diff --git a/.hgsubstate b/.hgsubstate
index 3c8c8a913..85fd85747 100644
--- a/.hgsubstate
+++ b/.hgsubstate
@@ -1 +1 @@
-230ef1360257ef0ac622f6e85a94323ef2e49cae external/nupack
+349ebd349ca931cb634439e10a7916ab307ab596 external/nupack
diff --git a/src/Orchard.Tests.Modules/Orchard.Tests.Modules.csproj b/src/Orchard.Tests.Modules/Orchard.Tests.Modules.csproj
index 86944a801..c721b10f0 100644
--- a/src/Orchard.Tests.Modules/Orchard.Tests.Modules.csproj
+++ b/src/Orchard.Tests.Modules/Orchard.Tests.Modules.csproj
@@ -122,10 +122,12 @@
     </Reference>
     <Reference Include="System.Data" />
     <Reference Include="System.Xml" />
+    <Reference Include="WindowsBase" />
   </ItemGroup>
   <ItemGroup>
     <Compile Include="CodeGeneration\Commands\CodeGenerationCommandsTests.cs" />
     <Compile Include="DatabaseEnabledTestsBase.cs" />
+    <Compile Include="Packaging\PackageBuilderTests.cs" />
     <Compile Include="Properties\AssemblyInfo.cs" />
     <Compile Include="Roles\Controllers\AdminControllerTests.cs" />
     <Compile Include="Roles\Services\RoleServiceTests.cs" />
@@ -158,6 +160,10 @@
       <Project>{17F86780-9A1F-4AA1-86F1-875EEC2730C7}</Project>
       <Name>Orchard.Modules</Name>
     </ProjectReference>
+    <ProjectReference Include="..\Orchard.Web\Modules\Orchard.Packaging\Orchard.Packaging.csproj">
+      <Project>{DFD137A2-DDB5-4D22-BE0D-FA9AD4C8B059}</Project>
+      <Name>Orchard.Packaging</Name>
+    </ProjectReference>
     <ProjectReference Include="..\Orchard.Web\Modules\Orchard.Roles\Orchard.Roles.csproj">
       <Project>{D10AD48F-407D-4DB5-A328-173EC7CB010F}</Project>
       <Name>Orchard.Roles</Name>
@@ -200,7 +206,9 @@
       <Install>true</Install>
     </BootstrapperPackage>
   </ItemGroup>
-  <ItemGroup />
+  <ItemGroup>
+    <EmbeddedResource Include="Packaging\Hello.World.csproj.txt" />
+  </ItemGroup>
   <Import Project="$(MSBuildToolsPath)\Microsoft.CSharp.targets" />
   <!-- To modify your build process, add your task inside one of the targets below and uncomment it. 
        Other similar extension points exist, see Microsoft.Common.targets.
diff --git a/src/Orchard.Tests.Modules/Packaging/PackageBuilderTests.cs b/src/Orchard.Tests.Modules/Packaging/PackageBuilderTests.cs
new file mode 100644
index 000000000..b167c62ce
--- /dev/null
+++ b/src/Orchard.Tests.Modules/Packaging/PackageBuilderTests.cs
@@ -0,0 +1,77 @@
+using System;
+using System.Collections.Generic;
+using System.IO;
+using System.IO.Packaging;
+using System.Linq;
+using System.Text;
+using Autofac;
+using NUnit.Framework;
+using Orchard.Environment.Extensions;
+using Orchard.Environment.Extensions.Models;
+using Orchard.FileSystems.WebSite;
+using Orchard.Packaging.Services;
+using Orchard.Tests.Stubs;
+
+namespace Orchard.Tests.Modules.Packaging {
+    [TestFixture]
+    public class PackageBuilderTests : ContainerTestBase {
+        protected override void Register(Autofac.ContainerBuilder builder) {
+            builder.RegisterType<PackageBuilder>().As<IPackageBuilder>();
+            builder.RegisterType<InMemoryWebSiteFolder>().As<IWebSiteFolder>()
+                .As<InMemoryWebSiteFolder>().InstancePerLifetimeScope();
+        }
+        
+        private Stream BuildHelloWorld(IPackageBuilder packageBuilder) {
+            return packageBuilder.BuildPackage(new ExtensionDescriptor {
+                ExtensionType = "Module",
+                Name = "Hello.World",
+                Version = "1.0",
+                Description = "a",
+                Author = "b"
+            });
+        }
+        [Test]
+        public void PackageForModuleIsOpcPackage() {
+            var packageBuilder = _container.Resolve<IPackageBuilder>();
+            var stream = BuildHelloWorld(packageBuilder);
+
+            var package = Package.Open(stream);
+            Assert.That(package, Is.Not.Null);
+            Assert.That(package.PackageProperties.Identifier, Is.EqualTo("Orchard.Module.Hello.World"));
+        }
+
+        [Test]
+        public void PropertiesPassThroughAsExpected() {
+            var packageBuilder = _container.Resolve<IPackageBuilder>();
+            var stream = BuildHelloWorld(packageBuilder);
+
+            var package = Package.Open(stream);
+            Assert.That(package.PackageProperties.Description, Is.EqualTo("a"));
+            Assert.That(package.PackageProperties.Creator, Is.EqualTo("b"));
+            Assert.That(package.PackageProperties.Version, Is.EqualTo("1.0"));
+        }
+
+
+        [Test]
+        public void ProjectFileIsAdded() {
