diff --git a/CHANGELOG.md b/CHANGELOG.md
index 25cff25ce..90ab8a7d8 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -28,6 +28,8 @@ The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/).
 - Zerologon exploiter writes runtime artifacts to a secure temporary directory
   instead of $HOME. #1143
 - Authentication mechanism to use bcrypt on server side. #1139
+- `server_config.json` puts environment config options in a separate section
+  named "environment". #1161
 
 ### Removed
 - Relevant dead code as reported by Vulture. #1149
diff --git a/appimage/build_appimage.sh b/appimage/build_appimage.sh
index 866ba5a19..bce51bc89 100755
--- a/appimage/build_appimage.sh
+++ b/appimage/build_appimage.sh
@@ -166,7 +166,6 @@ copy_monkey_island_to_appdir() {
   cp -r "$1"/common "$INSTALL_DIR/"
   cp -r "$1"/monkey_island "$INSTALL_DIR/"
   cp ./run_appimage.sh "$INSTALL_DIR"/monkey_island/linux/
-  cp ./island_logger_config.json "$INSTALL_DIR"/
   cp ./server_config.json.standard "$INSTALL_DIR"/monkey_island/cc/
 
   # TODO: This is a workaround that may be able to be removed after PR #848 is
diff --git a/appimage/run_appimage.sh b/appimage/run_appimage.sh
index 1c84b41f1..837ef5d3a 100644
--- a/appimage/run_appimage.sh
+++ b/appimage/run_appimage.sh
@@ -3,12 +3,6 @@
 PYTHON_CMD="$APPDIR"/opt/python3.7/bin/python3.7
 DOT_MONKEY="$HOME"/.monkey_island/
 
-configure_default_logging() {
-    if [ ! -f "$DOT_MONKEY"/island_logger_config.json ]; then
-        cp "$APPDIR"/usr/src/island_logger_config.json "$DOT_MONKEY"
-    fi
-}
-
 configure_default_server() {
     if [ ! -f "$DOT_MONKEY"/server_config.json ]; then
         cp "$APPDIR"/usr/src/monkey_island/cc/server_config.json.standard "$DOT_MONKEY"/server_config.json
@@ -21,9 +15,8 @@ mkdir --mode=0700 --parents "$DOT_MONKEY"
 DB_DIR="$DOT_MONKEY"/db
 mkdir --parents "$DB_DIR"
 
-configure_default_logging
 configure_default_server
 
 cd "$APPDIR"/usr/src || exit 1
 ./monkey_island/bin/mongodb/bin/mongod --dbpath "$DB_DIR" &
-${PYTHON_CMD} ./monkey_island.py --server-config "$DOT_MONKEY"/server_config.json --logger-config "$DOT_MONKEY"/island_logger_config.json
+${PYTHON_CMD} ./monkey_island.py --server-config "$DOT_MONKEY"/server_config.json
diff --git a/appimage/server_config.json.standard b/appimage/server_config.json.standard
index 99848f945..8c894b849 100644
--- a/appimage/server_config.json.standard
+++ b/appimage/server_config.json.standard
@@ -1,5 +1,8 @@
 {
-  "server_config": "password",
-  "deployment": "standard",
-  "data_dir": "~/.monkey_island"
+  "data_dir": "~/.monkey_island",
+  "log_level": "DEBUG",
+  "environment": {
+    "server_config": "password",
+    "deployment": "standard"
+  }
 }
diff --git a/monkey/monkey_island.py b/monkey/monkey_island.py
index 5363ac5de..650cfe95d 100644
--- a/monkey/monkey_island.py
+++ b/monkey/monkey_island.py
@@ -32,4 +32,4 @@ if "__main__" == __name__:
 
     from monkey_island.cc.main import main  # noqa: E402
 
-    main(island_args.setup_only, island_args.server_config)
+    main(config["data_dir"], island_args.setup_only, island_args.server_config)
diff --git a/monkey/monkey_island/cc/environment/environment_config.py b/monkey/monkey_island/cc/environment/environment_config.py
index 1f9602d22..6f4626c9e 100644
--- a/monkey/monkey_island/cc/environment/environment_config.py
+++ b/monkey/monkey_island/cc/environment/environment_config.py
@@ -9,7 +9,6 @@ import monkey_island.cc.environment.server_config_generator as server_config_gen
 from monkey_island.cc.environment.user_creds import UserCreds
 from monkey_island.cc.resources.auth.auth_user import User
 from monkey_island.cc.resources.auth.user_store import UserStore
-from monkey_island.cc.server_utils.consts import DEFAULT_DATA_DIR
 
 
 class EnvironmentConfig:
@@ -19,7 +18,6 @@ class EnvironmentConfig:
         self.deployment = None
         self.user_creds = None
         self.aws = None
-        self.data_dir = None
 
         self._load_from_file(self._server_config_path)
 
