diff --git a/pre_commit/commands/install.py b/pre_commit/commands/install.py
deleted file mode 100644
index 9630f577..00000000
--- a/pre_commit/commands/install.py
+++ /dev/null
@@ -1,24 +0,0 @@
-from __future__ import print_function
-from __future__ import unicode_literals
-
-import os
-import pkg_resources
-import stat
-
-
-def install(runner):
-    """Install the pre-commit hooks."""
-    pre_commit_file = pkg_resources.resource_filename(
-        'pre_commit', 'resources/pre-commit.sh',
-    )
-    with open(runner.pre_commit_path, 'w') as pre_commit_file_obj:
-        pre_commit_file_obj.write(open(pre_commit_file).read())
-
-    original_mode = os.stat(runner.pre_commit_path).st_mode
-    os.chmod(
-        runner.pre_commit_path,
-        original_mode | stat.S_IXUSR | stat.S_IXGRP | stat.S_IXOTH,
-    )
-
-    print('pre-commit installed at {0}'.format(runner.pre_commit_path))
-    return 0
diff --git a/pre_commit/commands/install_uninstall.py b/pre_commit/commands/install_uninstall.py
new file mode 100644
index 00000000..4698ee1e
--- /dev/null
+++ b/pre_commit/commands/install_uninstall.py
@@ -0,0 +1,69 @@
+from __future__ import print_function
+from __future__ import unicode_literals
+
+import io
+import os
+import os.path
+import pkg_resources
+import stat
+
+
+# This is used to identify the hook file we install
+IDENTIFYING_HASH = 'd8ee923c46731b42cd95cc869add4062'
+
+
+def is_our_pre_commit(filename):
+    return IDENTIFYING_HASH in io.open(filename).read()
+
+
+def make_executable(filename):
+    original_mode = os.stat(filename).st_mode
+    os.chmod(
+        filename,
+        original_mode | stat.S_IXUSR | stat.S_IXGRP | stat.S_IXOTH,
+    )
+
+
+def install(runner, overwrite=False):
+    """Install the pre-commit hooks."""
+    pre_commit_file = pkg_resources.resource_filename(
+        'pre_commit', 'resources/pre-commit-hook',
+    )
+
+    # If we have an existing hook, move it to pre-commit.legacy
+    if (
+        os.path.exists(runner.pre_commit_path) and
+        not is_our_pre_commit(runner.pre_commit_path)
+    ):
+        os.rename(runner.pre_commit_path, runner.pre_commit_legacy_path)
+
+    # If we specify overwrite, we simply delete the legacy file
+    if overwrite and os.path.exists(runner.pre_commit_legacy_path):
+        os.remove(runner.pre_commit_legacy_path)
+    elif os.path.exists(runner.pre_commit_legacy_path):
+        print(
+            'Running in migration mode with existing hooks at {0}\n'
+            'Use -f to use only pre-commit.'.format(
+                runner.pre_commit_legacy_path,
+            )
+        )
+
+    with open(runner.pre_commit_path, 'w') as pre_commit_file_obj:
+        pre_commit_file_obj.write(open(pre_commit_file).read())
+    make_executable(runner.pre_commit_path)
+
+    print('pre-commit installed at {0}'.format(runner.pre_commit_path))
+    return 0
+
+
+def uninstall(runner):
+    """Uninstall the pre-commit hooks."""
+    if os.path.exists(runner.pre_commit_path):
+        os.remove(runner.pre_commit_path)
+        print('pre-commit uninstalled')
+
+    if os.path.exists(runner.pre_commit_legacy_path):
+        os.rename(runner.pre_commit_legacy_path, runner.pre_commit_path)
+        print('Restored previous hooks to {0}'.format(runner.pre_commit_path))
+
+    return 0
diff --git a/pre_commit/commands/uninstall.py b/pre_commit/commands/uninstall.py
deleted file mode 100644
index 52e0dca3..00000000
--- a/pre_commit/commands/uninstall.py
+++ /dev/null
@@ -1,13 +0,0 @@
-from __future__ import print_function
-from __future__ import unicode_literals
-
-import os
-import os.path
-
-
-def uninstall(runner):
-    """Uninstall the pre-commit hooks."""
