diff --git a/nix.spec.in b/nix.spec.in
index 477768c6a..6b9e37637 100644
--- a/nix.spec.in
+++ b/nix.spec.in
@@ -106,7 +106,7 @@ chmod 1775 $RPM_BUILD_ROOT/nix/store
 for d in profiles gcroots;
 do
   mkdir -p $RPM_BUILD_ROOT/nix/var/nix/$d/per-user
-  chmod 1777 $RPM_BUILD_ROOT/nix/var/nix/$d/per-user
+  chmod 755 $RPM_BUILD_ROOT/nix/var/nix/$d/per-user
 done
 
 # fix permission of nix profile
diff --git a/scripts/install-multi-user.sh b/scripts/install-multi-user.sh
index fd0f54184..d060e5165 100644
--- a/scripts/install-multi-user.sh
+++ b/scripts/install-multi-user.sh
@@ -437,24 +437,17 @@ create_build_users() {
 }
 
 create_directories() {
+    # FIXME: remove all of this because it duplicates LocalStore::LocalStore().
+
     _sudo "to make the basic directory structure of Nix (part 1)" \
-          mkdir -pv -m 0755 /nix /nix/var /nix/var/log /nix/var/log/nix /nix/var/log/nix/drvs /nix/var/nix{,/db,/gcroots,/profiles,/temproots,/userpool}
+          mkdir -pv -m 0755 /nix /nix/var /nix/var/log /nix/var/log/nix /nix/var/log/nix/drvs /nix/var/nix{,/db,/gcroots,/profiles,/temproots,/userpool} /nix/var/nix/{gcroots,profiles}/per-user
 
     _sudo "to make the basic directory structure of Nix (part 2)" \
-          mkdir -pv -m 1777 /nix/var/nix/{gcroots,profiles}/per-user
-
-    _sudo "to make the basic directory structure of Nix (part 3)" \
           mkdir -pv -m 1775 /nix/store
 
-    _sudo "to make the basic directory structure of Nix (part 4)" \
+    _sudo "to make the basic directory structure of Nix (part 3)" \
           chgrp "$NIX_BUILD_GROUP_NAME" /nix/store
 
-    _sudo "to set up the root user's profile (part 1)" \
-          mkdir -pv -m 0755 /nix/var/nix/profiles/per-user/root
-
-    _sudo "to set up the root user's profile (part 2)" \
-          mkdir -pv -m 0700 "$ROOT_HOME/.nix-defexpr"
-
     _sudo "to place the default nix daemon configuration (part 1)" \
           mkdir -pv -m 0555 /etc/nix
 }
@@ -497,7 +490,7 @@ EOF
 We will:
 
  - make sure your computer doesn't already have Nix files
-   (if it does, I  will tell you how to clean them up.)
+   (if it does, I will tell you how to clean them up.)
  - create local users (see the list above for the users we'll make)
  - create a local group ($NIX_BUILD_GROUP_NAME)
  - install Nix in to $NIX_ROOT
diff --git a/scripts/nix-profile-daemon.sh.in b/scripts/nix-profile-daemon.sh.in
index 23da5e855..47655080a 100644
--- a/scripts/nix-profile-daemon.sh.in
+++ b/scripts/nix-profile-daemon.sh.in
@@ -5,45 +5,6 @@ __ETC_PROFILE_NIX_SOURCED=1
 export NIX_USER_PROFILE_DIR="@localstatedir@/nix/profiles/per-user/$USER"
 export NIX_PROFILES="@localstatedir@/nix/profiles/default $HOME/.nix-profile"
 