@@ -35,31 +33,29 @@ class EnvironmentConfig:
 
     def _load_from_json(self, config_json: str) -> EnvironmentConfig:
         data = json.loads(config_json)
-        self._load_from_dict(data)
+        self._load_from_dict(data["environment"])
 
     def _load_from_dict(self, dict_data: Dict):
         aws = dict_data["aws"] if "aws" in dict_data else None
-        data_dir = dict_data["data_dir"] if "data_dir" in dict_data else DEFAULT_DATA_DIR
 
         self.server_config = dict_data["server_config"]
         self.deployment = dict_data["deployment"]
         self.user_creds = _get_user_credentials_from_config(dict_data)
         self.aws = aws
-        self.data_dir = data_dir
-
-    @property
-    def data_dir_abs_path(self):
-        return os.path.abspath(os.path.expanduser(os.path.expandvars(self.data_dir)))
 
     def save_to_file(self):
+        with open(self._server_config_path, "r") as f:
+            config = json.load(f)
+
+        config["environment"] = self.to_dict()
+
         with open(self._server_config_path, "w") as f:
-            f.write(json.dumps(self.to_dict(), indent=2))
+            f.write(json.dumps(config, indent=2))
 
     def to_dict(self) -> Dict:
         config_dict = {
             "server_config": self.server_config,
             "deployment": self.deployment,
-            "data_dir": self.data_dir,
         }
         if self.aws:
             config_dict.update({"aws": self.aws})
diff --git a/monkey/monkey_island/cc/main.py b/monkey/monkey_island/cc/main.py
index 4bdc764c3..cf56144ed 100644
--- a/monkey/monkey_island/cc/main.py
+++ b/monkey/monkey_island/cc/main.py
@@ -34,10 +34,13 @@ from monkey_island.cc.setup import setup  # noqa: E402
 MINIMUM_MONGO_DB_VERSION_REQUIRED = "4.2.0"
 
 
-def main(should_setup_only=False, server_config_filename=DEFAULT_SERVER_CONFIG_PATH):
+def main(
+    data_dir,
+    should_setup_only=False,
+    server_config_filename=DEFAULT_SERVER_CONFIG_PATH,
+):
     logger.info("Starting bootloader server")
 
-    data_dir = env_singleton.env.get_config().data_dir_abs_path
     env_singleton.initialize_from_file(server_config_filename)
     initialize_encryptor(data_dir)
     initialize_services(data_dir)
diff --git a/monkey/monkey_island/cc/server_config.json.develop b/monkey/monkey_island/cc/server_config.json.develop
index 33fb33487..fe9e2687f 100644
--- a/monkey/monkey_island/cc/server_config.json.develop
+++ b/monkey/monkey_island/cc/server_config.json.develop
@@ -1,5 +1,7 @@
 {
-  "server_config": "password",
-  "deployment": "develop",
-  "log_level": "DEBUG"
+  "log_level": "DEBUG",
+  "environment": {
+    "server_config": "password",
+    "deployment": "develop"
+  }
 }
diff --git a/monkey/tests/conftest.py b/monkey/tests/conftest.py
index 328cb109c..20e57f4d0 100644
--- a/monkey/tests/conftest.py
+++ b/monkey/tests/conftest.py
@@ -38,16 +38,6 @@ def standard_with_credentials(environment_resources_dir):
     return os.path.join(environment_resources_dir, "server_config_standard_with_credentials.json")
 
 
-@pytest.fixture(scope="session")
-def with_data_dir(environment_resources_dir):
-    return os.path.join(environment_resources_dir, "server_config_with_data_dir.json")
-
-
-@pytest.fixture(scope="session")
-def with_data_dir_home(environment_resources_dir):
-    return os.path.join(environment_resources_dir, "server_config_with_data_dir_home.json")
-
-
 @pytest.fixture(scope="session")
 def server_config_resources_dir(resources_dir):
     return os.path.join(resources_dir, "server_configs")
diff --git a/monkey/tests/monkey_island/cc/environment/test_environment_config.py b/monkey/tests/monkey_island/cc/environment/test_environment_config.py
index 6f9170f2f..6968a18aa 100644
--- a/monkey/tests/monkey_island/cc/environment/test_environment_config.py
+++ b/monkey/tests/monkey_island/cc/environment/test_environment_config.py
@@ -6,7 +6,6 @@ import pytest
 
 from monkey_island.cc.environment.environment_config import EnvironmentConfig
 from monkey_island.cc.environment.user_creds import UserCreds
-from monkey_island.cc.server_utils.consts import DEFAULT_DATA_DIR
 
