diff --git a/configure.ac b/configure.ac
index ffeff3a5..64d60adf 100644
--- a/configure.ac
+++ b/configure.ac
@@ -2,7 +2,7 @@ AC_INIT(nix, 0.12)
 AC_CONFIG_SRCDIR(README)
 AC_CONFIG_AUX_DIR(config)
 AM_INIT_AUTOMAKE([dist-bzip2 foreign])
-        
+
 # Change to `1' to produce a `stable' release (i.e., the `preREVISION'
 # suffix is not added).
 STABLE=0
@@ -18,8 +18,6 @@ fi
 
 AC_DEFINE_UNQUOTED(NIX_VERSION, ["$VERSION"], [Nix version.])
 
-AC_PREFIX_DEFAULT(/nix)
-
 AC_CANONICAL_HOST
 
 
@@ -61,6 +59,10 @@ AC_SUBST(system)
 AC_DEFINE_UNQUOTED(SYSTEM, ["$system"], [platform identifier (`cpu-os')])
 
 
+# State should be stored in /nix/var, unless the user overrides it explicitly.
+test "$localstatedir" = '${prefix}/var' && localstatedir=/nix/var
+
+
 # Windows-specific stuff.
 if test "$sys_name" = "cygwin"; then
     # We cannot delete open files.
@@ -174,7 +176,7 @@ AC_SUBST(xmlflags)
 
 AC_ARG_WITH(store-dir, AC_HELP_STRING([--with-store-dir=PATH],
   [path of the Nix store]),
-  storedir=$withval, storedir='${prefix}/store')
+  storedir=$withval, storedir='/nix/store')
 AC_SUBST(storedir)
 
 AC_ARG_ENABLE(old-db-compat, AC_HELP_STRING([--disable-old-db-compat],
@@ -240,7 +242,7 @@ if test -z "$bzip2"; then
   bzip2_lib='-L${top_builddir}/externals/inst-bzip2/lib -lbz2'
   bzip2_include='-I${top_builddir}/externals/inst-bzip2/include'
   # The binary will be copied to $libexecdir.
-  bzip2_bin='${libexecdir}'
+  bzip2_bin='${libexecdir}/nix'
   # But for testing, we have to use the temporary copy :-(
   bzip2_bin_test='${top_builddir}/externals/inst-bzip2/bin'
 else
diff --git a/nix.spec.in b/nix.spec.in
index 5cc66063..34b49f63 100644
--- a/nix.spec.in
+++ b/nix.spec.in
@@ -16,8 +16,7 @@ Group: Software Deployment
 URL: http://nixos.org/
 Source0: %{name}-@version@.tar.bz2
 BuildRoot: %{_tmppath}/%{name}-%{version}-buildroot
-%define _prefix /nix
-Prefix: %{_prefix}
+Prefix: /usr
 Requires: /usr/bin/perl
 Requires: curl
 
@@ -76,9 +75,9 @@ fi
 %{_prefix}/lib
 %{_prefix}/libexec
 %{_prefix}/include
-%{_prefix}/var
 %{_prefix}/share
-%{_prefix}/store
+/nix/var
+/nix/store
 %config
 %{_prefix}/etc
 #%doc
diff --git a/tests/init.sh b/tests/init.sh
index 0ce4fe7b..9beaf086 100644
--- a/tests/init.sh
+++ b/tests/init.sh
@@ -29,9 +29,9 @@ ln -s $TOP/scripts/nix-build $NIX_BIN_DIR/
 ln -s $TOP/scripts/nix-install-package $NIX_BIN_DIR/
 ln -s $TOP/scripts/nix-push $NIX_BIN_DIR/
 ln -s $TOP/scripts/nix-pull $NIX_BIN_DIR/
-ln -s $bzip2_bin_test/bzip2 $NIX_BIN_DIR/
-ln -s $bzip2_bin_test/bunzip2 $NIX_BIN_DIR/
 mkdir $NIX_BIN_DIR/nix
+ln -s $bzip2_bin_test/bzip2 $NIX_BIN_DIR/nix/
+ln -s $bzip2_bin_test/bunzip2 $NIX_BIN_DIR/nix/
 ln -s $TOP/scripts/copy-from-other-stores.pl $NIX_BIN_DIR/nix/
 ln -s $TOP/scripts/download-using-manifests.pl $NIX_BIN_DIR/nix/
 ln -s $TOP/scripts/readmanifest.pm $NIX_BIN_DIR/nix/