diff --git a/ivy/Ivy.scala b/ivy/Ivy.scala
index 21ba28bff..22d52a6a6 100644
--- a/ivy/Ivy.scala
+++ b/ivy/Ivy.scala
@@ -63,8 +63,9 @@ final class IvySbt(val configuration: IvyConfiguration)
 		configuration match
 		{
 			case e: ExternalIvyConfiguration => is.load(e.file)
-			case i: InlineIvyConfiguration => 
-				IvySbt.configureCache(is, i.paths.cacheDirectory, i.localOnly)
+			case i: InlineIvyConfiguration =>
+				i.paths.ivyHome foreach settings.setDefaultIvyUserDir
+				IvySbt.configureCache(is, i.localOnly)
 				IvySbt.setResolvers(is, i.resolvers, i.otherResolvers, i.localOnly, configuration.log)
 				IvySbt.setModuleConfigurations(is, i.moduleConfigurations)
 		}
@@ -226,9 +227,9 @@ private object IvySbt
 			settings.addModuleConfiguration(attributes, settings.getMatcher(EXACT_OR_REGEXP), resolver.name, null, null, null)
 		}
 	}
-	private def configureCache(settings: IvySettings, dir: Option[File], localOnly: Boolean)
+	private def configureCache(settings: IvySettings, localOnly: Boolean)
 	{
-		val cacheDir = dir.getOrElse(settings.getDefaultRepositoryCacheBasedir())
+		val cacheDir = settings.getDefaultRepositoryCacheBasedir()
 		val manager = new DefaultRepositoryCacheManager("default-cache", settings, cacheDir) {
 			override def findModuleInCache(dd: DependencyDescriptor, revId: ModuleRevisionId, options: CacheMetadataOptions, r: String) =
 				super.findModuleInCache(dd,revId,options,null)
@@ -243,7 +244,6 @@ private object IvySbt
 		}
 		settings.addRepositoryCacheManager(manager)
 		settings.setDefaultRepositoryCacheManager(manager)
-		dir.foreach(dir => settings.setDefaultResolutionCacheBasedir(dir.getAbsolutePath))
 	}
 	def toIvyConfiguration(configuration: Configuration) =
 	{
diff --git a/ivy/IvyConfigurations.scala b/ivy/IvyConfigurations.scala
index 6903c44d8..cc8bbd46f 100644
--- a/ivy/IvyConfigurations.scala
+++ b/ivy/IvyConfigurations.scala
@@ -6,9 +6,9 @@ package sbt
 import java.io.File
 import scala.xml.{Node, NodeSeq}
 
-final class IvyPaths(val baseDirectory: File, val cacheDirectory: Option[File])
+final class IvyPaths(val baseDirectory: File, val ivyHome: Option[File])
 {
-	def withBase(newBaseDirectory: File) = new IvyPaths(newBaseDirectory, cacheDirectory)
+	def withBase(newBaseDirectory: File) = new IvyPaths(newBaseDirectory, ivyHome)
 }
 sealed trait IvyConfiguration
 {
diff --git a/main/actions/CacheIvy.scala b/main/actions/CacheIvy.scala
index b9516ec59..c993bb710 100644
--- a/main/actions/CacheIvy.scala
+++ b/main/actions/CacheIvy.scala
@@ -146,7 +146,7 @@ object CacheIvy
 
 	object L1 {
 		implicit def retrieveToHL = (r: RetrieveConfiguration) => exists(r.retrieveDirectory) :+: r.outputPattern :+: HNil
-		implicit def ivyPathsToHL = (p: IvyPaths) => exists(p.baseDirectory) :+: p.cacheDirectory.map(exists.apply) :+: HNil
+		implicit def ivyPathsToHL = (p: IvyPaths) => exists(p.baseDirectory) :+: p.ivyHome.map(exists.apply) :+: HNil
 		implicit def ivyScalaHL = (i: IvyScala) => i.scalaVersion :+: names(i.configurations) :+: i.checkExplicit :+: i.filterImplicit :+: HNil
 		implicit def configurationToHL = (c: Configuration) => c.name :+: c.description :+: c.isPublic :+: names(c.extendsConfigs) :+: c.transitive :+: HNil
 
