diff --git a/CHANGELOG.md b/CHANGELOG.md
index f42501ee..d74a484c 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -2,6 +2,7 @@
 
 ## New features
 
+* `@include` directives in config file now also search in `$XDG_CONFIG_HOME/picom/include` and `$XDG_CONFIG_DIRS/picom/include`, in addition to relative to the config file's parent directory.
 * Allow `corner-radius-rules` to override `corner-radius = 0`. Previously setting corner radius to 0 globally disables rounded corners. (#1170)
 * New `picom-inspect` tool, which lets you test out your picom rules. Sample output:
 
@@ -49,7 +50,7 @@
 
 * picom now uses some OpenGL 4.3 features.
 * picom now optionally depends on `rtkit` at runtime to give itself realtime scheduling priority.
-* `libconfig` is now a mandatory dependency.
+* `libconfig` is now a mandatory dependency, with a minimal supported version of 1.7.
 
 # v11.2 (2024-Feb-13)
 
diff --git a/man/picom.1.asciidoc b/man/picom.1.asciidoc
index cdd98a3c..5f995ff6 100644
--- a/man/picom.1.asciidoc
+++ b/man/picom.1.asciidoc
@@ -421,6 +421,8 @@ CONFIGURATION FILES
 -------------------
 picom could read from a configuration file if libconfig support is compiled in. If *--config* is not used, picom will seek for a configuration file in `$XDG_CONFIG_HOME/picom.conf` (`~/.config/picom.conf`, usually), then `$XDG_CONFIG_HOME/picom/picom.conf`, then `$XDG_CONFIG_DIRS/picom.conf` (often `/etc/xdg/picom.conf`), then `$XDG_CONFIG_DIRS/picom/picom.conf`.
 
+When `@include` directive is used in the config file, picom will first search for the included file in the parent directory of `picom.conf`, then in `$XDG_CONFIG_HOME/picom/include/`, then in `$XDG_CONFIG_DIRS/picom/include`.
+
 picom uses general libconfig configuration file format. A sample configuration file is available as `picom.sample.conf` in the source tree. Most of commandline switches can be used as options in configuration file as well. For example, *--vsync* option documented above can be set in the configuration file using `vsync = `. Command line options will always overwrite the settings in the configuration file.
 
 Window-type-specific settings are exposed only in configuration file and has the following format:
diff --git a/src/config_libconfig.c b/src/config_libconfig.c
index 8867635a..659650e4 100644
--- a/src/config_libconfig.c
+++ b/src/config_libconfig.c
@@ -526,6 +526,21 @@ void generate_fading_config(struct options *opt) {
 	}
 }
 
+static const char **resolve_include(config_t * /* cfg */, const char *include_dir,
+                                    const char *path, const char **err) {
+	char *result = locate_auxiliary_file("include", path, include_dir);
+	if (result == NULL) {
+		*err = "Failed to locate included file";
+		return NULL;
+	}
+
+	log_debug("Resolved include file \"%s\" to \"%s\"", path, result);
+	const char **ret = ccalloc(2, const char *);
+	ret[0] = result;
+	ret[1] = NULL;
+	return ret;
+}
+
 /**
  * Parse a configuration file from default location.
  *
@@ -568,6 +583,7 @@ char *parse_config_libconfig(options_t *opt, const char *config_file) {
 		if (parent) {
 			config_set_include_dir(&cfg, parent);
 		}
+		config_set_include_func(&cfg, resolve_include);
 
 		free(abspath);
 	}
diff --git a/src/meson.build b/src/meson.build
index 1a522404..52baf220 100644
--- a/src/meson.build
+++ b/src/meson.build
@@ -34,7 +34,7 @@ endforeach
 foreach i : required_xcb_packages
 	base_deps += [dependency(i, version: '>=1.12.0', required: true)]
 endforeach
-base_deps += [dependency('libconfig', version: '>=1.4', required: true)]
+base_deps += [dependency('libconfig', version: '>=1.7', required: true)]
 
 if not cc.has_header('uthash.h')
   error('Dependency uthash not found')