Configuring diff tool with .gitconfig

Others have done a 99% answer on this, but there is one step left out. (My answer will be coming from OS X so you will have to change file paths accordingly.)

You make these changes to your ~/.gitconfig:

[diff]
    tool = diffmerge
[difftool "diffmerge"]
    cmd = /Applications/Diffmerge.app/Contents/MacOS/diffmerge $LOCAL $REMOTE

This will fix the diff tool. You can also fix this without editing the ~/.gitconfig directly by entering these commands from the terminal:

git config --global diff.tool diffmerge
git config --global difftool.diffmerge.cmd "/Applications/DiffMerge.appContents/MacOS/diffmerge \$LOCAL \$REMOTE"

The 1% that everyone else failed to mention is when using this you can't just run git diff myfile.txt; you need to run git difftool myfile.txt.

Git offers a range of difftools pre-configured "out-of-the-box" (kdiff3, kompare, tkdiff, meld, xxdiff, emerge, vimdiff, gvimdiff, ecmerge, diffuse, opendiff, p4merge and araxis), and also allows you to specify your own. To use one of the pre-configured difftools (for example, "vimdiff"), you add the following lines to your ~/.gitconfig:

[diff]
    tool = vimdiff

Now, you will be able to run "git difftool" and use your tool of choice.

Specifying your own difftool, on the other hand, takes a little bit more work, see How do I view 'git diff' output with my preferred diff tool/ viewer?

An additional way to do that (from the command line):

git config --global diff.tool tkdiff
git config --global merge.tool tkdiff
git config --global --add difftool.prompt false

The first two lines will set the difftool and mergetool to tkdiff- change that according to your preferences. The third line disables the annoying prompt so whenever you hit git difftool it will automatically launch the difftool.