-# Set up the per-user profile.
-mkdir -m 0755 -p $NIX_USER_PROFILE_DIR
-if ! test -O "$NIX_USER_PROFILE_DIR"; then
-    echo "WARNING: bad ownership on $NIX_USER_PROFILE_DIR" >&2
-fi
-
-if test -w $HOME; then
-  if ! test -L $HOME/.nix-profile; then
-      if test "$USER" != root; then
-          ln -s $NIX_USER_PROFILE_DIR/profile $HOME/.nix-profile
-      else
-          # Root installs in the system-wide profile by default.
-          ln -s @localstatedir@/nix/profiles/default $HOME/.nix-profile
-      fi
-  fi
-
-  # Subscribe the root user to the NixOS channel by default.
-  if [ "$USER" = root -a ! -e $HOME/.nix-channels ]; then
-      echo "https://nixos.org/channels/nixpkgs-unstable nixpkgs" > $HOME/.nix-channels
-  fi
-
-  # Create the per-user garbage collector roots directory.
-  NIX_USER_GCROOTS_DIR=@localstatedir@/nix/gcroots/per-user/$USER
-  mkdir -m 0755 -p $NIX_USER_GCROOTS_DIR
-  if ! test -O "$NIX_USER_GCROOTS_DIR"; then
-      echo "WARNING: bad ownership on $NIX_USER_GCROOTS_DIR" >&2
-  fi
-
-  # Set up a default Nix expression from which to install stuff.
-  if [ ! -e $HOME/.nix-defexpr -o -L $HOME/.nix-defexpr ]; then
-      rm -f $HOME/.nix-defexpr
-      mkdir -p $HOME/.nix-defexpr
-      if [ "$USER" != root ]; then
-          ln -s @localstatedir@/nix/profiles/per-user/root/channels $HOME/.nix-defexpr/channels_root
-      fi
-  fi
-fi
-
-
 # Set $NIX_SSL_CERT_FILE so that Nixpkgs applications like curl work.
 if [ ! -z "${NIX_SSL_CERT_FILE:-}" ]; then
     : # Allow users to override the NIX_SSL_CERT_FILE
diff --git a/scripts/nix-profile.sh.in b/scripts/nix-profile.sh.in
index 85f1d6e5d..e15f7cd46 100644
--- a/scripts/nix-profile.sh.in
+++ b/scripts/nix-profile.sh.in
@@ -1,6 +1,4 @@
 if [ -n "$HOME" ] && [ -n "$USER" ]; then
-    __savedpath="$PATH"
-    export PATH=@coreutils@
 
     # Set up the per-user profile.
     # This part should be kept in sync with nixpkgs:nixos/modules/programs/shell.nix
@@ -9,48 +7,6 @@ if [ -n "$HOME" ] && [ -n "$USER" ]; then
 
     NIX_USER_PROFILE_DIR=@localstatedir@/nix/profiles/per-user/$USER
 
-    mkdir -m 0755 -p "$NIX_USER_PROFILE_DIR"
-
-    if [ "$(stat --printf '%u' "$NIX_USER_PROFILE_DIR")" != "$(id -u)" ]; then
-        echo "Nix: WARNING: bad ownership on "$NIX_USER_PROFILE_DIR", should be $(id -u)" >&2
-    fi
-
-    if [ -w "$HOME" ]; then
-        if ! [ -L "$NIX_LINK" ]; then
-            echo "Nix: creating $NIX_LINK" >&2
-            if [ "$USER" != root ]; then
-                if ! ln -s "$NIX_USER_PROFILE_DIR"/profile "$NIX_LINK"; then
-                    echo "Nix: WARNING: could not create $NIX_LINK -> $NIX_USER_PROFILE_DIR/profile" >&2
-                fi
-            else
-                # Root installs in the system-wide profile by default.
-                ln -s @localstatedir@/nix/profiles/default "$NIX_LINK"
-            fi
-        fi
-
-        # Subscribe the user to the unstable Nixpkgs channel by default.
-        if [ ! -e "$HOME/.nix-channels" ]; then
-            echo "https://nixos.org/channels/nixpkgs-unstable nixpkgs" > "$HOME/.nix-channels"
-        fi
-
-        # Create the per-user garbage collector roots directory.
-        __user_gcroots=@localstatedir@/nix/gcroots/per-user/"$USER"
-        mkdir -m 0755 -p "$__user_gcroots"
-        if [ "$(stat --printf '%u' "$__user_gcroots")" != "$(id -u)" ]; then
-            echo "Nix: WARNING: bad ownership on $__user_gcroots, should be $(id -u)" >&2
-        fi
-        unset __user_gcroots
-
-        # Set up a default Nix expression from which to install stuff.
-        __nix_defexpr="$HOME"/.nix-defexpr
-        [ -L "$__nix_defexpr" ] && rm -f "$__nix_defexpr"
-        mkdir -m 0755 -p "$__nix_defexpr"
-        if [ "$USER" != root ] && [ ! -L "$__nix_defexpr"/channels_root ]; then
-            ln -s @localstatedir@/nix/profiles/per-user/root/channels "$__nix_defexpr"/channels_root
-        fi
-        unset __nix_defexpr
-    fi
-
     # Append ~/.nix-defexpr/channels to $NIX_PATH so that <nixpkgs>
     # paths work when the user has fetched the Nixpkgs channel.
     export NIX_PATH=${NIX_PATH:+$NIX_PATH:}$HOME/.nix-defexpr/channels
@@ -78,6 +34,6 @@ if [ -n "$HOME" ] && [ -n "$USER" ]; then
         export MANPATH="$NIX_LINK/share/man:$MANPATH"
     fi
 
