Index: library/Zend/Config/Xml.php
===================================================================
--- library/Zend/Config/Xml.php	(revision 16021)
+++ library/Zend/Config/Xml.php	(working copy)
@@ -81,10 +81,11 @@
         
         set_error_handler(array($this, '_loadFileErrorHandler')); // Warnings and errors are suppressed
         if (strstr($xml, '<?xml')) {
-            $config = simplexml_load_string($xml);
+            $xml = $this->_parseXml($xml);
         } else {
-            $config = simplexml_load_file($xml);
+            $xml = $this->_parseXml(file_get_contents($xml));
         }
+        $config = simplexml_load_string($xml);
 
         restore_error_handler();
         // Check if there was a error while loading file
@@ -129,6 +130,23 @@
 
         $this->_loadedSection = $section;
     }
+    
+    /**
+     * Replaces PHP Constants in the xml structure
+     * like Zend_Config_Ini does throught parse_ini_file()
+     *
+     * @param string $xml
+     * @return string the xml string with PHP constants replaced
+     */
+    protected function _parseXmlForPHPConstants($xml)
+    {
+        $constants = get_defined_constants(true);
+        $search    = array_keys($constants['user']);
+        $replace   = array_values($constants['user']);
+        
+        return str_replace(array_keys($constants['user']),
+                           array_values($constants['user']), $xml);
+    }
 
     /**
      * Helper function to process each element in the section and handle
Index: tests/Zend/Config/_files/constants.xml
===================================================================
--- tests/Zend/Config/_files/constants.xml	(revision 0)
+++ tests/Zend/Config/_files/constants.xml	(revision 0)
@@ -0,0 +1,13 @@
+<?xml version="1.0"?>
+<config>
+    <root>
+        <hostname>ZF6960_HOST</hostname>
+        <name>ZF6960_NAME</name>
+        <db>
+            <host>127.0.0.1</host>
+            <user>username</user>
+            <pass>password</pass>
+            <name>live</name>
+        </db>
+    </root>
+</config>
\ No newline at end of file
Index: tests/Zend/Config/XmlTest.php
===================================================================
--- tests/Zend/Config/XmlTest.php	(revision 16021)
+++ tests/Zend/Config/XmlTest.php	(working copy)
@@ -43,9 +43,11 @@
     protected $_xmlFileAllSectionsConfig;
     protected $_xmlFileCircularConfig;
     protected $_xmlFileInvalid;
+    protected $_xmlFileConstants;
 
     public function setUp()
     {
+        $this->_xmlFileConstants = dirname(__FILE__) . '/_files/constants.xml';
         $this->_xmlFileConfig = dirname(__FILE__) . '/_files/config.xml';
         $this->_xmlFileAllSectionsConfig = dirname(__FILE__) . '/_files/allsections.xml';
         $this->_xmlFileCircularConfig = dirname(__FILE__) . '/_files/circular.xml';
@@ -217,6 +219,19 @@
             $this->assertContains('failed to load', $expected->getMessage());
         }
     }
+    
+    /**
+     * @group ZF-6960
+     *
+     */
+    public function testZF6960_ConstantsMustBeReplacedInXml()
+    {
+        define ('ZF6960_HOST', 'testHost');
+        define ('ZF6960_NAME', 'testName');
+        $config = new Zend_Config_Xml($this->_xmlFileConstants);
+        $this->assertContains('testHost', $config->root->hostname);
+        $this->assertContains('testName', $config->root->name);
+    }
 
     public function testShortParamsOne()
     {