diff --git a/.changes/unreleased/Fixes-20240607-134648.yaml b/.changes/unreleased/Fixes-20240607-134648.yaml
new file mode 100644
index 00000000000..f40b98678f9
--- /dev/null
+++ b/.changes/unreleased/Fixes-20240607-134648.yaml
@@ -0,0 +1,6 @@
+kind: Fixes
+body: Fix snapshot config to work in yaml files
+time: 2024-06-07T13:46:48.383215-04:00
+custom:
+  Author: gshank
+  Issue: "4000"
diff --git a/core/dbt/artifacts/resources/v1/snapshot.py b/core/dbt/artifacts/resources/v1/snapshot.py
index 6164d953184..dee235a19df 100644
--- a/core/dbt/artifacts/resources/v1/snapshot.py
+++ b/core/dbt/artifacts/resources/v1/snapshot.py
@@ -18,39 +18,35 @@ class SnapshotConfig(NodeConfig):
     # Not using Optional because of serialization issues with a Union of str and List[str]
     check_cols: Union[str, List[str], None] = None
 
-    @classmethod
-    def validate(cls, data):
-        super().validate(data)
-        # Note: currently you can't just set these keys in schema.yml because this validation
-        # will fail when parsing the snapshot node.
-        if not data.get("strategy") or not data.get("unique_key") or not data.get("target_schema"):
+    def final_validate(self):
+        if not self.strategy or not self.unique_key or not self.target_schema:
             raise ValidationError(
                 "Snapshots must be configured with a 'strategy', 'unique_key', "
                 "and 'target_schema'."
             )
-        if data.get("strategy") == "check":
-            if not data.get("check_cols"):
+        if self.strategy == "check":
+            if not self.check_cols:
                 raise ValidationError(
                     "A snapshot configured with the check strategy must "
                     "specify a check_cols configuration."
                 )
-            if isinstance(data["check_cols"], str) and data["check_cols"] != "all":
+            if isinstance(self.check_cols, str) and self.check_cols != "all":
                 raise ValidationError(
-                    f"Invalid value for 'check_cols': {data['check_cols']}. "
+                    f"Invalid value for 'check_cols': {self.check_cols}. "
                     "Expected 'all' or a list of strings."
                 )
-        elif data.get("strategy") == "timestamp":
-            if not data.get("updated_at"):
+        elif self.strategy == "timestamp":
+            if not self.updated_at:
                 raise ValidationError(
                     "A snapshot configured with the timestamp strategy "
                     "must specify an updated_at configuration."
                 )
-            if data.get("check_cols"):
+            if self.check_cols:
                 raise ValidationError("A 'timestamp' snapshot should not have 'check_cols'")
         # If the strategy is not 'check' or 'timestamp' it's a custom strategy,
         # formerly supported with GenericSnapshotConfig
 
-        if data.get("materialized") and data.get("materialized") != "snapshot":
+        if self.materialized and self.materialized != "snapshot":
             raise ValidationError("A snapshot must have a materialized value of 'snapshot'")
 
     # Called by "calculate_node_config_dict" in ContextConfigGenerator
diff --git a/core/dbt/parser/manifest.py b/core/dbt/parser/manifest.py
index 1ac2ca6acf2..74e8f226ab2 100644
--- a/core/dbt/parser/manifest.py
+++ b/core/dbt/parser/manifest.py
@@ -467,6 +467,7 @@ def load(self) -> Manifest:
             self.process_model_inferred_primary_keys()
             self.check_valid_group_config()
             self.check_valid_access_property()
+            self.check_valid_snapshot_config()
 
             semantic_manifest = SemanticManifest(self.manifest)
             if not semantic_manifest.validate():
@@ -1345,6 +1346,16 @@ def check_valid_access_property(self):
                     materialization=node.get_materialization(),
                 )
 
