diff --git a/parity/cli/mod.rs b/parity/cli/mod.rs
index 47a0af0bb..3515d0d35 100644
--- a/parity/cli/mod.rs
+++ b/parity/cli/mod.rs
@@ -16,7 +16,7 @@
 
 #[macro_use]
 mod usage;
-use dir::default_data_path;
+use dir;
 
 usage! {
 	{
@@ -90,8 +90,8 @@ usage! {
 		flag_no_download: bool = false, or |c: &Config| otry!(c.parity).no_download.clone(),
 		flag_no_consensus: bool = false, or |c: &Config| otry!(c.parity).no_consensus.clone(),
 		flag_chain: String = "homestead", or |c: &Config| otry!(c.parity).chain.clone(),
-		flag_base_path: String = default_data_path(), or |c: &Config| otry!(c.parity).base_path.clone(),
-		flag_db_path: String = "$BASE/chains", or |c: &Config| otry!(c.parity).db_path.clone(),
+		flag_base_path: String = dir::default_data_path(), or |c: &Config| otry!(c.parity).base_path.clone(),
+		flag_db_path: String = dir::CHAINS_PATH, or |c: &Config| otry!(c.parity).db_path.clone(),
 		flag_keys_path: String = "$BASE/keys", or |c: &Config| otry!(c.parity).keys_path.clone(),
 		flag_identity: String = "", or |c: &Config| otry!(c.parity).identity.clone(),
 
diff --git a/parity/cli/usage.txt b/parity/cli/usage.txt
index 7c3e5cc7d..9705c7359 100644
--- a/parity/cli/usage.txt
+++ b/parity/cli/usage.txt
@@ -336,7 +336,7 @@ Legacy Options:
                            testnet --keys-path $HOME/parity/testnet-keys.
                            Overrides the --keys-path option.
   --import-geth-keys       Attempt to import keys from Geth client.
-  --datadir PATH           Equivalent to --db-path PATH.
+  --datadir PATH           Equivalent to --base-path PATH.
   --networkid INDEX        Equivalent to --network-id INDEX.
   --peers NUM              Equivalent to --min-peers NUM.
   --nodekey KEY            Equivalent to --node-key KEY.
diff --git a/parity/configuration.rs b/parity/configuration.rs
index 85ff61d5c..f3135e0ee 100644
--- a/parity/configuration.rs
+++ b/parity/configuration.rs
@@ -30,11 +30,11 @@ use ethcore::verification::queue::VerifierSettings;
 use rpc::{IpcConfiguration, HttpConfiguration};
 use ethcore_rpc::NetworkSettings;
 use cache::CacheConfig;
-use helpers::{to_duration, to_mode, to_block_id, to_u256, to_pending_set, to_price, replace_home,
+use helpers::{to_duration, to_mode, to_block_id, to_u256, to_pending_set, to_price, replace_home, replace_home_for_db,
 geth_ipc_path, parity_ipc_path, to_bootnodes, to_addresses, to_address, to_gas_limit, to_queue_strategy};
 use params::{ResealPolicy, AccountsConfig, GasPricerConfig, MinerExtras};
 use ethcore_logger::Config as LogConfig;
-use dir::{Directories, default_hypervisor_path};
+use dir::{Directories, default_hypervisor_path, default_local_path};
 use dapps::Configuration as DappsConfiguration;
 use signer::{Configuration as SignerConfiguration};
 use updater::{UpdatePolicy, UpdateFilter, ReleaseTrack};
@@ -707,9 +707,14 @@ impl Configuration {
 	fn directories(&self) -> Directories {
 		use util::path;
 
+		let local_path = default_local_path();
 		let data_path = replace_home("", self.args.flag_datadir.as_ref().unwrap_or(&self.args.flag_base_path));
 
-		let db_path = replace_home(&data_path, &self.args.flag_db_path);
+		let db_path = if self.args.flag_datadir.is_some() {
+			replace_home(&data_path, &self.args.flag_db_path)
+		} else {
+			replace_home_for_db(&data_path, &local_path, &self.args.flag_db_path)
+		};
 		let keys_path = replace_home(&data_path, &self.args.flag_keys_path);
 		let dapps_path = replace_home(&data_path, &self.args.flag_dapps_path);
 		let ui_path = replace_home(&data_path, &self.args.flag_ui_path);
diff --git a/parity/dir.rs b/parity/dir.rs
index bd83ef3c0..ffef0d94e 100644
--- a/parity/dir.rs
+++ b/parity/dir.rs
@@ -18,7 +18,7 @@ use std::fs;
 use std::path::{PathBuf, Path};
 use util::{H64, H256};
 use util::journaldb::Algorithm;
-use helpers::replace_home;
+use helpers::{replace_home, replace_home_for_db};
 use app_dirs::{AppInfo, get_app_root, AppDataType};
 
