diff --git a/dvc/cli.py b/dvc/cli.py
index 6b69d7ba8..605fa8957 100644
--- a/dvc/cli.py
+++ b/dvc/cli.py
@@ -21,6 +21,7 @@ from dvc.command.config import CmdConfig
 from dvc.command.checkout import CmdCheckout
 from dvc.command.remote import CmdRemoteAdd, CmdRemoteRemove
 from dvc.command.remote import CmdRemoteModify, CmdRemoteList, CmdRemoteDefault
+from dvc.command.cache import CmdCacheDir
 from dvc.command.metrics import CmdMetricsShow, CmdMetricsAdd
 from dvc.command.metrics import CmdMetricsRemove, CmdMetricsModify
 from dvc.command.install import CmdInstall
@@ -783,6 +784,46 @@ def parse_args(argv=None):
                         help=REMOTE_LIST_HELP)
     remote_list_parser.set_defaults(func=CmdRemoteList)
 
+    # Cache
+    CACHE_HELP = 'Manage cache settings.'
+    cache_parser = subparsers.add_parser(
+                        'cache',
+                        parents=[parent_parser],
+                        description=CACHE_HELP,
+                        help=CACHE_HELP)
+
+    cache_subparsers = cache_parser.add_subparsers(
+                        dest='cmd',
+                        help='Use dvc cache CMD --help for '
+                             'command-specific help.')
+
+    _fix_subparsers(cache_subparsers)
+
+    parent_cache_config_parser = argparse.ArgumentParser(
+                        add_help=False,
+                        parents=[parent_config_parser])
+    CACHE_DIR_HELP = 'Configure cache directory location.'
+    cache_dir_parser = cache_subparsers.add_parser(
+                        'dir',
+                        parents=[parent_cache_config_parser],
+                        description=CACHE_DIR_HELP,
+                        help=CACHE_DIR_HELP)
+    cache_dir_parser.add_argument(
+                        '-u',
+                        '--unset',
+                        default=False,
+                        action='store_true',
+                        help='Unset option.')
+    cache_dir_parser.add_argument(
+                        'value',
+                        nargs='?',
+                        default=None,
+                        help='Path to cache directory. Relative paths are '
+                             'resolved relative to the current directory and '
+                             'saved to config relative to the config file '
+                             'location.')
+    cache_dir_parser.set_defaults(func=CmdCacheDir)
+
     # Metrics
     METRICS_HELP = 'Get metrics from all branches.'
     metrics_parser = subparsers.add_parser(
diff --git a/dvc/command/cache.py b/dvc/command/cache.py
new file mode 100644
index 000000000..599a1ed96
--- /dev/null
+++ b/dvc/command/cache.py
@@ -0,0 +1,16 @@
+import os
+
+from dvc.command.config import CmdConfig
+
+
+class CmdCacheDir(CmdConfig):
+    def run(self):
+        self.args.name = 'cache.dir'
+
+        path = self.args.value
+        if not os.path.isabs(path):
+            config_dir = os.path.dirname(self.configobj.filename)
+            path = os.path.relpath(path, config_dir)
+        self.args.value = path
+
+        return super(CmdCacheDir, self).run()
diff --git a/tests/test_cache.py b/tests/test_cache.py
index a7a33a520..099fdd609 100644
--- a/tests/test_cache.py
+++ b/tests/test_cache.py
@@ -1,5 +1,6 @@
 import os
 import shutil
+import configobj
 
 from dvc.cache import Cache
 from dvc.main import main
@@ -114,3 +115,24 @@ class TestCacheLinkType(TestDvc):
 
         ret = main(['add', self.FOO])
         self.assertEqual(ret, 0)
+
+
+class TestCmdCacheDir(TestDvc):
+    def test_abs_path(self):
+        dname = os.path.join(os.path.dirname(self._root_dir), 'dir')
+        ret = main(['cache', 'dir', dname])
+        self.assertEqual(ret, 0)
+
+        config = configobj.ConfigObj(self.dvc.config.config_file)
+        self.assertEqual(config['cache']['dir'], dname)
+
+    def test_relative_path(self):
+        dname = os.path.join('..', 'path', 'to', 'dir')
+        ret = main(['cache', 'dir', dname])
+        self.assertEqual(ret, 0)
+
+        # NOTE: we are in the project's root and config is in .dvc/, so
+        # dir path written to config should be just one level above.
+        rel = os.path.join('..', dname)
+        config = configobj.ConfigObj(self.dvc.config.config_file)
+        self.assertEqual(config['cache']['dir'], rel)