diff --git a/README.md b/README.md
index 311c50eca..31b5b3733 100755
--- a/README.md
+++ b/README.md
@@ -179,6 +179,14 @@ yaml.schemas: {
 
 `yaml.schemas` allows you to specify json schemas that you want to validate against the yaml that you write. Kubernetes is an optional field. It does not require a url as the language server will provide that. You just need the keyword kubernetes and a glob pattern.
 
+### Using `$schema` key to specify schema
+
+Like [VSCode](https://code.visualstudio.com/Docs/languages/json#_mapping-in-the-json), specifying schema via `$schema` key at root is supported.
+
+```
+$schema: <urlToTheSchema>
+```
+
 ### Using inlined schema
 
 It is possible to specify a yaml schema using a modeline.
diff --git a/src/languageservice/services/yamlSchemaService.ts b/src/languageservice/services/yamlSchemaService.ts
index fa8ab5944..f88acba08 100644
--- a/src/languageservice/services/yamlSchemaService.ts
+++ b/src/languageservice/services/yamlSchemaService.ts
@@ -21,6 +21,7 @@ import { URI } from 'vscode-uri';
 import * as nls from 'vscode-nls';
 import { convertSimple2RegExpPattern } from '../utils/strings';
 import { SingleYAMLDocument } from '../parser/yamlParser07';
+import { ObjectASTNode, StringASTNode } from '../jsonASTTypes';
 import { JSONDocument } from '../parser/jsonParser07';
 import * as yaml from 'js-yaml';
 
@@ -268,10 +269,10 @@ export class YAMLSchemaService extends JSONSchemaService {
       const seen: { [schemaId: string]: boolean } = Object.create(null);
       const schemas: string[] = [];
 
-      const schemaFromModeline = this.getSchemaFromModeline(doc);
-      if (schemaFromModeline !== undefined) {
-        schemas.push(schemaFromModeline);
-        seen[schemaFromModeline] = true;
+      const schemaFromFileContent = this.getSchemaFromFileContent(doc);
+      if (schemaFromFileContent !== undefined) {
+        schemas.push(schemaFromFileContent);
+        seen[schemaFromFileContent] = true;
       }
 
       for (const entry of this.filePatternAssociations) {
@@ -364,12 +365,25 @@ export class YAMLSchemaService extends JSONSchemaService {
   }
 
   /**
-   * Retrieve schema if declared as modeline.
+   * Retrieve schema if declared in file content.
    * Public for testing purpose, not part of the API.
    * @param doc
    */
-  public getSchemaFromModeline(doc: SingleYAMLDocument | JSONDocument): string {
+  public getSchemaFromFileContent(doc: SingleYAMLDocument | JSONDocument): string {
+    let schema = undefined;
     if (doc instanceof SingleYAMLDocument) {
+      const properties = (doc.root as ObjectASTNode)?.properties;
+      if (Array.isArray(properties)) {
+        for (const prop of properties) {
+          if (prop.keyNode.value == '$schema') {
+            schema = (prop.valueNode as StringASTNode).value;
+          }
+        }
+      }
+      if (schema !== undefined) {
+        return schema;
+      }
+
       const yamlLanguageServerModeline = doc.lineComments.find((lineComment) => {
         const matchModeline = lineComment.match(/^#\s+yaml-language-server\s*:/g);
         return matchModeline !== null && matchModeline.length === 1;
@@ -382,11 +396,11 @@ export class YAMLSchemaService extends JSONSchemaService {
               'Several $schema attributes have been found on the yaml-language-server modeline. The first one will be picked.'
             );
           }
-          return schemaMatchs[0].substring('$schema='.length);
+          schema = schemaMatchs[0].substring('$schema='.length);
         }
       }
     }
-    return undefined;
+    return schema;
   }
 
   private async resolveCustomSchema(schemaUri, doc): ResolvedSchema {
diff --git a/test/schema.test.ts b/test/schema.test.ts
index 74c1bbf39..935c2a4ac 100644
--- a/test/schema.test.ts
+++ b/test/schema.test.ts
@@ -538,7 +538,7 @@ suite('JSON Schema', () => {
     assert.equal(hello_world_schema, null);
   });
 
-  describe('Test getSchemaFromModeline', function () {
+  describe('Test getSchemaFromFileContent', function () {
     test('simple case', async () => {
       checkReturnSchemaUrl('# yaml-language-server: $schema=expectedUrl', 'expectedUrl');
     });
@@ -586,11 +586,22 @@ suite('JSON Schema', () => {
       checkReturnSchemaUrl('# yaml-language-server: $notschema=url1', undefined);
     });
 
-    function checkReturnSchemaUrl(modeline: string, expectedResult: string): void {
+    test('schema key', async () => {
+      checkReturnSchemaUrl('$schema: expectedUrl', 'expectedUrl');
+    });
+
+    test('schema key and simple case', async () => {
+      checkReturnSchemaUrl('# yaml-language-server: $schema=expectedUrl1\n$schema: expectedUrl2', 'expectedUrl2');
+    });
+
+    test('schema key with wrong type', async () => {
+      checkReturnSchemaUrl('# yaml-language-server: $schema=expectedUrl1\n$schema: [expectedUrl2,expectedUrl3]', 'expectedUrl1');
+    });
+
+    function checkReturnSchemaUrl(fileContent: string, expectedResult: string): void {
       const service = new SchemaService.YAMLSchemaService(schemaRequestServiceForURL, workspaceContext);
-      const yamlDoc = new parser.SingleYAMLDocument([]);
-      yamlDoc.lineComments = [modeline];
-      assert.equal(service.getSchemaFromModeline(yamlDoc), expectedResult);
+      const yamlDoc = parser.parse(fileContent).documents[0];
+      assert.equal(service.getSchemaFromFileContent(yamlDoc), expectedResult);
     }
   });
 });