 
 @pytest.fixture
@@ -17,31 +16,28 @@ def config_file(tmpdir):
 def test_get_with_credentials(with_credentials):
     config_dict = EnvironmentConfig(with_credentials).to_dict()
 
-    assert len(config_dict.keys()) == 5
+    assert len(config_dict.keys()) == 4
     assert config_dict["server_config"] == "password"
     assert config_dict["deployment"] == "develop"
     assert config_dict["user"] == "test"
     assert config_dict["password_hash"] == "abcdef"
-    assert config_dict["data_dir"] == DEFAULT_DATA_DIR
 
 
 def test_get_with_no_credentials(no_credentials):
     config_dict = EnvironmentConfig(no_credentials).to_dict()
 
-    assert len(config_dict.keys()) == 3
+    assert len(config_dict.keys()) == 2
     assert config_dict["server_config"] == "password"
     assert config_dict["deployment"] == "develop"
-    assert config_dict["data_dir"] == DEFAULT_DATA_DIR
 
 
 def test_get_with_partial_credentials(partial_credentials):
     config_dict = EnvironmentConfig(partial_credentials).to_dict()
 
-    assert len(config_dict.keys()) == 4
+    assert len(config_dict.keys()) == 3
     assert config_dict["server_config"] == "password"
     assert config_dict["deployment"] == "develop"
     assert config_dict["user"] == "test"
-    assert config_dict["data_dir"] == DEFAULT_DATA_DIR
 
 
 def test_save_to_file(config_file, standard_with_credentials):
@@ -54,13 +50,28 @@ def test_save_to_file(config_file, standard_with_credentials):
     with open(config_file, "r") as f:
         from_file = json.load(f)
 
-    assert len(from_file.keys()) == 6
-    assert from_file["server_config"] == "standard"
-    assert from_file["deployment"] == "develop"
-    assert from_file["user"] == "test"
-    assert from_file["password_hash"] == "abcdef"
-    assert from_file["aws"] == "test_aws"
-    assert from_file["data_dir"] == DEFAULT_DATA_DIR
+    assert len(from_file.keys()) == 2
+    assert len(from_file["environment"].keys()) == 5
+    assert from_file["environment"]["server_config"] == "standard"
+    assert from_file["environment"]["deployment"] == "develop"
+    assert from_file["environment"]["user"] == "test"
+    assert from_file["environment"]["password_hash"] == "abcdef"
+    assert from_file["environment"]["aws"] == "test_aws"
+
+
+def test_save_to_file_preserve_log_level(config_file, standard_with_credentials):
+    shutil.copyfile(standard_with_credentials, config_file)
+
+    environment_config = EnvironmentConfig(config_file)
+    environment_config.aws = "test_aws"
+    environment_config.save_to_file()
+
+    with open(config_file, "r") as f:
+        from_file = json.load(f)
+
+    assert len(from_file.keys()) == 2
+    assert "log_level" in from_file
+    assert from_file["log_level"] == "NOTICE"
 
 
 def test_add_user(config_file, standard_with_credentials):
@@ -76,9 +87,9 @@ def test_add_user(config_file, standard_with_credentials):
     with open(config_file, "r") as f:
         from_file = json.load(f)
 
-    assert len(from_file.keys()) == 5
-    assert from_file["user"] == new_user
-    assert from_file["password_hash"] == new_password_hash
+    assert len(from_file["environment"].keys()) == 4
+    assert from_file["environment"]["user"] == new_user
+    assert from_file["environment"]["password_hash"] == new_password_hash
 