+            var packageBuilder = _container.Resolve<IPackageBuilder>();
+            var folder = _container.Resolve<InMemoryWebSiteFolder>();
+            string content;
+            using (var sourceStream = GetType().Assembly.GetManifestResourceStream(GetType(), "Hello.World.csproj.txt")) {
+                content = new StreamReader(sourceStream).ReadToEnd();
+            }
+            folder.AddFile("~/Modules/Hello.World/Hello.World.csproj", content);
+
+            var stream = BuildHelloWorld(packageBuilder);
+
+            var package = Package.Open(stream);
+            var projectUri = PackUriHelper.CreatePartUri(new Uri("/Content/Modules/Hello.World/Hello.World.csproj", UriKind.Relative));
+            var projectPart = package.GetPart(projectUri);
+            using (var projectStream = projectPart.GetStream()) {
+                var projectContent = new StreamReader(projectStream).ReadToEnd();
+                Assert.That(projectContent, Is.EqualTo(content));
+            }
+        }
+
+    }
+}
diff --git a/src/Orchard.Tests/Orchard.Framework.Tests.csproj b/src/Orchard.Tests/Orchard.Framework.Tests.csproj
index 9b3fe7eac..86fae3a54 100644
--- a/src/Orchard.Tests/Orchard.Framework.Tests.csproj
+++ b/src/Orchard.Tests/Orchard.Framework.Tests.csproj
@@ -245,6 +245,7 @@
     <Compile Include="Mvc\Routes\UrlPrefixTests.cs" />
     <Compile Include="Records\BigRecord.cs" />
     <Compile Include="Scripting\ScriptingTests.cs" />
+    <Compile Include="Stubs\InMemoryWebSiteFolder.cs" />
     <Compile Include="Stubs\StubWorkContextAccessor.cs" />
     <Compile Include="Stubs\StubExtensionManager.cs" />
     <Compile Include="Stubs\StubReportsCoordinator.cs" />
diff --git a/src/Orchard.Tests/Stubs/InMemoryWebSiteFolder.cs b/src/Orchard.Tests/Stubs/InMemoryWebSiteFolder.cs
new file mode 100644
index 000000000..2a5fa7d79
--- /dev/null
+++ b/src/Orchard.Tests/Stubs/InMemoryWebSiteFolder.cs
@@ -0,0 +1,57 @@
+using System;
+using System.Collections.Generic;
+using System.IO;
+using System.Text;
+using Orchard.Caching;
+using Orchard.FileSystems.WebSite;
+
+namespace Orchard.Tests.Stubs {
+    public class InMemoryWebSiteFolder : IWebSiteFolder {
+        Dictionary<string, string> _contents = new Dictionary<string, string>(StringComparer.OrdinalIgnoreCase);
+
+        public void AddFile(string virtualPath, string contents) {
+            _contents[Canonical(virtualPath)] = contents;
+        }
+
+        private string Canonical(string virtualPath) {
+            return virtualPath.Replace("\\", "/");
+        }
+
+        public IEnumerable<string> ListDirectories(string virtualPath) {
+            throw new NotImplementedException();
+        }
+
+        public IEnumerable<string> ListFiles(string virtualPath, bool recursive) {
+            throw new NotImplementedException();
+        }
+
+        public bool FileExists(string virtualPath) {
+            return _contents.ContainsKey(virtualPath);
+        }
+
+        public string ReadFile(string virtualPath) {
+            string value;
+            return _contents.TryGetValue(Canonical(virtualPath), out value) ? value : null;
+        }
+
+        public string ReadFile(string virtualPath, bool actualContent) {
+            throw new NotImplementedException();
+        }
+
+        public void CopyFileTo(string virtualPath, Stream destination) {
+            string value;
+            if (_contents.TryGetValue(Canonical(virtualPath), out value)) {
+                var bytes = Encoding.Default.GetBytes(value);
+                destination.Write(bytes, 0, bytes.Length);
+            }
+        }
+
+        public void CopyFileTo(string virtualPath, Stream destination, bool actualContent) {
+            throw new NotImplementedException();
+        }
+
+        public IVolatileToken WhenPathChanges(string virtualPath) {
+            throw new NotImplementedException();
+        }
+    }
+}
\ No newline at end of file
diff --git a/src/Orchard.Web/Modules/Orchard.Packaging/Services/PackageBuilder.cs b/src/Orchard.Web/Modules/Orchard.Packaging/Services/PackageBuilder.cs
index a86f2a2bf..674c21de2 100644
--- a/src/Orchard.Web/Modules/Orchard.Packaging/Services/PackageBuilder.cs
+++ b/src/Orchard.Web/Modules/Orchard.Packaging/Services/PackageBuilder.cs
@@ -4,21 +4,17 @@ using System.IO;
 using System.Linq;
 using System.Net.Mime;
 using System.Reflection;
-using System.Web;
-using System.Web.Hosting;
 using System.Xml.Linq;
-using NuPack;
+using NuGet;
 using Orchard.Environment.Extensions;
 using Orchard.Environment.Extensions.Models;
 using Orchard.FileSystems.WebSite;
 
