diff --git a/cmd/sync/snapshot.go b/cmd/sync/snapshot.go
index da7646e0..14712a4e 100644
--- a/cmd/sync/snapshot.go
+++ b/cmd/sync/snapshot.go
@@ -1,6 +1,7 @@
 package sync
 
 import (
+	"context"
 	"encoding/json"
 	"fmt"
 	"io"
@@ -9,30 +10,95 @@ import (
 	"strings"
 	"time"
 
+	"crypto/md5"
+	"encoding/hex"
+
 	"github.com/databricks/bricks/git"
+	"github.com/databricks/bricks/project"
 )
 
-type snapshot map[string]time.Time
+// A snapshot is a persistant store of knowledge bricks cli has about state of files
+// in the remote repo. We use the last modified times (mtime) of files to determine
+// whether a files need to be updated in the remote repo.
+//
+// 1. Any stale files in the remote repo are updated. That is if the last modified
+// time recorded in the snapshot is less than the actual last modified time of the file
+//
+// 2. Any files present in snapshot but absent locally are deleted from remote path
+//
+// Changing either the databricks workspace (ie Host) or the remote path (ie RemotePath)
+// local files are being synced to will make bricks cli switch to a different
+// snapshot for persisting/loading sync state
+type Snapshot struct {
+	// hostname of the workspace this snapshot is for
+	Host string `json:"host"`
+	// Path in workspace for project repo
+	RemotePath string `json:"remote_path"`
+	// Map of all files present in the remote repo with the:
+	// key: relative file path from project root
+	// value: last time the remote instance of this file was updated
+	LastUpdatedTimes map[string]time.Time `json:"last_modified_times"`
+}
 
 type diff struct {
 	put    []string
 	delete []string
 }
 
-const SyncSnapshotFile = "repo_snapshot.json"
-const BricksDir = ".bricks"
+const syncSnapshotDirName = "sync-snapshots"
 
-func (s *snapshot) storeSnapshot(root string) error {
-	// create snapshot file
-	configDir := filepath.Join(root, BricksDir)
-	if _, err := os.Stat(configDir); os.IsNotExist(err) {
-		err = os.Mkdir(configDir, os.ModeDir|os.ModePerm)
+func GetFileName(host, remotePath string) string {
+	hash := md5.Sum([]byte(host + remotePath))
+	hashString := hex.EncodeToString(hash[:])
+	return hashString[:16] + ".json"
+}
+
+// Compute path of the snapshot file on the local machine
+// The file name for unique for a tuple of (host, remotePath)
+// precisely it's the first 16 characters of md5(concat(host, remotePath))
+func (s *Snapshot) getPath(ctx context.Context) (string, error) {
+	prj := project.Get(ctx)
+	cacheDir, err := prj.CacheDir()
+	if err != nil {
+		return "", err
+	}
+	snapshotDir := filepath.Join(cacheDir, syncSnapshotDirName)
+	if _, err := os.Stat(snapshotDir); os.IsNotExist(err) {
+		err = os.Mkdir(snapshotDir, os.ModeDir|os.ModePerm)
 		if err != nil {
-			return fmt.Errorf("failed to create config directory: %s", err)
+			return "", fmt.Errorf("failed to create config directory: %s", err)
 		}
 	}
-	persistedSnapshotPath := filepath.Join(configDir, SyncSnapshotFile)
-	f, err := os.OpenFile(persistedSnapshotPath, os.O_CREATE|os.O_WRONLY|os.O_TRUNC, 0755)
+	fileName := GetFileName(s.Host, s.RemotePath)
+	return filepath.Join(snapshotDir, fileName), nil
+}
+
+func newSnapshot(ctx context.Context, remotePath string) (*Snapshot, error) {
+	prj := project.Get(ctx)
+
+	// Get host this snapshot is for
+	wsc := prj.WorkspacesClient()
+
+	// TODO: The host may be late-initialized in certain Azure setups where we
+	// specify the workspace by its resource ID. tracked in: https://databricks.atlassian.net/browse/DECO-194
+	host := wsc.Config.Host
+	if host == "" {
+		return nil, fmt.Errorf("failed to resolve host for snapshot")
+	}
+
+	return &Snapshot{
+		Host:             host,
+		RemotePath:       remotePath,
+		LastUpdatedTimes: make(map[string]time.Time),
+	}, nil
+}
+
+func (s *Snapshot) storeSnapshot(ctx context.Context) error {
+	snapshotPath, err := s.getPath(ctx)
+	if err != nil {
+		return err
+	}
+	f, err := os.OpenFile(snapshotPath, os.O_CREATE|os.O_WRONLY|os.O_TRUNC, 0644)
 	if err != nil {
 		return fmt.Errorf("failed to create/open persisted sync snapshot file: %s", err)
 	}
@@ -50,13 +116,17 @@ func (s *snapshot) storeSnapshot(root string) error {
 	return nil
 }
 
