diff --git a/tests/test_z_cmdline.py b/tests/test_z_cmdline.py
index b2dcb9f50..b9783d53e 100644
--- a/tests/test_z_cmdline.py
+++ b/tests/test_z_cmdline.py
@@ -576,8 +576,9 @@ def test_usedevelop_mixed(initproj, cmd):
     assert "sdist-make" in result.stdout.str()
 
 
-def test_test_usedevelop(cmd, initproj):
-    initproj("example123-0.5", filedefs={
+@pytest.mark.parametrize("src_root", [".", "src"])
+def test_test_usedevelop(cmd, initproj, src_root):
+    initproj("example123-0.5", src_root=src_root, filedefs={
         'tests': {
             'test_hello.py': """
                 def test_hello(pytestconfig):
@@ -602,6 +603,7 @@ def test_hello(pytestconfig):
     assert "sdist-make" not in result.stdout.str()
     result = cmd.run("tox", "-epython", )
     assert not result.ret
+    assert "develop-inst-noop" in result.stdout.str()
     result.stdout.fnmatch_lines([
         "*1 passed*",
         "*summary*",
@@ -611,6 +613,7 @@ def test_hello(pytestconfig):
     old = cmd.tmpdir.chdir()
     result = cmd.run("tox", "-c", "example123/tox.ini")
     assert not result.ret
+    assert "develop-inst-noop" in result.stdout.str()
     result.stdout.fnmatch_lines([
         "*1 passed*",
         "*summary*",
@@ -623,11 +626,18 @@ def test_hello(pytestconfig):
     testfile.write("def test_fail(): assert 0")
     result = cmd.run("tox", )
     assert result.ret
+    assert "develop-inst-noop" in result.stdout.str()
     result.stdout.fnmatch_lines([
         "*1 failed*",
         "*summary*",
         "*python: *failed*",
     ])
+    # test develop is called if setup.py changes
+    setup_py = py.path.local("setup.py")
+    setup_py.write(setup_py.read() + ' ')
+    result = cmd.run("tox", )
+    assert result.ret
+    assert "develop-inst-nodeps" in result.stdout.str()
 
 
 def test_alwayscopy(initproj, cmd):
diff --git a/tox/_pytestplugin.py b/tox/_pytestplugin.py
index 129678a21..047df7160 100644
--- a/tox/_pytestplugin.py
+++ b/tox/_pytestplugin.py
@@ -290,7 +290,7 @@ def fnmatch_lines(self, lines2):
 @pytest.fixture
 def initproj(request, tmpdir):
     """ create a factory function for creating example projects. """
-    def initproj(nameversion, filedefs=None):
+    def initproj(nameversion, filedefs=None, src_root="."):
         if filedefs is None:
             filedefs = {}
         if _istext(nameversion) or _isbytes(nameversion):
@@ -304,18 +304,20 @@ def initproj(nameversion, filedefs=None):
         create_files(base, filedefs)
         if 'setup.py' not in filedefs:
             create_files(base, {'setup.py': '''
-                from setuptools import setup
+                from setuptools import setup, find_packages
                 setup(
                     name='%(name)s',
                     description='%(name)s project',
                     version='%(version)s',
                     license='MIT',
                     platforms=['unix', 'win32'],
-                    packages=['%(name)s', ],
+                    packages=find_packages('%(src_root)s'),
+                    package_dir={'':'%(src_root)s'},
                 )
             ''' % locals()})
         if name not in filedefs:
-            create_files(base, {
+            src_dir = base.ensure(src_root, dir=1)
+            create_files(src_dir, {
                 name: {'__init__.py': '__version__ = %r' % version}
             })
         manifestlines = []