-    if os.path.exists(runner.pre_commit_path):
-        os.remove(runner.pre_commit_path)
-        print('pre-commit uninstalled')
-    return 0
diff --git a/pre_commit/main.py b/pre_commit/main.py
index e1e8ff73..eb678a90 100644
--- a/pre_commit/main.py
+++ b/pre_commit/main.py
@@ -6,9 +6,9 @@ import pkg_resources
 from pre_commit import color
 from pre_commit.commands.autoupdate import autoupdate
 from pre_commit.commands.clean import clean
-from pre_commit.commands.install import install
+from pre_commit.commands.install_uninstall import install
+from pre_commit.commands.install_uninstall import uninstall
 from pre_commit.commands.run import run
-from pre_commit.commands.uninstall import uninstall
 from pre_commit.runner import Runner
 from pre_commit.util import entry
 
@@ -28,7 +28,13 @@ def main(argv):
 
     subparsers = parser.add_subparsers(dest='command')
 
-    subparsers.add_parser('install', help='Intall the pre-commit script.')
+    install_parser = subparsers.add_parser(
+        'install', help='Intall the pre-commit script.',
+    )
+    install_parser.add_argument(
+        '-f', '--overwrite', action='store_true',
+        help='Overwrite existing hooks / remove migration mode.',
+    )
 
     subparsers.add_parser('uninstall', help='Uninstall the pre-commit script.')
 
@@ -67,7 +73,7 @@ def main(argv):
     runner = Runner.create()
 
     if args.command == 'install':
-        return install(runner)
+        return install(runner, overwrite=args.overwrite)
     elif args.command == 'uninstall':
         return uninstall(runner)
     elif args.command == 'clean':
diff --git a/pre_commit/resources/pre-commit-hook b/pre_commit/resources/pre-commit-hook
new file mode 100755
index 00000000..60c620cf
--- /dev/null
+++ b/pre_commit/resources/pre-commit-hook
@@ -0,0 +1,31 @@
+#!/usr/bin/env bash
+# This is a randomish md5 to identify this script
+# d8ee923c46731b42cd95cc869add4062
+
+HERE=$(dirname $(readlink -f "$0"))
+
+retv=0
+
+which pre-commit > /dev/null
+if [ $? -ne 0 ]; then
+    echo '`pre-commit` not found.  Did you forget to activate your virtualenv?'
+    exit 1
+fi
+
+
+# Run the legacy pre-commit if it exists
+if [ -x "$HERE"/pre-commit.legacy ]; then
+    "$HERE"/pre-commit.legacy
+    if [ $? -ne 0 ]; then
+        retv=1
+    fi
+fi
+
+
+# Run pre-commit
+pre-commit
+if [ $? -ne 0 ]; then
+    retv=1
+fi
+
+exit $retv
diff --git a/pre_commit/resources/pre-commit.sh b/pre_commit/resources/pre-commit.sh
deleted file mode 100755
index 1a93b653..00000000
--- a/pre_commit/resources/pre-commit.sh
+++ /dev/null
@@ -1,9 +0,0 @@
-#!/usr/bin/env bash
-
-which pre-commit > /dev/null
-if [ $? -ne 0 ]; then
-    echo '`pre-commit` not found.  Did you forget to activate your virtualenv?'
-    exit 1
-fi
-
-pre-commit
diff --git a/pre_commit/runner.py b/pre_commit/runner.py
index 1768a336..bbba62c7 100644
--- a/pre_commit/runner.py
+++ b/pre_commit/runner.py
@@ -41,7 +41,14 @@ class Runner(object):
 
     @cached_property
     def pre_commit_path(self):
-        return os.path.join(self.git_root, '.git/hooks/pre-commit')
+        return os.path.join(self.git_root, '.git', 'hooks', 'pre-commit')
+
+    @cached_property
+    def pre_commit_legacy_path(self):
+        """The path in the 'hooks' directory representing the temporary
+        storage for existing pre-commit hooks.