-func (s *snapshot) loadSnapshot(root string) error {
-	persistedSnapshotPath := filepath.Join(root, BricksDir, SyncSnapshotFile)
-	if _, err := os.Stat(persistedSnapshotPath); os.IsNotExist(err) {
+func (s *Snapshot) loadSnapshot(ctx context.Context) error {
+	snapshotPath, err := s.getPath(ctx)
+	if err != nil {
+		return err
+	}
+	// Snapshot file not found. We do not load anything
+	if _, err := os.Stat(snapshotPath); os.IsNotExist(err) {
 		return nil
 	}
 
-	f, err := os.Open(persistedSnapshotPath)
+	f, err := os.Open(snapshotPath)
 	if err != nil {
 		return fmt.Errorf("failed to open persisted sync snapshot file: %s", err)
 	}
@@ -64,10 +134,9 @@ func (s *snapshot) loadSnapshot(root string) error {
 
 	bytes, err := io.ReadAll(f)
 	if err != nil {
-		// clean up these error messages a bit
 		return fmt.Errorf("failed to read sync snapshot from disk: %s", err)
 	}
-	err = json.Unmarshal(bytes, s)
+	err = json.Unmarshal(bytes, &s)
 	if err != nil {
 		return fmt.Errorf("failed to json unmarshal persisted snapshot: %s", err)
 	}
@@ -92,22 +161,23 @@ func (d diff) String() string {
 	return strings.Join(changes, ", ")
 }
 
-func (s snapshot) diff(all []git.File) (change diff) {
+func (s Snapshot) diff(all []git.File) (change diff) {
 	currentFilenames := map[string]bool{}
+	lastModifiedTimes := s.LastUpdatedTimes
 	for _, f := range all {
 		// create set of current files to figure out if removals are needed
 		currentFilenames[f.Relative] = true
 		// get current modified timestamp
 		modified := f.Modified()
-		lastSeenModified, seen := s[f.Relative]
+		lastSeenModified, seen := lastModifiedTimes[f.Relative]
 
 		if !seen || modified.After(lastSeenModified) {
 			change.put = append(change.put, f.Relative)
-			s[f.Relative] = modified
+			lastModifiedTimes[f.Relative] = modified
 		}
 	}
 	// figure out files in the snapshot, but not on local filesystem
-	for relative := range s {
+	for relative := range lastModifiedTimes {
 		_, exists := currentFilenames[relative]
 		if exists {
 			continue
@@ -115,11 +185,11 @@ func (s snapshot) diff(all []git.File) (change diff) {
 		// add them to a delete batch
 		change.delete = append(change.delete, relative)
 		// remove the file from snapshot
-		delete(s, relative)
+		delete(lastModifiedTimes, relative)
 	}
 	// and remove them from the snapshot
 	for _, v := range change.delete {
-		delete(s, v)
+		delete(lastModifiedTimes, v)
 	}
 	return
 }
diff --git a/cmd/sync/snapshot_test.go b/cmd/sync/snapshot_test.go
index 72136416..ef945008 100644
--- a/cmd/sync/snapshot_test.go
+++ b/cmd/sync/snapshot_test.go
@@ -25,7 +25,9 @@ func TestDiff(t *testing.T) {
 	fileSet := git.NewFileSet(projectDir)
 	files, err := fileSet.All()
 	assert.NoError(t, err)
-	state := snapshot{}
+	state := Snapshot{
+		LastUpdatedTimes: make(map[string]time.Time),
+	}
 	change := state.diff(files)
 
