diff --git a/.hgignore b/.hgignore
index 9cec915..1b4b5a4 100644
--- a/.hgignore
+++ b/.hgignore
@@ -1,3 +1,5 @@
 .o$
 ~$
 ^flexnbd$
+^build/
+^pkg/
diff --git a/Rakefile b/Rakefile
index a8d47cc..89f9cf1 100644
--- a/Rakefile
+++ b/Rakefile
@@ -1,7 +1,8 @@
 DEBUG  = true
 
-SOURCES = %w( flexnbd ioutil readwrite serve util parse control remote )
-OBJECTS = SOURCES.map { |s| "#{s}.o" }
+SOURCES = FileList['src/*.c']
+OBJECTS = SOURCES.pathmap( "%{^src,build}X.o" )
+
 LIBS    = %w( pthread )
 CCFLAGS = %w( -Wall )
 LDFLAGS = []
@@ -15,52 +16,66 @@ if DEBUG
 end
 
 desc "Build flexnbd binary"
-rule 'default' => 'flexnbd'
+task :flexnbd => 'build/flexnbd'
 
 namespace "test" do
   desc "Run all tests"
   task 'run' => ["unit", "scenarios"]
-  
+
   desc "Build C tests"
-  task 'build' => TEST_MODULES.map { |n| "tests/check_#{n}" }
-  
+  task 'build' => TEST_MODULES.map { |n| "build/tests/check_#{n}" }
+
   desc "Run C tests"
   task 'unit' => 'build' do
     TEST_MODULES.each do |n|
       ENV['EF_DISABLE_BANNER'] = '1'
-      sh "./tests/check_#{n}"
+      sh "build/tests/check_#{n}"
     end
   end
-  
+
   desc "Run NBD test scenarios"
   task 'scenarios' => 'flexnbd' do
     sh "cd tests; ruby nbd_scenarios"
   end
 end
 
+
 def gcc_link(target, objects)
+  FileUtils.mkdir_p File.dirname( target )
+
   sh "gcc #{LDFLAGS.join(' ')} "+
     LIBS.map { |l| "-l#{l}" }.join(" ")+
+    " -I src" +
     " -o #{target} "+
     objects.join(" ")
 end
 
-rule 'flexnbd' => OBJECTS do |t|
+rule 'build/flexnbd' => OBJECTS do |t|
   gcc_link(t.name, t.sources)
 end
 
-rule(/tests\/check_[a-z]+$/ => [ proc { |target| [target+".o", "util.o"] } ]) do |t|
-  gcc_link(t.name, t.sources + [LIBCHECK])
+TEST_MODULES.each do |m|
+  deps = ["tests/check_#{m}.c", "build/util.o"]
+  maybe_obj_name = "build/#{m}.o"
+
+  deps << maybe_obj_name if OBJECTS.include?( maybe_obj_name )
+
+  file "build/tests/check_#{m}" => deps do |t|
+    gcc_link(t.name, deps + [LIBCHECK])
+  end
 end
 
-rule '.o' => '.c' do |t|
-  sh "gcc -I. -c #{CCFLAGS.join(' ')} -o #{t.name} #{t.source} "
+
+OBJECTS.zip( SOURCES ).each do |o,c|
+  file o => c do |t|
+    FileUtils.mkdir_p File.dirname( o )
+    sh "gcc -Isrc -c #{CCFLAGS.join(' ')} -o #{o} #{c} "
+  end
 end
 