-    export PATH="$NIX_LINK/bin:$__savedpath"
-    unset __savedpath NIX_LINK NIX_USER_PROFILE_DIR
+    export PATH="$NIX_LINK/bin:$PATH"
+    unset NIX_LINK NIX_USER_PROFILE_DIR
 fi
diff --git a/src/libstore/local-store.cc b/src/libstore/local-store.cc
index 859094e61..00f3a31a2 100644
--- a/src/libstore/local-store.cc
+++ b/src/libstore/local-store.cc
@@ -70,15 +70,17 @@ LocalStore::LocalStore(const Params & params)
         createSymlink(profilesDir, gcRootsDir + "/profiles");
     }
 
+    for (auto & perUserDir : {profilesDir + "/per-user", gcRootsDir + "/per-user"}) {
+        createDirs(perUserDir);
+        if (chmod(perUserDir.c_str(), 0755) == -1)
+            throw SysError("could not set permissions on '%s' to 755", perUserDir);
+    }
+
+    createUser(getUserName(), getuid());
+
     /* Optionally, create directories and set permissions for a
        multi-user install. */
     if (getuid() == 0 && settings.buildUsersGroup != "") {
-
-        Path perUserDir = profilesDir + "/per-user";
-        createDirs(perUserDir);
-        if (chmod(perUserDir.c_str(), 01777) == -1)
-            throw SysError(format("could not set permissions on '%1%' to 1777") % perUserDir);
-
         mode_t perm = 01775;
 
         struct group * gr = getgrnam(settings.buildUsersGroup.get().c_str());
@@ -1432,4 +1434,19 @@ void LocalStore::signPathInfo(ValidPathInfo & info)
 }
 
 
+void LocalStore::createUser(const std::string & userName, uid_t userId)
+{
+    for (auto & dir : {
+        fmt("%s/profiles/per-user/%s", stateDir, userName),
+        fmt("%s/gcroots/per-user/%s", stateDir, userName)
+    }) {
+        createDirs(dir);
+        if (chmod(dir.c_str(), 0755) == -1)
+            throw SysError("changing permissions of directory '%s'", dir);
+        if (chown(dir.c_str(), userId, 0) == -1)
+            throw SysError("changing owner of directory '%s'", dir);
+    }
+}
+
+
 }
diff --git a/src/libstore/local-store.hh b/src/libstore/local-store.hh
index 3ae34c403..379a06af8 100644
--- a/src/libstore/local-store.hh
+++ b/src/libstore/local-store.hh
@@ -293,6 +293,8 @@ private:
 
     Path getRealStoreDir() override { return realStoreDir; }
 
+    void createUser(const std::string & userName, uid_t userId) override;
+
     friend class DerivationGoal;
     friend class SubstitutionGoal;
 };
diff --git a/src/libstore/store-api.hh b/src/libstore/store-api.hh
index 7fb568602..ba8990755 100644
--- a/src/libstore/store-api.hh
+++ b/src/libstore/store-api.hh
@@ -628,6 +628,9 @@ public:
         return storePath;
     }
 
+    virtual void createUser(const std::string & userName, uid_t userId)
+    { }
+
 protected:
 
     Stats stats;
diff --git a/src/libutil/util.cc b/src/libutil/util.cc
index 1b7449991..6f3bf7ae8 100644
--- a/src/libutil/util.cc
+++ b/src/libutil/util.cc
@@ -475,6 +475,16 @@ Path createTempDir(const Path & tmpRoot, const Path & prefix,
 }
 