 	// New files are added to put
diff --git a/cmd/sync/sync.go b/cmd/sync/sync.go
index d5d76b26..f1d21e03 100644
--- a/cmd/sync/sync.go
+++ b/cmd/sync/sync.go
@@ -44,12 +44,8 @@ var syncCmd = &cobra.Command{
 		}
 
 		root := prj.Root()
-		fileSet := git.NewFileSet(root)
-		if err != nil {
-			return err
-		}
 		syncCallback := getRemoteSyncCallback(ctx, root, *remotePath, wsc)
-		err = spawnSyncRoutine(ctx, fileSet, *interval, syncCallback)
+		err = spawnSyncRoutine(ctx, *interval, syncCallback, *remotePath)
 		return err
 	},
 }
diff --git a/cmd/sync/watchdog.go b/cmd/sync/watchdog.go
index c87cd660..13364ae9 100644
--- a/cmd/sync/watchdog.go
+++ b/cmd/sync/watchdog.go
@@ -12,7 +12,6 @@ import (
 	"sync"
 	"time"
 
-	"github.com/databricks/bricks/git"
 	"github.com/databricks/bricks/project"
 	"github.com/databricks/databricks-sdk-go/databricks/client"
 	"github.com/databricks/databricks-sdk-go/service/workspace"
@@ -20,8 +19,8 @@ import (
 	"golang.org/x/sync/errgroup"
 )
 
+// TODO: add .databricks to .gitignore on bricks init
 type watchdog struct {
-	files   git.FileSet
 	ticker  *time.Ticker
 	wg      sync.WaitGroup
 	failure error // data race? make channel?
@@ -104,46 +103,49 @@ func getRemoteSyncCallback(ctx context.Context, root, remoteDir string, wsc *wor
 }
 
 func spawnSyncRoutine(ctx context.Context,
-	files git.FileSet,
 	interval time.Duration,
-	applyDiff func(diff) error) error {
+	applyDiff func(diff) error,
+	remotePath string) error {
 	w := &watchdog{
-		files:  files,
 		ticker: time.NewTicker(interval),
 	}
 	w.wg.Add(1)
-	go w.main(ctx, applyDiff)
+	go w.main(ctx, applyDiff, remotePath)
 	w.wg.Wait()
 	return w.failure
 }
 
 // tradeoff: doing portable monitoring only due to macOS max descriptor manual ulimit setting requirement
 // https://github.com/gorakhargosh/watchdog/blob/master/src/watchdog/observers/kqueue.py#L394-L418
-func (w *watchdog) main(ctx context.Context, applyDiff func(diff) error) {
+func (w *watchdog) main(ctx context.Context, applyDiff func(diff) error, remotePath string) {
 	defer w.wg.Done()
-	// load from json or sync it every time there's an action
-	state := snapshot{}
-	root := w.files.Root()
+	snapshot, err := newSnapshot(ctx, remotePath)
+	if err != nil {
+		log.Printf("[ERROR] cannot create snapshot: %s", err)
+		w.failure = err
+		return
+	}
 	if *persistSnapshot {
-		err := state.loadSnapshot(root)
+		err := snapshot.loadSnapshot(ctx)
 		if err != nil {
 			log.Printf("[ERROR] cannot load snapshot: %s", err)
 			w.failure = err
 			return
 		}
 	}
+	prj := project.Get(ctx)
 	for {
 		select {
 		case <-ctx.Done():
 			return
 		case <-w.ticker.C:
-			all, err := w.files.All()
+			all, err := prj.GetFileSet().All()
 			if err != nil {
 				log.Printf("[ERROR] cannot list files: %s", err)
 				w.failure = err
 				return
 			}
-			change := state.diff(all)
+			change := snapshot.diff(all)
 			if change.IsEmpty() {
 				continue
 			}
@@ -154,7 +156,7 @@ func (w *watchdog) main(ctx context.Context, applyDiff func(diff) error) {
 				return
 			}
 			if *persistSnapshot {
-				err = state.storeSnapshot(root)
+				err = snapshot.storeSnapshot(ctx)
 				if err != nil {
 					log.Printf("[ERROR] cannot store snapshot: %s", err)
 					w.failure = err
diff --git a/git/fileset.go b/git/fileset.go
index d38df1c9..a3734cf7 100644
--- a/git/fileset.go
+++ b/git/fileset.go
@@ -71,6 +71,10 @@ func (w *FileSet) All() ([]File, error) {
 	return w.RecursiveListFiles(w.root)
 }
 
