diff --git a/CHANGELOG.rst b/CHANGELOG.rst
index 1c1185dc081..810934bcc94 100644
--- a/CHANGELOG.rst
+++ b/CHANGELOG.rst
@@ -8,6 +8,17 @@
 
 .. towncrier release notes start
 
+
+Pytest 3.2.0 (unreleased)
+=========================
+
+- New ``cache_dir`` ini option: sets a directory where stores content of cache plugin.
+  Default directory is ``.cache`` which is created in :ref:`rootdir <rootdir>`.
+  Directory may be relative or absolute path. If setting relative path, then directory
+  is created relative to :ref:`rootdir <rootdir>`. Additionally path may contain environment
+  variables, that will be expanded.
+
+
 Pytest 3.1.3 (2017-07-03)
 =========================
 
diff --git a/_pytest/cacheprovider.py b/_pytest/cacheprovider.py
index 7fc08fff368..8e64f5b8dc9 100755
--- a/_pytest/cacheprovider.py
+++ b/_pytest/cacheprovider.py
@@ -8,13 +8,14 @@
 import py
 import pytest
 import json
+import os
 from os.path import sep as _sep, altsep as _altsep
 
 
 class Cache(object):
     def __init__(self, config):
         self.config = config
-        self._cachedir = config.rootdir.join(".cache")
+        self._cachedir = Cache.cache_dir_from_config(config)
         self.trace = config.trace.root.get("cache")
         if config.getvalue("cacheclear"):
             self.trace("clearing cachedir")
@@ -22,6 +23,16 @@ def __init__(self, config):
                 self._cachedir.remove()
             self._cachedir.mkdir()
 
+    @staticmethod
+    def cache_dir_from_config(config):
+        cache_dir = config.getini("cache_dir")
+        cache_dir = os.path.expanduser(cache_dir)
+        cache_dir = os.path.expandvars(cache_dir)
+        if os.path.isabs(cache_dir):
+            return py.path.local(cache_dir)
+        else:
+            return config.rootdir.join(cache_dir)
+
     def makedir(self, name):
         """ return a directory path object with the given name.  If the
         directory does not yet exist, it will be created.  You can use it
@@ -171,6 +182,9 @@ def pytest_addoption(parser):
     group.addoption(
         '--cache-clear', action='store_true', dest="cacheclear",
         help="remove all cache contents at start of test run.")
+    parser.addini(
+        "cache_dir", default='.cache',
+        help="cache directory path.")
 
 
 def pytest_cmdline_main(config):
diff --git a/doc/en/cache.rst b/doc/en/cache.rst
index 688b6dd0468..e4071a8f8ab 100644
--- a/doc/en/cache.rst
+++ b/doc/en/cache.rst
@@ -1,3 +1,5 @@
+.. _`cache_provider`:
+
 Cache: working with cross-testrun state
 =======================================
 
diff --git a/doc/en/customize.rst b/doc/en/customize.rst
index ce0a36c11a2..0e484e37df5 100644
--- a/doc/en/customize.rst
+++ b/doc/en/customize.rst
@@ -243,7 +243,6 @@ Builtin configuration file options
    from ``pytest.ini``/``tox.ini``/``setup.cfg`` of the project if any,
    or up to the file-system root.
 
-
 .. confval:: filterwarnings
 
    .. versionadded:: 3.1
@@ -262,3 +261,14 @@ Builtin configuration file options
 
    This tells pytest to ignore deprecation warnings and turn all other warnings
    into errors. For more information please refer to :ref:`warnings`.
+
+.. confval:: cache_dir
+
+   .. versionadded:: 3.2
+
+   Sets a directory where stores content of cache plugin. Default directory is
+   ``.cache`` which is created in :ref:`rootdir <rootdir>`. Directory may be
+   relative or absolute path. If setting relative path, then directory is created
+   relative to :ref:`rootdir <rootdir>`. Additionally path may contain environment
+   variables, that will be expanded. For more information about cache plugin
+   please refer to :ref:`cache_provider`.
diff --git a/testing/test_cache.py b/testing/test_cache.py
index 600b5e6d9fc..c7e92063b1a 100755
--- a/testing/test_cache.py
+++ b/testing/test_cache.py
@@ -1,6 +1,6 @@
 from __future__ import absolute_import, division, print_function
 import sys
-
+import py
 import _pytest
 import pytest
 import os
@@ -87,7 +87,36 @@ def test_cachefuncarg(cache):
         assert result.ret == 0
         result.stdout.fnmatch_lines(["*1 passed*"])
 
-
+    def test_custom_rel_cache_dir(self, testdir):
+        rel_cache_dir = os.path.join('custom_cache_dir', 'subdir')
+        testdir.makeini("""
+            [pytest]
+            cache_dir = {cache_dir}
+        """.format(cache_dir=rel_cache_dir))
+        testdir.makepyfile(test_errored='def test_error():\n    assert False')
+        testdir.runpytest()
+        assert testdir.tmpdir.join(rel_cache_dir).isdir()
+
+    def test_custom_abs_cache_dir(self, testdir, tmpdir_factory):
+        tmp = str(tmpdir_factory.mktemp('tmp'))
+        abs_cache_dir = os.path.join(tmp, 'custom_cache_dir')
+        testdir.makeini("""
+            [pytest]
+            cache_dir = {cache_dir}
+        """.format(cache_dir=abs_cache_dir))
+        testdir.makepyfile(test_errored='def test_error():\n    assert False')
+        testdir.runpytest()
+        assert py.path.local(abs_cache_dir).isdir()
+
+    def test_custom_cache_dir_with_env_var(self, testdir, monkeypatch):
+        monkeypatch.setenv('env_var', 'custom_cache_dir')
+        testdir.makeini("""
+            [pytest]
+            cache_dir = {cache_dir}
+        """.format(cache_dir='$env_var'))
+        testdir.makepyfile(test_errored='def test_error():\n    assert False')
+        testdir.runpytest()
+        assert testdir.tmpdir.join('custom_cache_dir').isdir()
 
 def test_cache_reportheader(testdir):
     testdir.makepyfile("""