 
+std::string getUserName()
+{
+    auto pw = getpwuid(geteuid());
+    std::string name = pw ? pw->pw_name : getEnv("USER", "");
+    if (name.empty())
+        throw Error("cannot figure out user name");
+    return name;
+}
+
+
 static Lazy<Path> getHome2([]() {
     Path homeDir = getEnv("HOME");
     if (homeDir.empty()) {
diff --git a/src/libutil/util.hh b/src/libutil/util.hh
index 07c3d28ff..f057fdb2c 100644
--- a/src/libutil/util.hh
+++ b/src/libutil/util.hh
@@ -126,6 +126,8 @@ void deletePath(const Path & path, unsigned long long & bytesFreed);
 Path createTempDir(const Path & tmpRoot = "", const Path & prefix = "nix",
     bool includePid = true, bool useGlobalCounter = true, mode_t mode = 0755);
 
+std::string getUserName();
+
 /* Return $HOME or the user's home directory from /etc/passwd. */
 Path getHome();
 
diff --git a/src/nix-channel/nix-channel.cc b/src/nix-channel/nix-channel.cc
index 06eb3d23b..70aa5c966 100755
--- a/src/nix-channel/nix-channel.cc
+++ b/src/nix-channel/nix-channel.cc
@@ -159,13 +159,7 @@ static int _main(int argc, char ** argv)
         nixDefExpr = home + "/.nix-defexpr";
 
         // Figure out the name of the channels profile.
-        ;
-        auto pw = getpwuid(geteuid());
-        std::string name = pw ? pw->pw_name : getEnv("USER", "");
-        if (name.empty())
-            throw Error("cannot figure out user name");
-        profile = settings.nixStateDir + "/profiles/per-user/" + name + "/channels";
-        createDirs(dirOf(profile));
+        profile = fmt("%s/profiles/per-user/%s/channels", settings.nixStateDir, getUserName());
 
         enum {
             cNone,
diff --git a/src/nix-daemon/nix-daemon.cc b/src/nix-daemon/nix-daemon.cc
index e88aaf636..cd18489b0 100644
--- a/src/nix-daemon/nix-daemon.cc
+++ b/src/nix-daemon/nix-daemon.cc
@@ -742,7 +742,8 @@ static void performOp(TunnelLogger * logger, ref<Store> store,
 }
 
 
-static void processConnection(bool trusted)
+static void processConnection(bool trusted,
+    const std::string & userName, uid_t userId)
 {
     MonitorFdHup monitor(from.fd);
 
@@ -793,6 +794,8 @@ static void processConnection(bool trusted)
         params["path-info-cache-size"] = "0";
         auto store = openStore(settings.storeUri, params);
 
+        store->createUser(userName, userId);
+
         tunnelLogger->stopWork();
         to.flush();
 
@@ -1053,7 +1056,7 @@ static void daemonLoop(char * * argv)
                 /* Handle the connection. */
                 from.fd = remote.get();
                 to.fd = remote.get();
-                processConnection(trusted);
+                processConnection(trusted, user, peer.uid);
 
                 exit(0);
             }, options);
@@ -1133,7 +1136,7 @@ static int _main(int argc, char * * argv)
                     }
                 }
             } else {
-                processConnection(true);
+                processConnection(true, "root", 0);
             }
         } else {
             daemonLoop(argv);
diff --git a/src/nix-env/nix-env.cc b/src/nix-env/nix-env.cc
index 48686ce72..2aeb8ebb0 100644
--- a/src/nix-env/nix-env.cc
+++ b/src/nix-env/nix-env.cc
@@ -192,12 +192,6 @@ static void loadDerivations(EvalState & state, Path nixExprPath,
 }
 
 
-static Path getDefNixExprPath()
-{
-    return getHome() + "/.nix-defexpr";
-}
-
-
 static long getPriority(EvalState & state, DrvInfo & drv)
 {
     return drv.queryMetaInt("priority", 0);
@@ -1327,9 +1321,20 @@ static int _main(int argc, char * * argv)
         Globals globals;
 
         globals.instSource.type = srcUnknown;
-        globals.instSource.nixExprPath = getDefNixExprPath();
+        globals.instSource.nixExprPath = getHome() + "/.nix-defexpr";
         globals.instSource.systemFilter = "*";
 