+func (w *FileSet) IsGitIgnored(pattern string) bool {
+	return w.ignore.MatchesPath(pattern)
+}
+
 // Recursively traverses dir in a depth first manner and returns a list of all files
 // that are being tracked in the FileSet (ie not being ignored for matching one of the
 // patterns in w.ignore)
diff --git a/internal/sync_test.go b/internal/sync_test.go
index b0d1afaf..3949e579 100644
--- a/internal/sync_test.go
+++ b/internal/sync_test.go
@@ -3,7 +3,9 @@ package internal
 import (
 	"bytes"
 	"context"
+	"encoding/json"
 	"fmt"
+	"io"
 	"os"
 	"os/exec"
 	"path/filepath"
@@ -11,6 +13,7 @@ import (
 	"testing"
 	"time"
 
+	"github.com/databricks/bricks/cmd/sync"
 	"github.com/databricks/bricks/folders"
 	"github.com/databricks/databricks-sdk-go/service/repos"
 	"github.com/databricks/databricks-sdk-go/service/workspace"
@@ -18,9 +21,6 @@ import (
 	"github.com/stretchr/testify/assert"
 )
 
-// TODO: Write an integration tests for incremental bricks sync once its complete
-// with support for different profiles (go/jira/DECO-118)
-
 // This test needs auth env vars to run.
 // Please run using the deco env test or deco env shell
 func TestAccFullSync(t *testing.T) {
@@ -72,7 +72,7 @@ func TestAccFullSync(t *testing.T) {
 	defer f.Close()
 
 	// start bricks sync process
-	cmd = exec.Command("go", "run", "main.go", "sync", "--remote-path", repoPath, "--persist-snapshot", "false")
+	cmd = exec.Command("go", "run", "main.go", "sync", "--remote-path", repoPath, "--persist-snapshot=false")
 