+        """
+        return self.pre_commit_path + '.legacy'
 
     @cached_property
     def cmd_runner(self):
diff --git a/pre_commit/store.py b/pre_commit/store.py
index c35bcbae..c4942919 100644
--- a/pre_commit/store.py
+++ b/pre_commit/store.py
@@ -22,7 +22,10 @@ def _get_default_directory():
     `Store.get_default_directory` can be mocked in tests and
     `_get_default_directory` can be tested.
     """
-    return os.path.join(os.environ['HOME'], '.pre-commit')
+    return os.environ.get(
+        'PRE_COMMIT_HOME',
+        os.path.join(os.environ['HOME'], '.pre-commit'),
+    )
 
 
 class Store(object):
diff --git a/setup.py b/setup.py
index fb2d7099..83ff2005 100644
--- a/setup.py
+++ b/setup.py
@@ -27,7 +27,7 @@ setup(
     packages=find_packages('.', exclude=('tests*', 'testing*')),
     package_data={
         'pre_commit': [
-            'resources/pre-commit.sh'
+            'resources/pre-commit-hook'
         ]
     },
     install_requires=[
diff --git a/testing/fixtures.py b/testing/fixtures.py
index 2fa5f535..3bf18273 100644
--- a/testing/fixtures.py
+++ b/testing/fixtures.py
@@ -66,4 +66,7 @@ def make_consuming_repo(tmpdir_factory, repo_source):
     config = make_config_from_repo(path)
     git_path = git_dir(tmpdir_factory)
     write_config(git_path, config)
+    with local.cwd(git_path):
+        git('add', C.CONFIG_FILE)
+        git('commit', '-m', 'Add hooks config')
     return git_path
diff --git a/tests/commands/install_test.py b/tests/commands/install_test.py
deleted file mode 100644
index 53965e6e..00000000
--- a/tests/commands/install_test.py
+++ /dev/null
@@ -1,28 +0,0 @@
-from __future__ import absolute_import
-from __future__ import unicode_literals
-
-import io
-import os
-import os.path
-import pkg_resources
-import stat
-
-from pre_commit.commands.install import install
-from pre_commit.runner import Runner
-from testing.fixtures import git_dir
-
-
-def test_install_pre_commit(tmpdir_factory):
-    path = git_dir(tmpdir_factory)
-    runner = Runner(path)
-    ret = install(runner)
-    assert ret == 0
-    assert os.path.exists(runner.pre_commit_path)
-    pre_commit_contents = io.open(runner.pre_commit_path).read()
-    pre_commit_sh = pkg_resources.resource_filename(
-        'pre_commit', 'resources/pre-commit.sh',
-    )
-    expected_contents = io.open(pre_commit_sh).read()
-    assert pre_commit_contents == expected_contents
-    stat_result = os.stat(runner.pre_commit_path)
-    assert stat_result.st_mode & (stat.S_IXUSR | stat.S_IXGRP | stat.S_IXOTH)
diff --git a/tests/commands/install_uninstall_test.py b/tests/commands/install_uninstall_test.py
new file mode 100644
index 00000000..4832afbb
--- /dev/null
+++ b/tests/commands/install_uninstall_test.py
@@ -0,0 +1,278 @@
+from __future__ import absolute_import
+from __future__ import unicode_literals
+
+import io
+import os
+import os.path
+import re
+import pkg_resources
+import subprocess
+import stat
+from plumbum import local
+
+from pre_commit.commands.install_uninstall import install
+from pre_commit.commands.install_uninstall import is_our_pre_commit
+from pre_commit.commands.install_uninstall import make_executable
+from pre_commit.commands.install_uninstall import uninstall
+from pre_commit.runner import Runner
+from testing.fixtures import git_dir
+from testing.fixtures import make_consuming_repo
+
+
+def test_is_not_our_pre_commit():