-using NuPack_PackageBuilder = NuPack.PackageBuilder;
-using NuPack_IPackageBuilder = NuPack.IPackageBuilder;
+using NuGetPackageBuilder = NuGet.PackageBuilder;
 
 namespace Orchard.Packaging.Services {
     [OrchardFeature("PackagingServices")]
     public class PackageBuilder : IPackageBuilder {
-        private readonly IExtensionManager _extensionManager;
         private readonly IWebSiteFolder _webSiteFolder;
 
         private static readonly string[] _ignoredThemeExtensions = new[] {
@@ -34,8 +30,7 @@ namespace Orchard.Packaging.Services {
                 _ignoredThemeExtensions.Contains(Path.GetExtension(filePath) ?? "");
         }
 
-        public PackageBuilder(IExtensionManager extensionManager, IWebSiteFolder webSiteFolder) {
-            _extensionManager = extensionManager;
+        public PackageBuilder(IWebSiteFolder webSiteFolder) {
             _webSiteFolder = webSiteFolder;
         }
 
@@ -72,7 +67,7 @@ namespace Orchard.Packaging.Services {
 
 
         private void SetCoreProperties(CreateContext context, ExtensionDescriptor extensionDescriptor) {
-            context.Builder.Id = extensionDescriptor.Name;
+            context.Builder.Id = "Orchard." + extensionDescriptor.ExtensionType + "." + extensionDescriptor.Name;
             context.Builder.Version = new Version(extensionDescriptor.Version);
             context.Builder.Title = extensionDescriptor.DisplayName ?? extensionDescriptor.Name;
             context.Builder.Description = extensionDescriptor.Description;
@@ -140,7 +135,8 @@ namespace Orchard.Packaging.Services {
 
 
         private static void BeginPackage(CreateContext context) {
-            context.Builder = new NuPack_PackageBuilder();
+            context.Stream = new MemoryStream();
+            context.Builder = new NuGetPackageBuilder();
         }
 
         private static void EstablishPaths(CreateContext context, IWebSiteFolder webSiteFolder, string locationPath, string moduleName, string moduleType) {
@@ -151,7 +147,7 @@ namespace Orchard.Packaging.Services {
             else {
                 context.SourcePath = "~/Modules/" + moduleName + "/";
             }
-            context.TargetPath = "\\" + moduleName + "\\";
+            context.TargetPath = "\\Content\\Modules\\" + moduleName + "\\";
         }
 
         private static bool LoadProject(CreateContext context, string relativePath) {
@@ -164,13 +160,15 @@ namespace Orchard.Packaging.Services {
         }
 
         private static void EmbedVirtualFile(CreateContext context, string relativePath, string contentType) {
-            var file = new VirtualPackageFile(context.SourceFolder, context.SourcePath + relativePath);
+            var file = new VirtualPackageFile(
+                context.SourceFolder,
+                context.SourcePath + relativePath, 
+                context.TargetPath + relativePath);
             context.Builder.Files.Add(file);
         }
 
 
         private static void EndPackage(CreateContext context) {
-            context.Stream = new MemoryStream();
             context.Builder.Save(context.Stream);
         }
 
@@ -178,9 +176,7 @@ namespace Orchard.Packaging.Services {
 
         private class CreateContext {
             public Stream Stream { get; set; }
-            //public Package Package { get; set; }
-            //public Manifest Manifest { get; set; }
-            public NuPack_PackageBuilder Builder { get; set; }
+            public NuGetPackageBuilder Builder { get; set; }
 
             public IWebSiteFolder SourceFolder { get; set; }
             public string SourcePath { get; set; }
@@ -191,28 +187,31 @@ namespace Orchard.Packaging.Services {
 
         #endregion
 
-        
+
         #region Nested type: CreateContext
 
         private class VirtualPackageFile : IPackageFile {
-            private readonly IWebSiteFolder _sourceFolder;
+            private readonly IWebSiteFolder _webSiteFolder;
+            private readonly string _virtualPath;
+            private readonly string _packagePath;
 
-            public VirtualPackageFile(IWebSiteFolder sourceFolder, string path) {
-                Path = path;
-                _sourceFolder = sourceFolder;
+            public VirtualPackageFile(IWebSiteFolder webSiteFolder, string virtualPath, string packagePath) {
+                _webSiteFolder = webSiteFolder;
+                _virtualPath = virtualPath;
+                _packagePath = packagePath;
             }
 
-            public string Path { get; private set; }
+            public string Path { get { return _packagePath; } }
 
             public Stream GetStream() {
                 var stream = new MemoryStream();
-                _sourceFolder.CopyFileTo(Path, stream);
+                _webSiteFolder.CopyFileTo(_virtualPath, stream);
                 stream.Seek(0, SeekOrigin.Begin);
                 return stream;
             }
         }
 
-        #endregion 
+        #endregion
 
     }
 }
\ No newline at end of file