diff --git a/packages/jupyterlab-collaborative-chat/src/factory.ts b/packages/jupyterlab-collaborative-chat/src/factory.ts
index 778914cb..2e9214e1 100644
--- a/packages/jupyterlab-collaborative-chat/src/factory.ts
+++ b/packages/jupyterlab-collaborative-chat/src/factory.ts
@@ -7,7 +7,6 @@ import {
   ChatWidget,
   IActiveCellManager,
   IAutocompletionRegistry,
-  IConfig,
   ISelectionWatcher
 } from '@jupyter/chat';
 import { IThemeManager } from '@jupyterlab/apputils';
@@ -20,7 +19,7 @@ import { ISignal, Signal } from '@lumino/signaling';
 import { CollaborativeChatModel } from './model';
 import { CollaborativeChatPanel } from './widget';
 import { YChat } from './ychat';
-import { IWidgetConfig } from './token';
+import { ICollaborativeChatConfig, IWidgetConfig } from './token';
 
 /**
  * The object provided by the chatDocument extension.
@@ -31,17 +30,17 @@ export class WidgetConfig implements IWidgetConfig {
   /**
    * The constructor of the WidgetConfig.
    */
-  constructor(config: Partial<IConfig>) {
+  constructor(config: Partial<ICollaborativeChatConfig>) {
     this._config = config;
   }
 
   /**
    * Getter and setter for the config.
    */
-  get config(): Partial<IConfig> {
+  get config(): Partial<ICollaborativeChatConfig> {
     return this._config;
   }
-  set config(value: Partial<IConfig>) {
+  set config(value: Partial<ICollaborativeChatConfig>) {
     this._config = { ...this._config, ...value };
     this._configChanged.emit(value);
   }
@@ -49,12 +48,18 @@ export class WidgetConfig implements IWidgetConfig {
   /**
    * Getter for the configChanged signal
    */
-  get configChanged(): ISignal<WidgetConfig, Partial<IConfig>> {
+  get configChanged(): ISignal<
+    WidgetConfig,
+    Partial<ICollaborativeChatConfig>
+  > {
     return this._configChanged;
   }
 
-  private _config: Partial<IConfig>;
-  private _configChanged = new Signal<WidgetConfig, Partial<IConfig>>(this);
+  private _config: Partial<ICollaborativeChatConfig>;
+  private _configChanged = new Signal<
+    WidgetConfig,
+    Partial<ICollaborativeChatConfig>
+  >(this);
 }
 
 /**
diff --git a/packages/jupyterlab-collaborative-chat/src/token.ts b/packages/jupyterlab-collaborative-chat/src/token.ts
index 30c26c4c..cd1b1c52 100644
--- a/packages/jupyterlab-collaborative-chat/src/token.ts
+++ b/packages/jupyterlab-collaborative-chat/src/token.ts
@@ -35,6 +35,16 @@ export const IChatFactory = new Token<IChatFactory>(
   'jupyter-collaborative-chat:IChatFactory'
 );
 
+/**
+ * The collaborative chat configs.
+ */
+export interface ICollaborativeChatConfig extends IConfig {
+  /**
+   * The default directory where to create and look for chat.
+   */
+  defaultDirectory: string;
+}
+
 /**
  * The interface for the chat factory objects.
  */
@@ -56,7 +66,7 @@ export interface IWidgetConfig {
   /**
    * The widget config
    */
-  config: Partial<IConfig>;
+  config: Partial<ICollaborativeChatConfig>;
 
   /**
    * A signal emitting when the configuration for the chats has changed.
diff --git a/python/jupyterlab-collaborative-chat/schema/factory.json b/python/jupyterlab-collaborative-chat/schema/factory.json
index 496c1177..3f32a5f8 100644
--- a/python/jupyterlab-collaborative-chat/schema/factory.json
+++ b/python/jupyterlab-collaborative-chat/schema/factory.json
@@ -37,6 +37,12 @@
       "default": true,
       "readOnly": false
     },
+    "defaultDirectory": {
+      "description": "Default directory where to create and look for chat.",
+      "type": "string",
+      "default": ".",
+      "readOnly": false
+    },
     "toolbar": {
       "title": "File browser toolbar items",
       "description": "Note: To disable a toolbar item,\ncopy it to User Preferences and add the\n\"disabled\" key. The following example will disable the uploader button:\n{\n  \"toolbar\": [\n    {\n      \"name\": \"uploader\",\n      \"disabled\": true\n    }\n  ]\n}\n\nToolbar description:",
diff --git a/python/jupyterlab-collaborative-chat/src/index.ts b/python/jupyterlab-collaborative-chat/src/index.ts
index 0d9143ab..5d1aabdc 100644
--- a/python/jupyterlab-collaborative-chat/src/index.ts
+++ b/python/jupyterlab-collaborative-chat/src/index.ts
@@ -136,6 +136,31 @@ const docFactories: JupyterFrontEndPlugin<IChatFactory> = {
      * Load the settings for the chat widgets.
      */
     function loadSetting(setting: ISettingRegistry.ISettings): void {
+      // Remove the previous directory if it is empty and has changed.
+      const previousDirectory = widgetConfig.config.defaultDirectory;
+      const currentDirectory = setting.get('defaultDirectory')
+        .composite as string;
+
+      if (
+        drive &&
+        previousDirectory &&
+        previousDirectory !== currentDirectory &&
+        previousDirectory !== '.'
+      ) {
+        drive
+          .get(previousDirectory)
+          .then(contentModel => {
+            if (contentModel.content.length === 0) {
+              drive.delete(previousDirectory).catch(e => {
+                // no-op, the directory might not be empty
+              });
+            }
+          })
+          .catch(() => {
+            // no-op, the directory does not exists.
+          });
+      }
+
       // Read the settings and convert to the correct type
       widgetConfig.config = {
         sendWithShiftEnter: setting.get('sendWithShiftEnter')
@@ -146,8 +171,33 @@ const docFactories: JupyterFrontEndPlugin<IChatFactory> = {
         enableCodeToolbar: setting.get('enableCodeToolbar')
           .composite as boolean,
         sendTypingNotification: setting.get('sendTypingNotification')
-          .composite as boolean
+          .composite as boolean,
+        defaultDirectory: currentDirectory
       };
+
+      // Create the new directory if necessary.
+      if (
+        drive &&
+        currentDirectory &&
+        previousDirectory !== currentDirectory &&
+        currentDirectory !== '.'
+      ) {
+        drive.get(currentDirectory, { content: false }).catch(() => {
+          drive
+            .newUntitled({
+              type: 'directory'
+            })
+            .then(contentModel => {
+              drive.rename(contentModel.path, currentDirectory).catch(e => {
+                drive.delete(contentModel.path);
+                throw e;
+              });
+            })
+            .catch(e => {
+              throw e;
+            });
+        });
+      }
     }
 
     if (settingRegistry) {
@@ -326,6 +376,11 @@ const chatCommands: JupyterFrontEndPlugin<void> = {
           } else {
             filepath = `${name}${chatFileType.extensions[0]}`;
           }
+          // Add the default directory to the path.
+          filepath = PathExt.join(
+            widgetConfig.config.defaultDirectory || '.',
+            filepath
+          );
         }
 
         let fileExist = true;