+    assert is_our_pre_commit('setup.py') is False
+
+
+def test_is_our_pre_commit():
+    assert is_our_pre_commit(
+        pkg_resources.resource_filename(
+            'pre_commit', 'resources/pre-commit-hook',
+        )
+    ) is True
+
+
+def test_install_pre_commit(tmpdir_factory):
+    path = git_dir(tmpdir_factory)
+    runner = Runner(path)
+    ret = install(runner)
+    assert ret == 0
+    assert os.path.exists(runner.pre_commit_path)
+    pre_commit_contents = io.open(runner.pre_commit_path).read()
+    pre_commit_script = pkg_resources.resource_filename(
+        'pre_commit', 'resources/pre-commit-hook',
+    )
+    expected_contents = io.open(pre_commit_script).read()
+    assert pre_commit_contents == expected_contents
+    stat_result = os.stat(runner.pre_commit_path)
+    assert stat_result.st_mode & (stat.S_IXUSR | stat.S_IXGRP | stat.S_IXOTH)
+
+
+def test_uninstall_does_not_blow_up_when_not_there(tmpdir_factory):
+    path = git_dir(tmpdir_factory)
+    runner = Runner(path)
+    ret = uninstall(runner)
+    assert ret == 0
+
+
+def test_uninstall(tmpdir_factory):
+    path = git_dir(tmpdir_factory)
+    runner = Runner(path)
+    assert not os.path.exists(runner.pre_commit_path)
+    install(runner)
+    assert os.path.exists(runner.pre_commit_path)
+    uninstall(runner)
+    assert not os.path.exists(runner.pre_commit_path)
+
+
+def _get_commit_output(tmpdir_factory, touch_file='foo'):
+    local['touch'](touch_file)
+    local['git']('add', touch_file)
+    # Don't want to write to home directory
+    env = dict(os.environ, **{'PRE_COMMIT_HOME': tmpdir_factory.get()})
+    return local['git'].run(
+        ['commit', '-m', 'Commit!', '--allow-empty'],
+        # git commit puts pre-commit to stderr
+        stderr=subprocess.STDOUT,
+        env=env,
+        retcode=None,
+    )[:2]
+
+
+NORMAL_PRE_COMMIT_RUN = re.compile(
+    r'^\[INFO\] Installing environment for .+\.\n'
+    r'\[INFO\] Once installed this environment will be reused\.\n'
+    r'\[INFO\] This may take a few minutes\.\.\.\n'
+    r'Bash hook\.+Passed\n'
+    r'\[master [a-f0-9]{7}\] Commit!\n'
+    r' 0 files changed\n'
+    r' create mode 100644 foo\n$'
+)
+
+
+def test_install_pre_commit_and_run(tmpdir_factory):
+    path = make_consuming_repo(tmpdir_factory, 'script_hooks_repo')
+    with local.cwd(path):
+        assert install(Runner(path)) == 0
+
+        ret, output = _get_commit_output(tmpdir_factory)
+        assert ret == 0
+        assert NORMAL_PRE_COMMIT_RUN.match(output)
+
+
+def test_install_idempotent(tmpdir_factory):
+    path = make_consuming_repo(tmpdir_factory, 'script_hooks_repo')
+    with local.cwd(path):
+        assert install(Runner(path)) == 0
+        assert install(Runner(path)) == 0
+
+        ret, output = _get_commit_output(tmpdir_factory)
+        assert ret == 0
+        assert NORMAL_PRE_COMMIT_RUN.match(output)
+
+
+def test_environment_not_sourced(tmpdir_factory):
+    path = make_consuming_repo(tmpdir_factory, 'script_hooks_repo')
+    with local.cwd(path):
+        assert install(Runner(path)) == 0
+
+        ret, stdout, stderr = local['git'].run(
+            ['commit', '--allow-empty', '-m', 'foo'],
+            env={},
+            retcode=None,
+        )
+        assert ret == 1
+        assert stdout == ''
+        assert stderr == (
+            '`pre-commit` not found.  '
+            'Did you forget to activate your virtualenv?\n'
