diff --git a/homeassistant/__main__.py b/homeassistant/__main__.py
index 6dbb609ec05..f12758a354d 100644
--- a/homeassistant/__main__.py
+++ b/homeassistant/__main__.py
@@ -31,7 +31,7 @@ def validate_python():
 def ensure_config_path(config_dir):
     """Validate the configuration directory."""
     import homeassistant.config as config_util
-    lib_dir = os.path.join(config_dir, 'lib')
+    lib_dir = os.path.join(config_dir, 'deps')
 
     # Test if configuration directory exists
     if not os.path.isdir(config_dir):
diff --git a/homeassistant/bootstrap.py b/homeassistant/bootstrap.py
index 2ba0681c2d6..7be0c9dd371 100644
--- a/homeassistant/bootstrap.py
+++ b/homeassistant/bootstrap.py
@@ -65,7 +65,7 @@ def _handle_requirements(hass, component, name):
         return True
 
     for req in component.REQUIREMENTS:
-        if not pkg_util.install_package(req, target=hass.config.path('lib')):
+        if not pkg_util.install_package(req, target=hass.config.path('deps')):
             _LOGGER.error('Not initializing %s because could not install '
                           'dependency %s', name, req)
             return False
@@ -211,7 +211,7 @@ def prepare_setup_platform(hass, config, domain, platform_name):
 
 def mount_local_lib_path(config_dir):
     """Add local library to Python Path."""
-    sys.path.insert(0, os.path.join(config_dir, 'lib'))
+    sys.path.insert(0, os.path.join(config_dir, 'deps'))
 
 
 # pylint: disable=too-many-branches, too-many-statements, too-many-arguments
@@ -372,10 +372,16 @@ def process_ha_config_upgrade(hass):
     _LOGGER.info('Upgrading config directory from %s to %s', conf_version,
                  __version__)
 
+    # This was where dependencies were installed before v0.18
+    # Probably should keep this around until ~v0.20.
     lib_path = hass.config.path('lib')
     if os.path.isdir(lib_path):
         shutil.rmtree(lib_path)
 
+    lib_path = hass.config.path('deps')
+    if os.path.isdir(lib_path):
+        shutil.rmtree(lib_path)
+
     with open(version_path, 'wt') as outp:
         outp.write(__version__)
 
diff --git a/tests/test_bootstrap.py b/tests/test_bootstrap.py
index d38c3968533..152818d02e4 100644
--- a/tests/test_bootstrap.py
+++ b/tests/test_bootstrap.py
@@ -58,7 +58,7 @@ class TestBootstrap:
         """Test removal of library on upgrade."""
         with tempfile.TemporaryDirectory() as config_dir:
             version_path = os.path.join(config_dir, '.HA_VERSION')
-            lib_dir = os.path.join(config_dir, 'lib')
+            lib_dir = os.path.join(config_dir, 'deps')
             check_file = os.path.join(lib_dir, 'check')
 
             with open(version_path, 'wt') as outp:
@@ -79,7 +79,7 @@ class TestBootstrap:
         """Test removal of library with no upgrade."""
         with tempfile.TemporaryDirectory() as config_dir:
             version_path = os.path.join(config_dir, '.HA_VERSION')
-            lib_dir = os.path.join(config_dir, 'lib')
+            lib_dir = os.path.join(config_dir, 'deps')
             check_file = os.path.join(lib_dir, 'check')
 
             with open(version_path, 'wt') as outp:
diff --git a/tests/util/test_package.py b/tests/util/test_package.py
index 840fe3d0ff8..ea9a8f23dfa 100644
--- a/tests/util/test_package.py
+++ b/tests/util/test_package.py
@@ -21,7 +21,7 @@ class TestPackageUtil(unittest.TestCase):
     def setUp(self):
         """Create local library for testing."""
         self.tmp_dir = tempfile.TemporaryDirectory()
-        self.lib_dir = os.path.join(self.tmp_dir.name, 'lib')
+        self.lib_dir = os.path.join(self.tmp_dir.name, 'deps')
 
     def tearDown(self):
         """Stop everything that was started."""