 	var cmdOut, cmdErr bytes.Buffer
 	cmd.Stdout = &cmdOut
@@ -89,7 +89,8 @@ func TestAccFullSync(t *testing.T) {
 		// terminate the bricks sync process
 		cmd.Process.Kill()
 		// Print the stdout and stderr logs from the bricks sync process
-		t.Log("[INFO] bricks sync logs: ")
+		t.Log("\n\n\n\n\n\n")
+		t.Logf("bricks sync logs for command: %s", cmd.String())
 		if err != nil {
 			t.Logf("error in bricks sync process: %s\n", err)
 		}
@@ -167,3 +168,181 @@ func TestAccFullSync(t *testing.T) {
 	assert.Contains(t, files3, ".gitkeep")
 	assert.Contains(t, files3, "world.txt")
 }
+
+func assertSnapshotContents(t *testing.T, host, repoPath, projectDir string, listOfSyncedFiles []string) {
+	snapshotPath := filepath.Join(projectDir, ".databricks/sync-snapshots", sync.GetFileName(host, repoPath))
+	assert.FileExists(t, snapshotPath)
+
+	var s *sync.Snapshot
+	f, err := os.Open(snapshotPath)
+	assert.NoError(t, err)
+	defer f.Close()
+
+	bytes, err := io.ReadAll(f)
+	assert.NoError(t, err)
+	err = json.Unmarshal(bytes, &s)
+	assert.NoError(t, err)
+
+	assert.Equal(t, s.Host, host)
+	assert.Equal(t, s.RemotePath, repoPath)
+	for _, filePath := range listOfSyncedFiles {
+		_, ok := s.LastUpdatedTimes[filePath]
+		assert.True(t, ok, fmt.Sprintf("%s not in snapshot file: %v", filePath, s.LastUpdatedTimes))
+	}
+	assert.Equal(t, len(listOfSyncedFiles), len(s.LastUpdatedTimes))
+}
+
+func TestAccIncrementalSync(t *testing.T) {
+	t.Log(GetEnvOrSkipTest(t, "CLOUD_ENV"))
+
+	// We assume cwd is in the bricks repo
+	wd, err := os.Getwd()
+	if err != nil {
+		t.Log("[WARN] error fetching current working dir: ", err)
+	}
+	t.Log("test run dir: ", wd)
+	bricksRepo, err := folders.FindDirWithLeaf(wd, ".git")
+	if err != nil {
+		t.Log("[ERROR] error finding git repo root in : ", wd)
+	}
+	t.Log("bricks repo location: : ", bricksRepo)
+	assert.Equal(t, "bricks", filepath.Base(bricksRepo))
+
+	wsc := workspaces.New()
+	ctx := context.Background()
+	me, err := wsc.CurrentUser.Me(ctx)
+	assert.NoError(t, err)
+	repoUrl := "https://github.com/shreyas-goenka/empty-repo.git"
+	repoPath := fmt.Sprintf("/Repos/%s/%s", me.UserName, RandomName("empty-repo-sync-integration-"))
+
+	repoInfo, err := wsc.Repos.Create(ctx, repos.CreateRepo{
+		Path:     repoPath,
+		Url:      repoUrl,
+		Provider: "gitHub",
+	})
+	assert.NoError(t, err)
+
+	t.Cleanup(func() {
+		err := wsc.Repos.DeleteByRepoId(ctx, repoInfo.Id)
+		assert.NoError(t, err)
+	})
+
+	// clone public empty remote repo
+	tempDir := t.TempDir()
+	cmd := exec.Command("git", "clone", repoUrl)
+	cmd.Dir = tempDir
+	err = cmd.Run()
+	assert.NoError(t, err)
+
+	projectDir := filepath.Join(tempDir, "empty-repo")
+
+	// Add .databricks to .gitignore
+	content := []byte("/.databricks/")
+	f2, err := os.Create(filepath.Join(projectDir, ".gitignore"))
+	assert.NoError(t, err)
+	defer f2.Close()
+	_, err = f2.Write(content)
+	assert.NoError(t, err)
+
+	// start bricks sync process
+	cmd = exec.Command("go", "run", "main.go", "sync", "--remote-path", repoPath, "--persist-snapshot=true")
+
+	var cmdOut, cmdErr bytes.Buffer
+	cmd.Stdout = &cmdOut
+	cmd.Stderr = &cmdErr
+	cmd.Dir = bricksRepo
+	// bricks sync command will inherit the env vars from process
+	t.Setenv("BRICKS_ROOT", projectDir)
+	err = cmd.Start()
+	assert.NoError(t, err)
+	t.Cleanup(func() {
+		// We wait three seconds to allow the bricks sync process flush its
+		// stdout buffer
+		time.Sleep(3 * time.Second)
+		// terminate the bricks sync process
+		cmd.Process.Kill()
+		// Print the stdout and stderr logs from the bricks sync process
+		// TODO: modify logs to suit multiple sync processes
+		t.Log("\n\n\n\n\n\n")
+		t.Logf("bricks sync logs for command: %s", cmd.String())
+		if err != nil {
+			t.Logf("error in bricks sync process: %s\n", err)
+		}
+		for _, line := range strings.Split(strings.TrimSuffix(cmdOut.String(), "\n"), "\n") {
+			t.Log("[bricks sync stdout]", line)
+		}
+		for _, line := range strings.Split(strings.TrimSuffix(cmdErr.String(), "\n"), "\n") {
+			t.Log("[bricks sync stderr]", line)
+		}
+	})
+
+	// First upload assertion
+	assert.Eventually(t, func() bool {
+		repoContent, err := wsc.Workspace.List(ctx, workspace.ListRequest{
+			Path: repoPath,
+		})
+		assert.NoError(t, err)
+		return len(repoContent.Objects) == 2
+	}, 30*time.Second, 5*time.Second)
+	repoContent, err := wsc.Workspace.List(ctx, workspace.ListRequest{
+		Path: repoPath,
+	})
+	assert.NoError(t, err)
+	var files1 []string
+	for _, v := range repoContent.Objects {
+		files1 = append(files1, filepath.Base(v.Path))
+	}
+	assert.Len(t, files1, 2)
+	assert.Contains(t, files1, ".gitignore")
+	assert.Contains(t, files1, ".gitkeep")
+	assertSnapshotContents(t, wsc.Config.Host, repoPath, projectDir, []string{".gitkeep", ".gitignore"})
+
+	// Create amsterdam.txt file
+	f, err := os.Create(filepath.Join(projectDir, "amsterdam.txt"))
+	assert.NoError(t, err)
+	defer f.Close()
+
+	// new file upload assertion
+	assert.Eventually(t, func() bool {
+		repoContent, err := wsc.Workspace.List(ctx, workspace.ListRequest{
+			Path: repoPath,
+		})
+		assert.NoError(t, err)
+		return len(repoContent.Objects) == 3
+	}, 30*time.Second, 5*time.Second)
+	repoContent, err = wsc.Workspace.List(ctx, workspace.ListRequest{
+		Path: repoPath,
+	})
+	assert.NoError(t, err)
+	var files2 []string
+	for _, v := range repoContent.Objects {
+		files2 = append(files2, filepath.Base(v.Path))
+	}
+	assert.Len(t, files2, 3)
+	assert.Contains(t, files2, "amsterdam.txt")
+	assert.Contains(t, files2, ".gitkeep")
+	assert.Contains(t, files2, ".gitignore")
+	assertSnapshotContents(t, wsc.Config.Host, repoPath, projectDir, []string{"amsterdam.txt", ".gitkeep", ".gitignore"})
+
+	// delete a file and assert
+	os.Remove(filepath.Join(projectDir, ".gitkeep"))
+	assert.Eventually(t, func() bool {
+		repoContent, err := wsc.Workspace.List(ctx, workspace.ListRequest{
+			Path: repoPath,
+		})
+		assert.NoError(t, err)
+		return len(repoContent.Objects) == 2
+	}, 30*time.Second, 5*time.Second)
+	repoContent, err = wsc.Workspace.List(ctx, workspace.ListRequest{
+		Path: repoPath,
+	})
+	assert.NoError(t, err)
+	var files3 []string
+	for _, v := range repoContent.Objects {
+		files3 = append(files3, filepath.Base(v.Path))
+	}
+	assert.Len(t, files3, 2)
+	assert.Contains(t, files3, "amsterdam.txt")
+	assert.Contains(t, files3, ".gitignore")
+	assertSnapshotContents(t, wsc.Config.Host, repoPath, projectDir, []string{"amsterdam.txt", ".gitignore"})
+}
diff --git a/project/config.go b/project/config.go
index f718df31..c83f41cb 100644
--- a/project/config.go
+++ b/project/config.go
@@ -31,8 +31,7 @@ type Assertions struct {
 }
 
