diff --git a/nimbus/config.nim b/nimbus/config.nim
index cfdb5b9af..9366369bb 100644
--- a/nimbus/config.nim
+++ b/nimbus/config.nim
@@ -23,7 +23,7 @@ import
   ],
   stew/shims/net as stewNet,
   eth/[common, net/nat, p2p/bootnodes, p2p/enode],
-  "."/[db/select_backend, 
+  "."/[db/select_backend,
     constants, vm_compile_info, version
   ],
   common/chain_config
@@ -733,6 +733,11 @@ proc makeConfig*(cmdLine = commandLineParams()): NimbusConf =
     result.rpcEnabled = result.rpcEnabled or rpcMustEnabled
     result.wsEnabled = result.wsEnabled or wsMustEnabled
 
+  # see issue #1346
+  if result.keyStore.string == defaultKeystoreDir() and
+     result.dataDir.string != defaultDataDir():
+    result.keyStore = OutDir(result.dataDir.string / "keystore")
+
 when isMainModule:
   # for testing purpose
   discard makeConfig()
diff --git a/tests/test_configuration.nim b/tests/test_configuration.nim
index f65fb7c33..9bb1098c2 100644
--- a/tests/test_configuration.nim
+++ b/tests/test_configuration.nim
@@ -257,5 +257,24 @@ proc configurationMain*() =
       let pkhex2 = rc2.get.seckey.toRaw.to0xHex
       check pkhex1 == pkhex2
 
+    test "default key-store and default data-dir":
+      let conf = makeTestConfig()
+      check conf.keyStore.string == conf.dataDir.string / "keystore"
+
+    test "custom key-store and custom data-dir":
+      let conf = makeConfig(@["--key-store:banana", "--data-dir:apple"])
+      check conf.keyStore.string == "banana"
+      check conf.dataDir.string == "apple"
+
+    test "default key-store and custom data-dir":
+      let conf = makeConfig(@["--data-dir:apple"])
+      check conf.dataDir.string == "apple"
+      check conf.keyStore.string == "apple" / "keystore"
+
+    test "custom key-store and default data-dir":
+      let conf = makeConfig(@["--key-store:banana"])
+      check conf.dataDir.string == defaultDataDir()
+      check conf.keyStore.string == "banana"
+
 when isMainModule:
   configurationMain()