diff --git a/.gitignore b/.gitignore
index 8e146282..6707f606 100644
--- a/.gitignore
+++ b/.gitignore
@@ -3,4 +3,3 @@
 /src/.phutil_module_cache
 /docs/
 /.divinercache/
-/.arc/
diff --git a/src/repository/api/ArcanistGitAPI.php b/src/repository/api/ArcanistGitAPI.php
index 21a5ffc7..aaab2392 100644
--- a/src/repository/api/ArcanistGitAPI.php
+++ b/src/repository/api/ArcanistGitAPI.php
@@ -53,6 +53,10 @@ final class ArcanistGitAPI extends ArcanistRepositoryAPI {
     return 'git';
   }
 
+  public function getMetadataPath() {
+    return $this->getPath('.git');
+  }
+
   public function getHasCommits() {
     return !$this->repositoryHasNoCommits;
   }
@@ -192,7 +196,7 @@ final class ArcanistGitAPI extends ArcanistRepositoryAPI {
         if ($default_relative) {
           $this->relativeExplanation =
             "it is the merge-base of '{$default_relative}' and HEAD, as ".
-            "specified in '.arc/default-relative-commit'.";
+            "specified in '.git/arc/default-relative-commit'.";
         }
       }
 
diff --git a/src/repository/api/ArcanistMercurialAPI.php b/src/repository/api/ArcanistMercurialAPI.php
index fa5c74c6..03d9fa19 100644
--- a/src/repository/api/ArcanistMercurialAPI.php
+++ b/src/repository/api/ArcanistMercurialAPI.php
@@ -58,6 +58,10 @@ final class ArcanistMercurialAPI extends ArcanistRepositoryAPI {
     return 'hg';
   }
 
+  public function getMetadataPath() {
+    return $this->getPath('.hg');
+  }
+
   public function getSourceControlBaseRevision() {
     return $this->getCanonicalRevisionName($this->getRelativeCommit());
   }
diff --git a/src/repository/api/ArcanistRepositoryAPI.php b/src/repository/api/ArcanistRepositoryAPI.php
index 9440c89e..a049c9ad 100644
--- a/src/repository/api/ArcanistRepositoryAPI.php
+++ b/src/repository/api/ArcanistRepositoryAPI.php
@@ -175,6 +175,7 @@ abstract class ArcanistRepositoryAPI {
   abstract public function supportsRelativeLocalCommits();
   abstract public function getWorkingCopyRevision();
   abstract public function updateWorkingCopy();
+  abstract public function getMetadataPath();
   abstract public function loadWorkingCopyDifferentialRevisions(
     ConduitClient $conduit,
     array $query);
@@ -353,7 +354,32 @@ abstract class ArcanistRepositoryAPI {
    * @task scratch
    */
   public function getScratchFilePath($path) {
-    return $this->getPath('.arc/'.$path);
+    $new_scratch_path  = Filesystem::resolvePath(
+      'arc',
+      $this->getMetadataPath());
+
+    static $checked = false;
+    if (!$checked) {
+      $checked = true;
+      $old_scratch_path = $this->getPath('.arc');
+      // we only want to do the migration once
+      // unfortunately, people have checked in .arc directories which
+      // means that the old one may get recreated after we delete it
+      if (Filesystem::pathExists($old_scratch_path) &&
+          !Filesystem::pathExists($new_scratch_path)) {
+        Filesystem::createDirectory($new_scratch_path);
+        $existing_files = Filesystem::listDirectory($old_scratch_path, true);
+        foreach ($existing_files as $file) {
+          $new_path = Filesystem::resolvePath($file, $new_scratch_path);
+          $old_path = Filesystem::resolvePath($file, $old_scratch_path);
+          Filesystem::writeFile(
+            $new_path,
+            Filesystem::readFile($old_path));
+        }
+        Filesystem::remove($old_scratch_path);
+      }
+    }
+    return Filesystem::resolvePath($path, $new_scratch_path);
   }
 
 }
diff --git a/src/repository/api/ArcanistSubversionAPI.php b/src/repository/api/ArcanistSubversionAPI.php
index ee27665a..0c165a62 100644
--- a/src/repository/api/ArcanistSubversionAPI.php
+++ b/src/repository/api/ArcanistSubversionAPI.php
@@ -36,6 +36,10 @@ final class ArcanistSubversionAPI extends ArcanistRepositoryAPI {
     return 'svn';
   }
 
+  public function getMetadataPath() {
+    return $this->getPath('.svn');
+  }
+
   protected function buildLocalFuture(array $argv) {
 
     $argv[0] = 'svn '.$argv[0];