 type Config struct {
-	Name      string    `json:"name"`              // or do default from folder name?..
-	Profile   string    `json:"profile,omitempty"` // rename?
+	Name      string    `json:"name"` // or do default from folder name?..
 	Isolation Isolation `json:"isolation,omitempty"`
 
 	// development-time vs deployment-time resources
diff --git a/project/project.go b/project/project.go
index d2502774..9b7747af 100644
--- a/project/project.go
+++ b/project/project.go
@@ -3,8 +3,11 @@ package project
 import (
 	"context"
 	"fmt"
+	"os"
+	"path/filepath"
 	"sync"
 
+	"github.com/databricks/bricks/git"
 	"github.com/databricks/databricks-sdk-go/databricks"
 	"github.com/databricks/databricks-sdk-go/service/clusters"
 	"github.com/databricks/databricks-sdk-go/service/commands"
@@ -13,6 +16,8 @@ import (
 	"github.com/spf13/cobra"
 )
 
+const CacheDirName = ".databricks"
+
 type project struct {
 	mu sync.Mutex
 
@@ -23,6 +28,7 @@ type project struct {
 	environment *Environment
 	wsc         *workspaces.WorkspacesClient
 	me          *scim.User
+	fileSet     *git.FileSet
 }
 
 // Configure is used as a PreRunE function for all commands that
@@ -61,12 +67,15 @@ func Initialize(ctx context.Context, root, env string) (context.Context, error)
 		return nil, fmt.Errorf("environment [%s] not defined", env)
 	}
 
+	fileSet := git.NewFileSet(root)
+
 	p := project{
 		root: root,
 		env:  env,
 
 		config:      &config,
 		environment: &environment,
+		fileSet:     &fileSet,
 	}
 
 	p.initializeWorkspacesClient(ctx)
@@ -105,6 +114,34 @@ func (p *project) Root() string {
 	return p.root
 }
 
