diff --git a/cdist/config.py b/cdist/config.py
index 31b41781..e20f1a7c 100644
--- a/cdist/config.py
+++ b/cdist/config.py
@@ -89,6 +89,25 @@ class Config(object):
         self.local.create_files_dirs()
         self.remote.create_files_dirs()
 
+    @staticmethod
+    def hostfile_process_line(line):
+        """Return host from read line or None if no host present."""
+        if not line:
+            return None
+        # remove comment if present
+        comment_index = line.find('#')
+        if comment_index >= 0:
+            host = line[:comment_index]
+        else:
+            host = line
+        # remove leading and trailing whitespaces
+        host = host.strip()
+        # skip empty lines
+        if host:
+            return host
+        else:
+            return None
+
     @staticmethod
     def hosts(source):
         """Yield hosts from source.
@@ -99,11 +118,13 @@ class Config(object):
             import fileinput
             try:
                 for host in fileinput.input(files=(source)):
-                    # remove leading and trailing whitespace
-                    yield host.strip()
-            except (IOError, OSError) as e:
-                raise cdist.Error("Error reading hosts from \'{}\'".format(
-                    source))
+                    host = Config.hostfile_process_line(host)
+                    if host:
+                        yield host
+            except (IOError, OSError, UnicodeError) as e:
+                raise cdist.Error(
+                        "Error reading hosts from file \'{}\': {}".format(
+                            source, e))
         else:
             if source:
                 for host in source:
diff --git a/docs/changelog b/docs/changelog
index b817555b..518be192 100644
--- a/docs/changelog
+++ b/docs/changelog
@@ -1,6 +1,9 @@
 Changelog
 ---------
 
+next:
+	* Core: Improve hostfile: support comments, skip empty lines (Darko Poljak)
+
 4.3.0: 2016-08-19
 	* Documentation: Add Parallelization chapter (Darko Poljak)
 	* Core: Add -b, --enable-beta option for enabling beta functionalities (Darko Poljak)
diff --git a/docs/src/man1/cdist.rst b/docs/src/man1/cdist.rst
index 47fe195c..baeb0025 100644
--- a/docs/src/man1/cdist.rst
+++ b/docs/src/man1/cdist.rst
@@ -82,7 +82,7 @@ Configure one or more hosts.
     Read additional hosts to operate on from specified file
     or from stdin if '-' (each host on separate line).
     If no host or host file is specified then, by default,
-    read hosts from stdin.
+    read hosts from stdin. For the file format see below.
 
 .. option:: -i MANIFEST, --initial-manifest MANIFEST
 
@@ -117,6 +117,20 @@ Configure one or more hosts.
 
     Command to use for remote execution (should behave like ssh)
 
+
+HOSTFILE FORMAT
+~~~~~~~~~~~~~~~
+HOSTFILE contains hosts per line. 
+All characters after and including '#' until the end of line is a comment.
+In a line, all leading and trailing whitespace characters are ignored.
+Empty lines are ignored/skipped.
+
+Hostfile line is processed like the following. First, all comments are
+removed. Then all leading and trailing whitespace characters are stripped.
+If such a line results in empty line it is ignored/skipped. Otherwise,
+host string is used.
+
+
 SHELL
 -----
 This command allows you to spawn a shell that enables access