 
 def test_get_users(standard_with_credentials):
@@ -101,20 +112,3 @@ def test_generate_default_file(config_file):
     assert environment_config.user_creds.username == ""
     assert environment_config.user_creds.password_hash == ""
     assert environment_config.aws is None
-    assert environment_config.data_dir == DEFAULT_DATA_DIR
-
-
-def test_data_dir(with_data_dir):
-    environment_config = EnvironmentConfig(with_data_dir)
-    assert environment_config.data_dir == "/test/data/dir"
-
-
-def set_home_env(monkeypatch, tmpdir):
-    monkeypatch.setenv("HOME", str(tmpdir))
-
-
-def test_data_dir_abs_path_from_file(monkeypatch, tmpdir, with_data_dir_home):
-    set_home_env(monkeypatch, tmpdir)
-
-    config = EnvironmentConfig(with_data_dir_home)
-    assert config.data_dir_abs_path == os.path.join(tmpdir, "data_dir")
diff --git a/monkey/tests/resources/environment/server_config_no_credentials.json b/monkey/tests/resources/environment/server_config_no_credentials.json
index ecc4c1708..0b7de96ef 100644
--- a/monkey/tests/resources/environment/server_config_no_credentials.json
+++ b/monkey/tests/resources/environment/server_config_no_credentials.json
@@ -1,4 +1,6 @@
 {
-  "server_config": "password",
-  "deployment": "develop"
+  "environment" : {
+    "server_config": "password",
+    "deployment": "develop"
+  }
 }
diff --git a/monkey/tests/resources/environment/server_config_partial_credentials.json b/monkey/tests/resources/environment/server_config_partial_credentials.json
index a9e283924..6158c4f30 100644
--- a/monkey/tests/resources/environment/server_config_partial_credentials.json
+++ b/monkey/tests/resources/environment/server_config_partial_credentials.json
@@ -1,5 +1,7 @@
 {
-  "server_config": "password",
-  "deployment": "develop",
-  "user": "test"
+  "environment" : {
+    "server_config": "password",
+    "deployment": "develop",
+    "user": "test"
+  }
 }
diff --git a/monkey/tests/resources/environment/server_config_standard_env.json b/monkey/tests/resources/environment/server_config_standard_env.json
index 420f1b303..3d5e0b8a0 100644
--- a/monkey/tests/resources/environment/server_config_standard_env.json
+++ b/monkey/tests/resources/environment/server_config_standard_env.json
@@ -1,4 +1,6 @@
 {
-  "server_config": "standard",
-  "deployment": "develop"
+  "environment" : {
+    "server_config": "standard",
+    "deployment": "develop"
+  }
 }
diff --git a/monkey/tests/resources/environment/server_config_standard_with_credentials.json b/monkey/tests/resources/environment/server_config_standard_with_credentials.json
index 4bff379e8..b8cdf5258 100644
--- a/monkey/tests/resources/environment/server_config_standard_with_credentials.json
+++ b/monkey/tests/resources/environment/server_config_standard_with_credentials.json
@@ -1,6 +1,9 @@
 {
+  "log_level": "NOTICE",
+  "environment" : {
     "server_config": "standard",
     "deployment": "develop",
     "user": "test",
     "password_hash": "abcdef"
+  }
 }
diff --git a/monkey/tests/resources/environment/server_config_with_credentials.json b/monkey/tests/resources/environment/server_config_with_credentials.json
index 54c0fa787..73cd6bbc3 100644
--- a/monkey/tests/resources/environment/server_config_with_credentials.json
+++ b/monkey/tests/resources/environment/server_config_with_credentials.json
@@ -1,6 +1,8 @@
 {
+  "environment" : {
     "server_config": "password",
     "deployment": "develop",
     "user": "test",
     "password_hash": "abcdef"
+  }
 }
diff --git a/monkey/tests/resources/environment/server_config_with_data_dir.json b/monkey/tests/resources/environment/server_config_with_data_dir.json
deleted file mode 100644
index b9d6845f3..000000000
--- a/monkey/tests/resources/environment/server_config_with_data_dir.json
+++ /dev/null
@@ -1,7 +0,0 @@
-{
-    "server_config": "password",
-    "deployment": "develop",
-    "user": "test",
-    "password_hash": "abcdef",
-    "data_dir": "/test/data/dir"
-}
diff --git a/monkey/tests/resources/environment/server_config_with_data_dir_home.json b/monkey/tests/resources/environment/server_config_with_data_dir_home.json
deleted file mode 100644
index e6e4a0a1f..000000000
--- a/monkey/tests/resources/environment/server_config_with_data_dir_home.json
+++ /dev/null
@@ -1,7 +0,0 @@
-{
-    "server_config": "password",
-    "deployment": "develop",
-    "user": "test",
-    "password_hash": "abcdef",
-    "data_dir": "~/data_dir"
-}