+func (p *project) GetFileSet() *git.FileSet {
+	return p.fileSet
+}
+
+// This cache dir will contain any state, state overrides (per user overrides
+// to the project config) or any generated artifacts (eg: sync snapshots)
+// that should never be checked into Git.
+//
+// We enfore that cache dir (.databricks) is added to .gitignore
+// because it contains per-user overrides that we do not want users to
+// accidentally check into git
+func (p *project) CacheDir() (string, error) {
+	// assert cache dir is present in git ignore
+	if !p.fileSet.IsGitIgnored(fmt.Sprintf("/%s/", CacheDirName)) {
+		return "", fmt.Errorf("please add /%s/ to .gitignore", CacheDirName)
+	}
+
+	cacheDirPath := filepath.Join(p.root, CacheDirName)
+	// create cache dir if it does not exist
+	if _, err := os.Stat(cacheDirPath); os.IsNotExist(err) {
+		err = os.Mkdir(cacheDirPath, os.ModeDir|os.ModePerm)
+		if err != nil {
+			return "", fmt.Errorf("failed to create cache directory %s with error: %s", cacheDirPath, err)
+		}
+	}
+	return cacheDirPath, nil
+}
+
 func (p *project) Config() Config {
 	return *p.config
 }
diff --git a/project/project_test.go b/project/project_test.go
index f9343777..3bee240b 100644
--- a/project/project_test.go
+++ b/project/project_test.go
@@ -2,6 +2,8 @@ package project
 
 import (
 	"context"
+	"os"
+	"path/filepath"
 	"testing"
 
 	"github.com/stretchr/testify/assert"
@@ -13,3 +15,62 @@ func TestProjectInitialize(t *testing.T) {
 	require.NoError(t, err)
 	assert.Equal(t, Get(ctx).config.Name, "dev")
 }
+
+func TestProjectCacheDirErrorsIfNoGitIgnoreFile(t *testing.T) {
+	// create project root with databricks.yml
+	projectDir := t.TempDir()
+	f1, err := os.Create(filepath.Join(projectDir, "databricks.yml"))
+	assert.NoError(t, err)
+	defer f1.Close()
+
+	ctx, err := Initialize(context.Background(), projectDir, DefaultEnvironment)
+	assert.NoError(t, err)
+
+	prj := Get(ctx)
+	_, err = prj.CacheDir()
+	assert.Error(t, err, "please add /.databricks/ to .gitignore")
+}
+
+func TestProjectCacheDirErrorsIfGitIgnoreEntryAbsent(t *testing.T) {
+	// create project root with databricks.yml
+	projectDir := t.TempDir()
+	f1, err := os.Create(filepath.Join(projectDir, "databricks.yml"))
+	assert.NoError(t, err)
+	defer f1.Close()
+
+	// create empty .gitignore
+	f2, err := os.Create(filepath.Join(projectDir, ".gitignore"))
+	assert.NoError(t, err)
+	defer f2.Close()
+
+	ctx, err := Initialize(context.Background(), projectDir, DefaultEnvironment)
+	assert.NoError(t, err)
+
+	prj := Get(ctx)
+	_, err = prj.CacheDir()
+	assert.Error(t, err, "please add /.databricks/ to .gitignore")
+}
+
+func TestProjectCacheDir(t *testing.T) {
+	// create project root with databricks.yml
+	projectDir := t.TempDir()
+	f1, err := os.Create(filepath.Join(projectDir, "databricks.yml"))
+	assert.NoError(t, err)
+	defer f1.Close()
+
+	// create .gitignore with the .databricks dir in it
+	f2, err := os.Create(filepath.Join(projectDir, ".gitignore"))
+	assert.NoError(t, err)
+	defer f2.Close()
+	content := []byte("/.databricks/")
+	_, err = f2.Write(content)
+	assert.NoError(t, err)
+
+	ctx, err := Initialize(context.Background(), projectDir, DefaultEnvironment)
+	assert.NoError(t, err)
+
+	prj := Get(ctx)
+	cacheDir, err := prj.CacheDir()
+	assert.NoError(t, err)
+	assert.Equal(t, filepath.Join(projectDir, ".databricks"), cacheDir)
+}