+    def check_valid_snapshot_config(self):
+        # Snapshot config can be set in either SQL files or yaml files,
+        # so we need to validate afterward.
+        for node in self.manifest.nodes.values():
+            if node.resource_type != NodeType.Snapshot:
+                continue
+            if node.created_at < self.started_at:
+                continue
+            node.config.final_validate()
+
     def write_perf_info(self, target_path: str):
         path = os.path.join(target_path, PERF_INFO_FILE_NAME)
         write_file(path, json.dumps(self._perf_info, cls=dbt.utils.JSONEncoder, indent=4))
diff --git a/tests/functional/configs/test_configs.py b/tests/functional/configs/test_configs.py
index 8d520f1ff80..2bbfac85c5c 100644
--- a/tests/functional/configs/test_configs.py
+++ b/tests/functional/configs/test_configs.py
@@ -2,7 +2,6 @@
 
 import pytest
 
-from dbt.exceptions import ParsingError
 from dbt.tests.util import (
     check_relations_equal,
     run_dbt,
@@ -120,7 +119,7 @@ def test_snapshots_materialization_proj_config(self, project):
         snapshots_dir = os.path.join(project.project_root, "snapshots")
         write_file(simple_snapshot, snapshots_dir, "mysnapshot.sql")
 
-        with pytest.raises(ParsingError):
+        with pytest.raises(ValidationError):
             run_dbt()
 
 
diff --git a/tests/functional/simple_snapshot/fixtures.py b/tests/functional/simple_snapshot/fixtures.py
index 04e4905d4cb..a94f0c04875 100644
--- a/tests/functional/simple_snapshot/fixtures.py
+++ b/tests/functional/simple_snapshot/fixtures.py
@@ -86,7 +86,6 @@
 
 
 models__schema_yml = """
-version: 2
 snapshots:
   - name: snapshot_actual
     data_tests:
@@ -97,7 +96,6 @@
 """
 
 models__schema_with_target_schema_yml = """
-version: 2
 snapshots:
   - name: snapshot_actual
     data_tests:
diff --git a/tests/functional/simple_snapshot/test_missing_strategy_snapshot.py b/tests/functional/simple_snapshot/test_missing_strategy_snapshot.py
index 407cd15439f..46543da8f4b 100644
--- a/tests/functional/simple_snapshot/test_missing_strategy_snapshot.py
+++ b/tests/functional/simple_snapshot/test_missing_strategy_snapshot.py
@@ -1,7 +1,7 @@
 import pytest
 
-from dbt.exceptions import ParsingError
 from dbt.tests.util import run_dbt
+from dbt_common.dataclass_schema import ValidationError
 from tests.functional.simple_snapshot.fixtures import (
     macros__test_no_overlaps_sql,
     models__ref_snapshot_sql,
@@ -10,7 +10,7 @@
 
 snapshots_invalid__snapshot_sql = """
 {# make sure to never name this anything with `target_schema` in the name, or the test will be invalid! #}
-{% snapshot missing_field_target_underscore_schema %}
+{% snapshot snapshot_actual %}
     {# missing the mandatory target_schema parameter #}
     {{
         config(
@@ -44,7 +44,10 @@ def macros():
 
 
 def test_missing_strategy(project):
-    with pytest.raises(ParsingError) as exc:
+    with pytest.raises(ValidationError) as exc:
         run_dbt(["compile"], expect_pass=False)
 
