diff --git a/tooling/lsp/src/requests/mod.rs b/tooling/lsp/src/requests/mod.rs
index 7bc510a2f6c..1789c3513f6 100644
--- a/tooling/lsp/src/requests/mod.rs
+++ b/tooling/lsp/src/requests/mod.rs
@@ -1,5 +1,5 @@
 use std::collections::BTreeMap;
-use std::path::PathBuf;
+use std::path::{Path, PathBuf};
 use std::{collections::HashMap, future::Future};
 
 use crate::{insert_all_files_for_workspace_into_file_manager, parse_diff, PackageCacheData};
@@ -301,6 +301,10 @@ fn on_formatting_inner(
     state: &LspState,
     params: lsp_types::DocumentFormattingParams,
 ) -> Result<Option<Vec<lsp_types::TextEdit>>, ResponseError> {
+    // The file_path might be Err/None if the action runs against an unsaved file
+    let file_path = params.text_document.uri.to_file_path().ok();
+    let directory_path = file_path.as_ref().and_then(|path| path.parent());
+
     let path = params.text_document.uri.to_string();
 
     if let Some(source) = state.input_files.get(&path) {
@@ -310,7 +314,8 @@ fn on_formatting_inner(
             return Ok(None);
         }
 
-        let new_text = nargo_fmt::format(source, module, &Config::default());
+        let config = read_format_config(directory_path);
+        let new_text = nargo_fmt::format(source, module, &config);
 
         let start_position = Position { line: 0, character: 0 };
         let end_position = Position {
@@ -327,6 +332,19 @@ fn on_formatting_inner(
     }
 }
 
+fn read_format_config(file_path: Option<&Path>) -> Config {
+    match file_path {
+        Some(file_path) => match Config::read(file_path) {
+            Ok(config) => config,
+            Err(err) => {
+                eprintln!("{}", err);
+                Config::default()
+            }
+        },
+        None => Config::default(),
+    }
+}
+
 pub(crate) fn position_to_byte_index<'a, F>(
     files: &'a F,
     file_id: F::FileId,
diff --git a/tooling/nargo_fmt/build.rs b/tooling/nargo_fmt/build.rs
index a95cbe16525..988a7dcc94d 100644
--- a/tooling/nargo_fmt/build.rs
+++ b/tooling/nargo_fmt/build.rs
@@ -62,7 +62,7 @@ fn generate_formatter_tests(test_file: &mut File, test_data_dir: &Path) {
 
         let (parsed_module, _errors) = noirc_frontend::parse_program(input);
 
-        let config = nargo_fmt::Config::of("{config}").unwrap();
+        let config = nargo_fmt::Config::of("{config}", &std::path::PathBuf::new()).unwrap();
         let fmt_text = nargo_fmt::format(input, parsed_module, &config);
 
         if std::env::var("UPDATE_EXPECT").is_ok() {{
@@ -84,7 +84,7 @@ fn generate_formatter_tests(test_file: &mut File, test_data_dir: &Path) {
 
             let (parsed_module, _errors) = noirc_frontend::parse_program(expected_output);
 
-            let config = nargo_fmt::Config::of("{config}").unwrap();
+            let config = nargo_fmt::Config::of("{config}", &std::path::PathBuf::new()).unwrap();
             let fmt_text = nargo_fmt::format(expected_output, parsed_module, &config);
 
             similar_asserts::assert_eq!(fmt_text, expected_output);
diff --git a/tooling/nargo_fmt/src/config.rs b/tooling/nargo_fmt/src/config.rs
index 488647c0b39..f01afc87af2 100644
--- a/tooling/nargo_fmt/src/config.rs
+++ b/tooling/nargo_fmt/src/config.rs
@@ -56,21 +56,30 @@ config! {
 }
 
 impl Config {
-    pub fn read(path: &Path) -> Result<Self, ConfigError> {
-        let config_path = path.join("noirfmt.toml");
+    /// Reads a Config starting at the given path and going through the path parents
+    /// until a `noirfmt.toml` file is found in one of them or the root is reached.
+    pub fn read(mut path: &Path) -> Result<Self, ConfigError> {
+        loop {
+            let config_path = path.join("noirfmt.toml");
+            if config_path.exists() {
+                match std::fs::read_to_string(&config_path) {
+                    Ok(input) => return Self::of(&input, &config_path),
+                    Err(cause) => return Err(ConfigError::ReadFailed(config_path, cause)),
+                };
+            }
 
-        let input = match std::fs::read_to_string(&config_path) {
-            Ok(input) => input,
-            Err(cause) if cause.kind() == std::io::ErrorKind::NotFound => String::new(),
-            Err(cause) => return Err(ConfigError::ReadFailed(config_path, cause)),
-        };
+            let Some(parent_path) = path.parent() else {
+                return Ok(Config::default());
+            };
 
-        Self::of(&input)
+            path = parent_path;
+        }
     }
 
-    pub fn of(s: &str) -> Result<Self, ConfigError> {
+    pub fn of(s: &str, path: &Path) -> Result<Self, ConfigError> {
         let mut config = Self::default();
-        let toml = toml::from_str(s).map_err(ConfigError::MalformedFile)?;
+        let toml =
+            toml::from_str(s).map_err(|err| ConfigError::MalformedFile(path.to_path_buf(), err))?;
         config.fill_from_toml(toml);
         Ok(config)
     }
diff --git a/tooling/nargo_fmt/src/errors.rs b/tooling/nargo_fmt/src/errors.rs
index e0a1758ae0f..f766234dcde 100644
--- a/tooling/nargo_fmt/src/errors.rs
+++ b/tooling/nargo_fmt/src/errors.rs
@@ -7,6 +7,6 @@ pub enum ConfigError {
     #[error("Cannot read file {0} - {1}")]
     ReadFailed(PathBuf, std::io::Error),
 
-    #[error("noirfmt.toml is badly formed, could not parse.\n\n {0}")]
-    MalformedFile(#[from] toml::de::Error),
+    #[error("{0} is badly formed, could not parse.\n\n {1}")]
+    MalformedFile(PathBuf, toml::de::Error),
 }