What are some recommended practices for handling configuration settings in a Python application?

First, you should use environment variables for sensitive or environment-specific values. Then, consider employing a dedicated configuration file, such as `.env` or `.yaml` to store other settings that you might want to eventually change.

Additionally, consider using a configuration management library like `configparser` for other, more complex configurations. I'd also recommend you document your configuration settings, specifying their purpose and default values. Last but not least, remember to use version control to track changes in your config files, ensuring that sensitive information such as API keys are stored securely.