+        )
+
+
+FAILING_PRE_COMMIT_RUN = re.compile(
+    r'^\[INFO\] Installing environment for .+\.\n'
+    r'\[INFO\] Once installed this environment will be reused\.\n'
+    r'\[INFO\] This may take a few minutes\.\.\.\n'
+    r'Failing hook\.+Failed\n'
+    r'\n'
+    r'Fail\n'
+    r'foo\n'
+    r'\n$'
+)
+
+
+def test_failing_hooks_returns_nonzero(tmpdir_factory):
+    path = make_consuming_repo(tmpdir_factory, 'failing_hook_repo')
+    with local.cwd(path):
+        assert install(Runner(path)) == 0
+
+        ret, output = _get_commit_output(tmpdir_factory)
+        assert ret == 1
+        assert FAILING_PRE_COMMIT_RUN.match(output)
+
+
+EXISTING_COMMIT_RUN = re.compile(
+    r'^legacy hook\n'
+    r'\[master [a-f0-9]{7}\] Commit!\n'
+    r' 0 files changed\n'
+    r' create mode 100644 baz\n$'
+)
+
+
+def test_install_existing_hooks_no_overwrite(tmpdir_factory):
+    path = make_consuming_repo(tmpdir_factory, 'script_hooks_repo')
+    with local.cwd(path):
+        runner = Runner(path)
+
+        # Write out an "old" hook
+        with io.open(runner.pre_commit_path, 'w') as hook_file:
+            hook_file.write('#!/usr/bin/env bash\necho "legacy hook"\n')
+        make_executable(runner.pre_commit_path)
+
+        # Make sure we installed the "old" hook correctly
+        ret, output = _get_commit_output(tmpdir_factory, touch_file='baz')
+        assert ret == 0
+        assert EXISTING_COMMIT_RUN.match(output)
+
+        # Now install pre-commit (no-overwrite)
+        assert install(runner) == 0
+
+        # We should run both the legacy and pre-commit hooks
+        ret, output = _get_commit_output(tmpdir_factory)
+        assert ret == 0
+        assert output.startswith('legacy hook\n')
+        assert NORMAL_PRE_COMMIT_RUN.match(output[len('legacy hook\n'):])
+
+
+def test_install_existing_hook_no_overwrite_idempotent(tmpdir_factory):
+    path = make_consuming_repo(tmpdir_factory, 'script_hooks_repo')
+    with local.cwd(path):
+        runner = Runner(path)
+
+        # Write out an "old" hook
+        with io.open(runner.pre_commit_path, 'w') as hook_file:
+            hook_file.write('#!/usr/bin/env bash\necho "legacy hook"\n')
+        make_executable(runner.pre_commit_path)
+
+        # Install twice
+        assert install(runner) == 0
+        assert install(runner) == 0
+
+        # We should run both the legacy and pre-commit hooks
+        ret, output = _get_commit_output(tmpdir_factory)
+        assert ret == 0
+        assert output.startswith('legacy hook\n')
+        assert NORMAL_PRE_COMMIT_RUN.match(output[len('legacy hook\n'):])
+
+
+FAIL_OLD_HOOK = re.compile(
+    r'fail!\n'
+    r'\[INFO\] Installing environment for .+\.\n'
+    r'\[INFO\] Once installed this environment will be reused\.\n'
+    r'\[INFO\] This may take a few minutes\.\.\.\n'
+    r'Bash hook\.+Passed\n'
+)
+
+
+def test_failing_existing_hook_returns_1(tmpdir_factory):
+    path = make_consuming_repo(tmpdir_factory, 'script_hooks_repo')
+    with local.cwd(path):
+        runner = Runner(path)
+
+        # Write out a failing "old" hook
+        with io.open(runner.pre_commit_path, 'w') as hook_file:
+            hook_file.write('#!/usr/bin/env bash\necho "fail!"\nexit 1\n')
+        make_executable(runner.pre_commit_path)
+
+        assert install(runner) == 0
+
+        # We should get a failure from the legacy hook