 #[cfg(target_os = "macos")] const AUTHOR: &'static str = "Parity";
@@ -31,6 +31,9 @@ use app_dirs::{AppInfo, get_app_root, AppDataType};
 #[cfg(not(any(target_os = "windows", target_os = "macos")))] const PRODUCT: &'static str = "io.parity.ethereum";
 #[cfg(not(any(target_os = "windows", target_os = "macos")))] const PRODUCT_HYPERVISOR: &'static str = "io.parity.ethereum-updates";
 
+#[cfg(target_os = "windows")] pub const CHAINS_PATH: &'static str = "$LOCAL/chains";
+#[cfg(not(target_os = "windows"))] pub const CHAINS_PATH: &'static str = "$BASE/chains";
+
 // this const is irrelevent cause we do have migrations now,
 // but we still use it for backwards compatibility
 const LEGACY_CLIENT_DB_VER_STR: &'static str = "5.3";
@@ -47,9 +50,10 @@ pub struct Directories {
 impl Default for Directories {
 	fn default() -> Self {
 		let data_dir = default_data_path();
+		let local_dir = default_local_path();
 		Directories {
 			base: replace_home(&data_dir, "$BASE"),
-			db: replace_home(&data_dir, "$BASE/chains"),
+			db: replace_home_for_db(&data_dir, &local_dir, CHAINS_PATH),
 			keys: replace_home(&data_dir, "$BASE/keys"),
 			signer: replace_home(&data_dir, "$BASE/signer"),
 			dapps: replace_home(&data_dir, "$BASE/dapps"),
@@ -209,6 +213,11 @@ pub fn default_data_path() -> String {
 	get_app_root(AppDataType::UserData, &app_info).map(|p| p.to_string_lossy().into_owned()).unwrap_or_else(|_| "$HOME/.parity".to_owned())
 }
 
+pub fn default_local_path() -> String {
+	let app_info = AppInfo { name: PRODUCT, author: AUTHOR };
+	get_app_root(AppDataType::UserCache, &app_info).map(|p| p.to_string_lossy().into_owned()).unwrap_or_else(|_| "$HOME/.parity".to_owned())
+}
+
 pub fn default_hypervisor_path() -> String {
 	let app_info = AppInfo { name: PRODUCT_HYPERVISOR, author: AUTHOR };
 	get_app_root(AppDataType::UserData, &app_info).map(|p| p.to_string_lossy().into_owned()).unwrap_or_else(|_| "$HOME/.parity-hypervisor".to_owned())
@@ -217,14 +226,18 @@ pub fn default_hypervisor_path() -> String {
 #[cfg(test)]
 mod tests {
 	use super::Directories;
-	use helpers::replace_home;
+	use helpers::{replace_home, replace_home_for_db};
 
 	#[test]
 	fn test_default_directories() {
 		let data_dir = super::default_data_path();
+		let local_dir = super::default_local_path();
 		let expected = Directories {
 			base: replace_home(&data_dir, "$BASE"),
-			db: replace_home(&data_dir, "$BASE/chains"),
+			db: replace_home_for_db(&data_dir, &local_dir,
+				if cfg!(target_os = "windows") { "$LOCAL/chains" }
+				else { "$BASE/chains" }
+			),
 			keys: replace_home(&data_dir, "$BASE/keys"),
 			signer: replace_home(&data_dir, "$BASE/signer"),
 			dapps: replace_home(&data_dir, "$BASE/dapps"),
diff --git a/parity/helpers.rs b/parity/helpers.rs
index b91b62f1d..680306684 100644
--- a/parity/helpers.rs
+++ b/parity/helpers.rs
@@ -135,8 +135,13 @@ pub fn to_price(s: &str) -> Result<f32, String> {
 pub fn replace_home(base: &str, arg: &str) -> String {
 	// the $HOME directory on mac os should be `~/Library` or `~/Library/Application Support`
 	let r = arg.replace("$HOME", env::home_dir().unwrap().to_str().unwrap());
-	let r = r.replace("$BASE", base	);
-	r.replace("/", &::std::path::MAIN_SEPARATOR.to_string()	)
+	let r = r.replace("$BASE", base);
+	r.replace("/", &::std::path::MAIN_SEPARATOR.to_string())
+}
+
+pub fn replace_home_for_db(base: &str, local: &str, arg: &str) -> String {
+	let r = replace_home(base, arg);
+	r.replace("$LOCAL", local)
 }
 
 /// Flush output buffer.