diff --git a/sbt/src/sbt-test/dependency-management/artifact/project/ArtifactTest.scala b/sbt/src/sbt-test/dependency-management/artifact/project/ArtifactTest.scala
new file mode 100644
index 000000000..c4cceac49
--- /dev/null
+++ b/sbt/src/sbt-test/dependency-management/artifact/project/ArtifactTest.scala
@@ -0,0 +1,42 @@
+	import sbt._
+	import Keys._
+
+object ArtifactTest extends Build
+{
+	lazy val projects = Seq(root)
+	lazy val root = Project("root", file(".")) settings(
+		ivyPaths <<= (baseDirectory, target)( (dir, t) => new IvyPaths(dir, Some(t))),
+		publishTo := Some(Resolver.file("Test Publish Repo", file("test-repo"))),
+		resolvers <<= (resolvers, publishTo)(_ ++ _.toList),
+		jarName in Compile := ArtifactName(base := artifactID, version = vers, tpe = classifier, ext = ext, cross = "", config = ""),
+		projectID := (if(retrieve) retrieveID else publishedID),
+		artifacts := artifact :: Nil
+		libraryDependencies ++= (if(retrieve) publishedID :: Nil else Nil),
+			// needed to add a jar with a different extension to the classpath
+		classpathFilter := "*." + ext,
+		check <<= checkTask
+	)
+
+	lazy val check = TaskKey[Unit]("check")
+
+	// define strings for defining the artifact
+	def artifactID = "test"
+	def ext = "test2"
+	def classifier = "test3"
+	def tpe = "test1"
+	def vers = "1.1"
+	def org = "test"
+
+	def artifact = Artifact(artifactID, tpe, ext, classifier)
+	
+	// define the IDs to use for publishing and retrieving
+	def publishedID = org % artifactID % vers artifacts(artifact)
+	def retrieveID = org % "test-retrieve" % "2.0"
+	
+	// check that the test class is on the compile classpath, either because it was compiled or because it was properly retrieved
+	def checkTask = (fullClasspath in Compile, scalaInstance) map { (cp, si) =>
+		val loader = classpath.ClasspathUtilities.toLoader(cp.files, si.loader)
+		try { Class.forName("test.Test", false, loader) }
+		catch { case _: ClassNotFoundException | _: NoClassDefFoundError => error("Dependency not retrieved properly") }
+	}
+}
diff --git a/sbt/src/sbt-test/dependency-management/artifact/project/build.properties b/sbt/src/sbt-test/dependency-management/artifact/project/build.properties
deleted file mode 100644
index 2b4d7e5a1..000000000
--- a/sbt/src/sbt-test/dependency-management/artifact/project/build.properties
+++ /dev/null
@@ -1,2 +0,0 @@
-project.name=Test
-project.version=1.0
\ No newline at end of file
diff --git a/sbt/src/sbt-test/dependency-management/artifact/project/build/ArtifactTest.scala b/sbt/src/sbt-test/dependency-management/artifact/project/build/ArtifactTest.scala
deleted file mode 100644
index 71197de44..000000000
--- a/sbt/src/sbt-test/dependency-management/artifact/project/build/ArtifactTest.scala
+++ /dev/null
@@ -1,44 +0,0 @@
-import sbt._
-
-class ArtifactTest(info: ProjectInfo) extends DefaultProject(info)
-{
-	// use cache specific to this test
-	override def ivyCacheDirectory = Some(outputPath / "ivy-cache")
-
-	// define a test repository to publish to
-	override def managedStyle = ManagedStyle.Maven
-	val publishTo = Resolver.file("Test Publish Repo", "test-repo" asFile)
-
-	// include the publishTo repository, which is normally excluded
-	override def ivyRepositories = publishTo :: Nil
-
-	// define strings for defining the artifact
-	override def artifactID = "test"
-	def ext = "test2"
-	def classifier = "test3"
-	def tpe = "test1"
-	def vers = "1.1"
-	def org = "test"
-	// define the jar
-	override def jarPath = outputPath / (artifactID + "-" + vers + "-" + classifier + "." + ext)
-	def artifact = Artifact(artifactID, tpe, ext, classifier)
-	
-	// define the IDs to use for publishing and retrieving
-	def publishedID = org % artifactID % vers artifacts(artifact)
-	def retrieveID = org % "test-retrieve" % "2.0"
-	
-	override def projectID = if(retrieve) retrieveID else publishedID
-	override def libraryDependencies = if(retrieve) Set(publishedID) else super.libraryDependencies
-	
-	// switches between publish and retrieve mode
-	def retrieve = "retrieve".asFile.exists
-	// needed to add a jar with a different extension to the classpath
-	override def classpathFilter = "*." + ext
-	
-	// check that the test class is on the compile classpath, either because it was compiled or because it was properly retrieved
-	lazy val check  = task { check0 }
-	def check0 =
-		try { Class.forName("test.Test", false, loader); None }
-		catch { case _: ClassNotFoundException | _: NoClassDefFoundError => Some("Dependency not retrieved properly") }
-	def loader = ClasspathUtilities.toLoader(compileClasspath, buildScalaInstance.loader)
-}