 desc "Remove all build targets, binaries and temporary files"
 rule 'clean' do
-  sh "rm -f *~ flexnbd " + (
-    OBJECTS + 
+  sh "rm -rf *~ build " + (
     TEST_MODULES.map { |n| ["tests/check_#{n}", "tests/check_#{n}.o"] }.flatten
   ).
   join(" ")
diff --git a/bitset.h b/src/bitset.h
similarity index 100%
rename from bitset.h
rename to src/bitset.h
diff --git a/control.c b/src/control.c
similarity index 100%
rename from control.c
rename to src/control.c
diff --git a/control.h b/src/control.h
similarity index 100%
rename from control.h
rename to src/control.h
diff --git a/flexnbd.c b/src/flexnbd.c
similarity index 100%
rename from flexnbd.c
rename to src/flexnbd.c
diff --git a/ioutil.c b/src/ioutil.c
similarity index 100%
rename from ioutil.c
rename to src/ioutil.c
diff --git a/ioutil.h b/src/ioutil.h
similarity index 100%
rename from ioutil.h
rename to src/ioutil.h
diff --git a/nbdtypes.h b/src/nbdtypes.h
similarity index 100%
rename from nbdtypes.h
rename to src/nbdtypes.h
diff --git a/params.h b/src/params.h
similarity index 100%
rename from params.h
rename to src/params.h
diff --git a/parse.c b/src/parse.c
similarity index 100%
rename from parse.c
rename to src/parse.c
diff --git a/parse.h b/src/parse.h
similarity index 100%
rename from parse.h
rename to src/parse.h
diff --git a/readwrite.c b/src/readwrite.c
similarity index 100%
rename from readwrite.c
rename to src/readwrite.c
diff --git a/readwrite.h b/src/readwrite.h
similarity index 100%
rename from readwrite.h
rename to src/readwrite.h
diff --git a/remote.c b/src/remote.c
similarity index 100%
rename from remote.c
rename to src/remote.c
diff --git a/serve.c b/src/serve.c
similarity index 100%
rename from serve.c
rename to src/serve.c
diff --git a/util.c b/src/util.c
similarity index 100%
rename from util.c
rename to src/util.c
diff --git a/util.h b/src/util.h
similarity index 100%
rename from util.h
rename to src/util.h
diff --git a/tests/nbd_scenarios b/tests/nbd_scenarios
index faa4767..7392112 100644
--- a/tests/nbd_scenarios
+++ b/tests/nbd_scenarios
@@ -13,39 +13,39 @@ class NBDScenarios < Test::Unit::TestCase
     @available_ports = [*40000..41000] - listening_ports
     @port1 = @available_ports.shift
     @port2 = @available_ports.shift
-    @nbd1 = FlexNBD.new("../flexnbd", @ip, @port1)
-  end 
-  
+    @nbd1 = FlexNBD.new("../build/flexnbd", @ip, @port1)
+  end
+
   def teardown
     @nbd1.kill rescue nil
     [@filename1, @filename2].each do |f|
       File.unlink(f) if File.exists?(f)
     end
   end
-  
+
   def test_read1
     writefile1("f"*64)
     serve1
-    
+
     [0, 12, 63].each do |num|
-    
+
       assert_equal(
-        @nbd1.read(num*@blocksize, @blocksize), 
+        @nbd1.read(num*@blocksize, @blocksize),
         @file1.read(num*@blocksize, @blocksize)
       )
     end
-    
+
     [124, 1200, 10028, 25488].each do |num|
       assert_equal(@nbd1.read(num, 4), @file1.read(num, 4))
     end
   end
-  
-  # Check that we're not 
+
+  # Check that we're not
   #
   def test_writeread1
     writefile1("0"*64)
     serve1
-    
+
     [0, 12, 63].each do |num|
       data = "X"*@blocksize
       @nbd1.write(num*@blocksize, data)
@@ -53,14 +53,14 @@ class NBDScenarios < Test::Unit::TestCase
       assert_equal(data, @nbd1.read(num*@blocksize, data.size))
     end
   end
-  
+
   # Check that we're not overstepping or understepping where our writes end
   # up.
   #
   def test_writeread2
     writefile1("0"*1024)
     serve1
-    
+
     d0 = "\0"*@blocksize
     d1 = "X"*@blocksize
     (0..63).each do |num|
@@ -70,16 +70,16 @@ class NBDScenarios < Test::Unit::TestCase
       assert_equal(d0, @nbd1.read(((2*num)+1)*@blocksize, d0.size))
     end
   end
-  
+
   protected
   def serve1(*acl)
     @nbd1.serve(@ip, @port1, @filename1, *acl)
   end
-  
+
   def writefile1(data)
     @file1 = TestFileWriter.new(@filename1, @blocksize).write(data)
   end
-  
+
   def listening_ports
     `netstat -ltn`.
       split("\n").