+        if (!pathExists(globals.instSource.nixExprPath)) {
+            createDirs(globals.instSource.nixExprPath);
+            replaceSymlink(
+                fmt("%s/profiles/per-user/%s/channels", settings.nixStateDir, getUserName()),
+                globals.instSource.nixExprPath + "/channels");
+            if (getuid() != 0)
+                replaceSymlink(
+                    fmt("%s/profiles/per-user/root/channels", settings.nixStateDir),
+                    globals.instSource.nixExprPath + "/channels_root");
+        }
+
         globals.dryRun = false;
         globals.preserveInstalled = false;
         globals.removeAll = false;
@@ -1422,9 +1427,14 @@ static int _main(int argc, char * * argv)
 
         if (globals.profile == "") {
             Path profileLink = getHome() + "/.nix-profile";
-            globals.profile = pathExists(profileLink)
-                ? absPath(readLink(profileLink), dirOf(profileLink))
-                : canonPath(settings.nixStateDir + "/profiles/default");
+            if (!pathExists(profileLink)) {
+                replaceSymlink(
+                    getuid() == 0
+                    ? settings.nixStateDir + "/profiles/default"
+                    : fmt("%s/profiles/per-user/%s/profile", settings.nixStateDir, getUserName()),
+                    profileLink);
+            }
+            globals.profile = absPath(readLink(profileLink), dirOf(profileLink));
         }
 
         op(globals, opFlags, opArgs);
diff --git a/tests/nix-channel.sh b/tests/nix-channel.sh
index 55f1695c4..93f837bef 100644
--- a/tests/nix-channel.sh
+++ b/tests/nix-channel.sh
@@ -36,7 +36,7 @@ grep -q 'item.*attrPath="foo".*name="dependencies"' $TEST_ROOT/meta.xml
 
 # Do an install.
 nix-env -i dependencies
-[ -e $TEST_ROOT/var/nix/profiles/default/foobar ]
+[ -e $TEST_HOME/.nix-profile/foobar ]
 
 clearProfiles
 rm -f $TEST_HOME/.nix-channels
@@ -55,5 +55,5 @@ grep -q 'item.*attrPath="foo".*name="dependencies"' $TEST_ROOT/meta.xml
 
 # Do an install.
 nix-env -i dependencies
-[ -e $TEST_ROOT/var/nix/profiles/default/foobar ]
+[ -e $TEST_HOME/.nix-profile/foobar ]
 
diff --git a/tests/nix-profile.sh b/tests/nix-profile.sh
index b244815e2..e2e0d1090 100644
--- a/tests/nix-profile.sh
+++ b/tests/nix-profile.sh
@@ -7,8 +7,3 @@ rm -rf $TEST_HOME $TEST_ROOT/profile-var
 mkdir -p $TEST_HOME
 USER=$user $SHELL -e -c ". $TEST_ROOT/nix-profile.sh; set"
 USER=$user $SHELL -e -c ". $TEST_ROOT/nix-profile.sh" # test idempotency
-
-[ -L $TEST_HOME/.nix-profile ]
-[ -e $TEST_HOME/.nix-channels ]
-[ -e $TEST_ROOT/profile-var/nix/gcroots/per-user/$user ]
-[ -e $TEST_ROOT/profile-var/nix/profiles/per-user/$user ]
diff --git a/tests/remote-store.sh b/tests/remote-store.sh
index f2f2806d0..77437658e 100644
--- a/tests/remote-store.sh
+++ b/tests/remote-store.sh
@@ -13,3 +13,7 @@ cmp $TEST_ROOT/d1 $TEST_ROOT/d2
 nix-store --gc --max-freed 1K
 
 killDaemon
+
+user=$(whoami)
+[ -e $NIX_STATE_DIR/gcroots/per-user/$user ]
+[ -e $NIX_STATE_DIR/profiles/per-user/$user ]
diff --git a/tests/user-envs.sh b/tests/user-envs.sh
index ba6392311..aebf6a2a2 100644
--- a/tests/user-envs.sh
+++ b/tests/user-envs.sh
@@ -20,7 +20,7 @@ drvPath10=$(nix-env -f ./user-envs.nix -qa --drv-path --no-name '*' | grep foo-1
 
 # Query descriptions.
 nix-env -f ./user-envs.nix -qa '*' --description | grep -q silly
-rm -f $HOME/.nix-defexpr
+rm -rf $HOME/.nix-defexpr
 ln -s $(pwd)/user-envs.nix $HOME/.nix-defexpr
 nix-env -qa '*' --description | grep -q silly