-    assert "Snapshots must be configured with a 'strategy'" in str(exc.value)
+    assert (
+        "Snapshots must be configured with a 'strategy', 'unique_key', and 'target_schema'"
+        in str(exc.value)
+    )
diff --git a/tests/functional/simple_snapshot/test_snapshot_config.py b/tests/functional/simple_snapshot/test_snapshot_config.py
new file mode 100644
index 00000000000..5124cf9c38b
--- /dev/null
+++ b/tests/functional/simple_snapshot/test_snapshot_config.py
@@ -0,0 +1,67 @@
+import pytest
+
+from dbt.tests.util import run_dbt, write_file
+
+orders_sql = """
+select 1 as id, 101 as user_id, 'pending' as status
+"""
+
+snapshot_sql = """
+{% snapshot orders_snapshot %}
+
+{{
+    config(
+      target_schema=schema,
+      strategy='check',
+      unique_key='id',
+      check_cols=['status'],
+    )
+}}
+
+select * from {{ ref('orders') }}
+
+{% endsnapshot %}
+"""
+
+snapshot_no_config_sql = """
+{% snapshot orders_snapshot %}
+
+select * from {{ ref('orders') }}
+
+{% endsnapshot %}
+"""
+
+snapshot_schema_yml = """
+snapshots:
+  - name: orders_snapshot
+    config:
+      target_schema: test
+      strategy: check
+      unique_key: id
+      check_cols: ['status']
+"""
+
+
+class TestSnapshotConfig:
+    @pytest.fixture(scope="class")
+    def models(self):
+        return {"orders.sql": orders_sql}
+
+    @pytest.fixture(scope="class")
+    def snapshots(self):
+        return {"snapshot_orders.sql": snapshot_sql}
+
+    def test_config(self, project):
+        run_dbt(["run"])
+        results = run_dbt(["snapshot"])
+        assert len(results) == 1
+
+        # try to parse with config in schema file
+        write_file(
+            snapshot_no_config_sql, project.project_root, "snapshots", "snapshot_orders.sql"
+        )
+        write_file(snapshot_schema_yml, project.project_root, "snapshots", "snapshot.yml")
+        results = run_dbt(["parse"])
+
+        results = run_dbt(["snapshot"])
+        assert len(results) == 1
diff --git a/tests/unit/contracts/graph/test_nodes_parsed.py b/tests/unit/contracts/graph/test_nodes_parsed.py
index 4e8392cb3df..bce860e63d3 100644
--- a/tests/unit/contracts/graph/test_nodes_parsed.py
+++ b/tests/unit/contracts/graph/test_nodes_parsed.py
@@ -1333,7 +1333,7 @@ def test_invalid_missing_updated_at(basic_timestamp_snapshot_config_dict):
     bad_fields = basic_timestamp_snapshot_config_dict
     del bad_fields["updated_at"]
     bad_fields["check_cols"] = "all"
-    assert_fails_validation(bad_fields, SnapshotConfig)
+    assert_snapshot_config_fails_validation(bad_fields)
 
 
 @pytest.fixture
@@ -1437,7 +1437,7 @@ def test_complex_snapshot_config(
 def test_invalid_check_wrong_strategy(basic_check_snapshot_config_dict):
     wrong_strategy = basic_check_snapshot_config_dict
     wrong_strategy["strategy"] = "timestamp"
-    assert_fails_validation(wrong_strategy, SnapshotConfig)
+    assert_snapshot_config_fails_validation(wrong_strategy)
 
 
 def test_invalid_missing_check_cols(basic_check_snapshot_config_dict):
@@ -1445,6 +1445,8 @@ def test_invalid_missing_check_cols(basic_check_snapshot_config_dict):
     del wrong_fields["check_cols"]
     with pytest.raises(ValidationError, match=r"A snapshot configured with the check strategy"):
         SnapshotConfig.validate(wrong_fields)
+        cfg = SnapshotConfig.from_dict(wrong_fields)
+        cfg.final_validate()
 
 
 def test_missing_snapshot_configs(basic_check_snapshot_config_dict):
@@ -1452,22 +1454,35 @@ def test_missing_snapshot_configs(basic_check_snapshot_config_dict):
     del wrong_fields["strategy"]
     with pytest.raises(ValidationError, match=r"Snapshots must be configured with a 'strategy'"):
         SnapshotConfig.validate(wrong_fields)
+        cfg = SnapshotConfig.from_dict(wrong_fields)
+        cfg.final_validate()
 
     wrong_fields["strategy"] = "timestamp"
     del wrong_fields["unique_key"]
     with pytest.raises(ValidationError, match=r"Snapshots must be configured with a 'strategy'"):
         SnapshotConfig.validate(wrong_fields)
+        cfg = SnapshotConfig.from_dict(wrong_fields)
+        cfg.final_validate()
 
     wrong_fields["unique_key"] = "id"
     del wrong_fields["target_schema"]
     with pytest.raises(ValidationError, match=r"Snapshots must be configured with a 'strategy'"):
         SnapshotConfig.validate(wrong_fields)
+        cfg = SnapshotConfig.from_dict(wrong_fields)
+        cfg.final_validate()
+
+
+def assert_snapshot_config_fails_validation(dct):
+    with pytest.raises(ValidationError):
+        SnapshotConfig.validate(dct)
+        obj = SnapshotConfig.from_dict(dct)
+        obj.final_validate()
 
 
 def test_invalid_check_value(basic_check_snapshot_config_dict):
     invalid_check_type = basic_check_snapshot_config_dict
     invalid_check_type["check_cols"] = "some"
-    assert_fails_validation(invalid_check_type, SnapshotConfig)
+    assert_snapshot_config_fails_validation(invalid_check_type)
 
 
 @pytest.fixture