diff --git a/src/__init__.py b/src/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/src/core/__init__.py b/src/core/__init__.py
new file mode 100644
index 0000000..e69de29
diff --git a/src/core/config.py b/src/core/config.py
new file mode 100644
index 0000000..9ef727e
--- /dev/null
+++ b/src/core/config.py
@@ -0,0 +1,86 @@
+"""
+Global application configuration.
+Following best practice of splitting config across domains.
+"""
+from enum import Enum
+from functools import lru_cache
+
+from pydantic import Field, HttpUrl
+from pydantic_settings import BaseSettings, SettingsConfigDict
+
+
+class Environment(str, Enum):
+    """Application environment."""
+    DEVELOPMENT = "development"
+    PRODUCTION = "production"
+    TESTING = "testing"
+
+
+class Config(BaseSettings):
+    """
+    Global application configuration.
+    
+    Loads from environment variables and .env file.
+    Domain-specific configs should be in their respective modules.
+    """
+    model_config = SettingsConfigDict(
+        env_file=".env",
+        env_file_encoding="utf-8",
+        case_sensitive=True,
+        extra="ignore",
+    )
+    
+    # Application
+    APP_NAME: str = "OpenAI-Compatible API"
+    APP_VERSION: str = "0.1.0"
+    ENVIRONMENT: Environment = Environment.DEVELOPMENT
+    DEBUG: bool = Field(default=False, description="Debug mode")
+    
+    # API Configuration
+    API_HOST: str = Field(default="0.0.0.0", description="API host")
+    API_PORT: int = Field(default=8000, description="API port")
+    API_PREFIX: str = Field(default="/v1", description="API route prefix")
+    
+    # Ollama Configuration
+    OLLAMA_HOST: HttpUrl = Field(
+        default="http://localhost:11434",
+        description="Ollama server URL"
+    )
+    OLLAMA_DEFAULT_MODEL: str = Field(
+        default="mistral-nemo:latest",
+        description="Default Ollama model"
+    )
+    OLLAMA_TIMEOUT: int = Field(
+        default=120,
+        description="Ollama request timeout in seconds"
+    )
+    STREAM_TIMEOUT: int = Field(
+        default=20,
+        description="Timeout for each streaming turn in seconds"
+    )
+
+    # Logging
+    LOG_LEVEL: str = Field(default="INFO", description="Logging level")
+    
+    # CORS
+    CORS_ORIGINS: list[str] = Field(
+        default=["*"],
+        description="Allowed CORS origins"
+    )
+    CORS_ALLOW_CREDENTIALS: bool = True
+    CORS_ALLOW_METHODS: list[str] = ["*"]
+    CORS_ALLOW_HEADERS: list[str] = ["*"]
+
+
+@lru_cache
+def get_config() -> Config:
+    """
+    Get cached configuration instance.
+    
+    Uses lru_cache to ensure config is loaded once and reused.
+    """
+    return Config()
+
+
+# Global config instance
+config = get_config()
diff --git a/src/core/exceptions.py b/src/core/exceptions.py
new file mode 100644
index 0000000..84f9d61
--- /dev/null
+++ b/src/core/exceptions.py
@@ -0,0 +1,52 @@
+"""
+Global exception definitions.
+Domain-specific exceptions should be in their respective modules.
+"""
+from typing import Any
+
+
+class AppException(Exception):
+    """Base exception for all application errors."""
+    
+    def __init__(
+        self,
+        message: str = "An error occurred",
+        status_code: int = 500,
+        details: dict[str, Any] | None = None,
+    ):
+        self.message = message
+        self.status_code = status_code
+        self.details = details or {}
+        super().__init__(self.message)
+
+
+class OllamaConnectionError(AppException):
+    """Raised when cannot connect to Ollama service."""
+    
+    def __init__(self, message: str = "Cannot connect to Ollama service"):
+        super().__init__(message=message, status_code=503)
+
+
+class OllamaTimeoutError(AppException):
+    """Raised when Ollama request times out."""
+    
+    def __init__(self, message: str = "Ollama request timed out"):
+        super().__init__(message=message, status_code=504)
+
+
+class ModelNotFoundError(AppException):
+    """Raised when requested model is not available."""
+    
+    def __init__(self, model_name: str):
+        super().__init__(
+            message=f"Model '{model_name}' not found",
+            status_code=404,
+            details={"model": model_name}
+        )
+
+
+class ValidationError(AppException):
+    """Raised for validation errors."""
+    
+    def __init__(self, message: str, details: dict[str, Any] | None = None):
+        super().__init__(message=message, status_code=422, details=details)
diff --git a/src/core/models.py b/src/core/models.py
new file mode 100644
index 0000000..7329f44
--- /dev/null
+++ b/src/core/models.py
@@ -0,0 +1,43 @@
+"""
+Custom Pydantic base models for consistent serialization.
+Following best practice of having a global base model.
+"""
+from datetime import datetime
+from typing import Any
+
+from fastapi.encoders import jsonable_encoder
+from pydantic import BaseModel, ConfigDict
+
+
+def datetime_to_iso_str(dt: datetime) -> str:
+    """Convert datetime to ISO format string."""
+    return dt.isoformat()
+
+
+class CustomBaseModel(BaseModel):
+    """
+    Custom base model with consistent configuration.
+    
+    All domain models should inherit from this for:
+    - Consistent JSON serialization
+    - Timezone-aware datetime handling
+    - Alias population support
+    """
+    model_config = ConfigDict(
+        json_encoders={datetime: datetime_to_iso_str},
+        populate_by_name=True,
+        use_enum_values=True,
+        validate_assignment=True,
+        arbitrary_types_allowed=True,
+    )
+    
+    def serializable_dict(self, **kwargs: Any) -> dict[str, Any]:
+        """
+        Return dict with only JSON-serializable fields.
+        
+        Useful for logging and debugging.
+        """
+        return jsonable_encoder(
+            self.model_dump(**kwargs),
+            custom_encoder={datetime: datetime_to_iso_str}
+        )