diff --git a/monkey/monkey_island/cc/setup/island_config_options.py b/monkey/monkey_island/cc/setup/island_config_options.py
index 71e9ba27f..384ed3079 100644
--- a/monkey/monkey_island/cc/setup/island_config_options.py
+++ b/monkey/monkey_island/cc/setup/island_config_options.py
@@ -1,5 +1,7 @@
 from __future__ import annotations
 
+from dpath import util
+
 from common.utils.file_utils import expand_path
 from monkey_island.cc.server_utils.consts import (
     DEFAULT_CERTIFICATE_PATHS,
@@ -10,29 +12,51 @@ from monkey_island.cc.server_utils.consts import (
     DEFAULT_START_MONGO_DB,
 )
 
+_DATA_DIR = "data_dir"
+_SSL_CERT = "ssl_certificate"
+_SSL_CERT_FILE = "ssl_certificate_file"
+_SSL_CERT_KEY = "ssl_certificate_key_file"
+_MONGODB = "mongodb"
+_START_MONGODB = "start_mongodb"
+_LOG_LEVEL = "log_level"
+
 
 class IslandConfigOptions:
     def __init__(self, config_contents: dict = None):
         if not config_contents:
             config_contents = {}
-        self.data_dir = expand_path(config_contents.get("data_dir", DEFAULT_DATA_DIR))
+        self.data_dir = expand_path(config_contents.get(_DATA_DIR, DEFAULT_DATA_DIR))
 
-        self.log_level = config_contents.get("log_level", DEFAULT_LOG_LEVEL)
+        self.log_level = config_contents.get(_LOG_LEVEL, DEFAULT_LOG_LEVEL)
 
         self.start_mongodb = config_contents.get(
-            "mongodb", {"start_mongodb": DEFAULT_START_MONGO_DB}
-        ).get("start_mongodb", DEFAULT_START_MONGO_DB)
+            _MONGODB, {_START_MONGODB: DEFAULT_START_MONGO_DB}
+        ).get(_START_MONGODB, DEFAULT_START_MONGO_DB)
 
         self.crt_path = expand_path(
-            config_contents.get("ssl_certificate", DEFAULT_CERTIFICATE_PATHS).get(
-                "ssl_certificate_file", DEFAULT_CRT_PATH
+            config_contents.get(_SSL_CERT, DEFAULT_CERTIFICATE_PATHS).get(
+                _SSL_CERT_FILE, DEFAULT_CRT_PATH
             )
         )
         self.key_path = expand_path(
-            config_contents.get("ssl_certificate", DEFAULT_CERTIFICATE_PATHS).get(
-                "ssl_certificate_key_file", DEFAULT_KEY_PATH
+            config_contents.get(_SSL_CERT, DEFAULT_CERTIFICATE_PATHS).get(
+                _SSL_CERT_KEY, DEFAULT_KEY_PATH
             )
         )
 
     def update(self, target: dict):
+        target = self._expand_config_paths(target)
         self.__dict__.update(target)
+
+    @staticmethod
+    def _expand_config_paths(config: dict) -> dict:
+        config_paths = [_DATA_DIR, f"{_SSL_CERT}.{_SSL_CERT_FILE}", f"{_SSL_CERT}.{_SSL_CERT_KEY}"]
+
+        for config_path in config_paths:
+            try:
+                expanded_val = expand_path(util.get(config, config_path, "."))
+                util.set(config, config_path, expanded_val, ".")
+            except KeyError:
+                pass
+
+        return config
diff --git a/monkey/tests/unit_tests/monkey_island/cc/setup/test_server_setup.py b/monkey/tests/unit_tests/monkey_island/cc/setup/test_server_setup.py
index a6f4c59ca..226842607 100644
--- a/monkey/tests/unit_tests/monkey_island/cc/setup/test_server_setup.py
+++ b/monkey/tests/unit_tests/monkey_island/cc/setup/test_server_setup.py
@@ -6,6 +6,7 @@ import pytest
 import monkey_island.cc.setup.config_setup  # noqa: F401
 from monkey_island.cc.arg_parser import IslandCmdArgs
 from monkey_island.cc.server_setup import _extract_config
+from monkey_island.cc.server_utils.file_utils import is_windows_os
 from monkey_island.cc.setup.island_config_options import IslandConfigOptions
 
 BAD_JSON = '{"data_dir": "C:\\test\\test"'
@@ -53,32 +54,36 @@ def test_deployment_config_overrides_defaults(deployment_server_config_path):
     )
 
 
-def test_cmd_config_overrides_everything(
-    deployment_server_config_path, cmd_server_config_path, user_default_server_config_path
-):
-    expected = IslandConfigOptions({"log_level": "/log_level_4"})
+def test_cmd_config_overrides_everything(deployment_server_config_path, cmd_server_config_path):
+    expected = IslandConfigOptions({"log_level": "/log_level_3"})
     create_server_config(dumps({"log_level": "/log_level_2"}), deployment_server_config_path)
-    create_server_config(dumps({"log_level": "/log_level_3"}), user_default_server_config_path)
-    create_server_config(dumps({"log_level": "/log_level_4"}), cmd_server_config_path)
+    create_server_config(dumps({"log_level": "/log_level_3"}), cmd_server_config_path)
     extracted_config = _extract_config(
         IslandCmdArgs(setup_only=False, server_config_path=cmd_server_config_path)
     )
     assert expected.__dict__ == extracted_config.__dict__
 
 
-def test_not_overriding_unspecified_values(
-    deployment_server_config_path, cmd_server_config_path, user_default_server_config_path
-):
-    expected = IslandConfigOptions({"log_level": "/log_level_4", "data_dir": "/data_dir1"})
+def test_not_overriding_unspecified_values(deployment_server_config_path, cmd_server_config_path):
+    expected = IslandConfigOptions({"log_level": "/log_level_2", "data_dir": "/data_dir1"})
     create_server_config(dumps({"data_dir": "/data_dir1"}), deployment_server_config_path)
-    create_server_config(dumps({"log_level": "/log_level_3"}), user_default_server_config_path)
-    create_server_config(dumps({"log_level": "/log_level_4"}), cmd_server_config_path)
+    create_server_config(dumps({"log_level": "/log_level_2"}), cmd_server_config_path)
     extracted_config = _extract_config(
         IslandCmdArgs(setup_only=False, server_config_path=cmd_server_config_path)
     )
     assert expected.__dict__ == extracted_config.__dict__
 
 
+def test_paths_get_expanded(deployment_server_config_path):
+    if is_windows_os():
+        path = "%temp%/path"
+    else:
+        path = "$HOME/path"
+    create_server_config(dumps({"data_dir": path}), deployment_server_config_path)
+    extracted_config = _extract_config(IslandCmdArgs(setup_only=False, server_config_path=None))
+    assert not extracted_config.data_dir == path
+
+
 def test_malformed_json(cmd_server_config_path):
     create_server_config(BAD_JSON, cmd_server_config_path)
     with pytest.raises(SystemExit):