration",
+                    "reply", DefaultConfig);
+            if (ResponseConfig) {
+              updateConfig(std::move(ResponseConfig.get()));
+            }
           }
         });
   }
@@ -226,20 +233,23 @@ Controller::parseConfig(llvm::StringRef JSON) {
   return lspserver::error("value cannot be converted to internal config type");
 }
 
-void Controller::readJSONConfig(lspserver::PathRef File) noexcept {
+bool Controller::readJSONConfigToDefault(lspserver::PathRef File) noexcept {
   try {
     std::string ConfigStr;
     std::ostringstream SS;
     std::ifstream In(File.str(), std::ios::in);
     SS << In.rdbuf();
 
-    if (auto NewConfig = parseConfig(SS.str()))
-      updateConfig(std::move(NewConfig.get()));
-    else {
-      throw nix::Error("configuration cannot be parsed");
+    if (auto NewConfig = parseConfig(SS.str())) {
+      DefaultConfig = std::move(NewConfig.get());
+      return true;
     }
+
+    throw nix::Error(".nixd.json configuration cannot be parsed");
   } catch (std::exception &E) {
+    return false;
   } catch (...) {
+    return false;
   }
 }
 
@@ -257,6 +267,16 @@ Controller::Controller(std::unique_ptr<lspserver::InboundPort> In,
     : LSPServer(std::move(In), std::move(Out)), WaitWorker(WaitWorker),
       ASTMgr(Pool) {
 
+  // JSON Config, run before initialize
+  if (readJSONConfigToDefault()) {
+    configuration::TopLevel JSONConfigCopy = DefaultConfig;
+    updateConfig(std::move(JSONConfigCopy));
+  };
+
+  WorkspaceConfiguration =
+      mkOutMethod<lspserver::ConfigurationParams, OptionalValue>(
+          "workspace/configuration", nullptr);
+
   // Life Cycle
   Registry.addMethod("initialize", this, &Controller::onInitialize);
   Registry.addNotification("initialized", this, &Controller::onInitialized);
@@ -293,17 +313,12 @@ Controller::Controller(std::unique_ptr<lspserver::InboundPort> In,
   // Workspace
   Registry.addNotification("workspace/didChangeConfiguration", this,
                            &Controller::onWorkspaceDidChangeConfiguration);
-  WorkspaceConfiguration =
-      mkOutMethod<lspserver::ConfigurationParams, configuration::TopLevel>(
-          "workspace/configuration");
 
   /// IPC
   Registry.addNotification("nixd/ipc/diagnostic", this,
                            &Controller::onEvalDiagnostic);
 
   Registry.addNotification("nixd/ipc/finished", this, &Controller::onFinished);
-
-  readJSONConfig();
 }
 
 //-----------------------------------------------------------------------------/
@@ -790,4 +805,11 @@ void Controller::onFormat(
   };
   boost::asio::post(Pool, std::move(Task));
 }
+
+bool fromJSON(const llvm::json::Value &E, OptionalValue &R,
+              llvm::json::Path P) {
+  R.Value = E;
+  return true;
+}
+
 } // namespace nixd