+        ret, output = _get_commit_output(tmpdir_factory)
+        assert ret == 1
+        assert FAIL_OLD_HOOK.match(output)
+
+
+def test_install_overwrite_no_existing_hooks(tmpdir_factory):
+    path = make_consuming_repo(tmpdir_factory, 'script_hooks_repo')
+    with local.cwd(path):
+        assert install(Runner(path), overwrite=True) == 0
+
+        ret, output = _get_commit_output(tmpdir_factory)
+        assert ret == 0
+        assert NORMAL_PRE_COMMIT_RUN.match(output)
+
+
+def test_install_overwrite(tmpdir_factory):
+    path = make_consuming_repo(tmpdir_factory, 'script_hooks_repo')
+    with local.cwd(path):
+        runner = Runner(path)
+
+        # Write out the "old" hook
+        with io.open(runner.pre_commit_path, 'w') as hook_file:
+            hook_file.write('#!/usr/bin/env bash\necho "legacy hook"\n')
+        make_executable(runner.pre_commit_path)
+
+        assert install(runner, overwrite=True) == 0
+
+        ret, output = _get_commit_output(tmpdir_factory)
+        assert ret == 0
+        assert NORMAL_PRE_COMMIT_RUN.match(output)
+
+
+def test_uninstall_restores_legacy_hooks(tmpdir_factory):
+    path = make_consuming_repo(tmpdir_factory, 'script_hooks_repo')
+    with local.cwd(path):
+        runner = Runner(path)
+
+        # Write out an "old" hook
+        with io.open(runner.pre_commit_path, 'w') as hook_file:
+            hook_file.write('#!/usr/bin/env bash\necho "legacy hook"\n')
+        make_executable(runner.pre_commit_path)
+
+        # Now install and uninstall pre-commit
+        assert install(runner) == 0
+        assert uninstall(runner) == 0
+
+        # Make sure we installed the "old" hook correctly
+        ret, output = _get_commit_output(tmpdir_factory, touch_file='baz')
+        assert ret == 0
+        assert EXISTING_COMMIT_RUN.match(output)
diff --git a/tests/commands/uninstall_test.py b/tests/commands/uninstall_test.py
deleted file mode 100644
index 9d5a38ed..00000000
--- a/tests/commands/uninstall_test.py
+++ /dev/null
@@ -1,26 +0,0 @@
-from __future__ import absolute_import
-from __future__ import unicode_literals
-
-import os.path
-
-from pre_commit.runner import Runner
-from pre_commit.commands.install import install
-from pre_commit.commands.uninstall import uninstall
-from testing.fixtures import git_dir
-
-
-def test_uninstall_does_not_blow_up_when_not_there(tmpdir_factory):
-    path = git_dir(tmpdir_factory)
-    runner = Runner(path)
-    ret = uninstall(runner)
-    assert ret == 0
-
-
-def test_uninstall(tmpdir_factory):
-    path = git_dir(tmpdir_factory)
-    runner = Runner(path)
-    assert not os.path.exists(runner.pre_commit_path)
-    install(runner)
-    assert os.path.exists(runner.pre_commit_path)
-    uninstall(runner)
-    assert not os.path.exists(runner.pre_commit_path)
diff --git a/tests/store_test.py b/tests/store_test.py
index 5ebfe05d..bc8cee6e 100644
--- a/tests/store_test.py
+++ b/tests/store_test.py
@@ -31,6 +31,14 @@ def test_get_default_directory_defaults_to_home():
     assert ret == os.path.join(os.environ['HOME'], '.pre-commit')
 
 
+def test_uses_environment_variable_when_present():
+    with mock.patch.dict(
+        os.environ, {'PRE_COMMIT_HOME': '/tmp/pre_commit_home'}
+    ):
+        ret = _get_default_directory()
+        assert ret == '/tmp/pre_commit_home'
+
+
 def test_store_require_created(store):
     assert not os.path.exists(store.directory)
     store.require_created()