diff --git a/README.md b/README.md
index 206ffe098b..c5e7f55581 100644
--- a/README.md
+++ b/README.md
@@ -282,7 +282,15 @@ If tempest has been successfully configured, a basic set of smoke
 tests can be run as follows:
 
     $ cd /opt/stack/tempest
-    $ nosetests tempest/scenario/test_network_basic_ops.py
+    $ tox -efull  tempest.scenario.test_network_basic_ops
+
+By default tempest is downloaded and the config file is generated, but the
+tempest package is not installed in the system's global site-packages (the
+package install includes installing dependences). So tempest won't run
+outside of tox. If you would like to install it add the following to your
+``localrc`` section:
+
+    INSTALL_TEMPEST=True
 
 # DevStack on Xenserver
 
diff --git a/lib/tempest b/lib/tempest
index 6177ffe197..f856ce05f9 100644
--- a/lib/tempest
+++ b/lib/tempest
@@ -63,6 +63,12 @@ BUILD_INTERVAL=1
 BUILD_TIMEOUT=${BUILD_TIMEOUT:-196}
 
 
+# This must be False on stable branches, as master tempest
+# deps do not match stable branch deps. Set this to True to
+# have tempest installed in devstack by default.
+INSTALL_TEMPEST=${INSTALL_TEMPEST:-"False"}
+
+
 BOTO_MATERIALS_PATH="$FILES/images/s3-materials/cirros-${CIRROS_VERSION}"
 BOTO_CONF=/etc/boto.cfg
 
@@ -94,8 +100,12 @@ function remove_disabled_extensions {
 
 # configure_tempest() - Set config files, create data dirs, etc
 function configure_tempest {
-    # install testr since its used to process tempest logs
-    pip_install $(get_from_global_requirements testrepository)
+    if [[ "$INSTALL_TEMPEST" == "True" ]]; then
+        setup_develop $TEMPEST_DIR
+    else
+        # install testr since its used to process tempest logs
+        pip_install $(get_from_global_requirements testrepository)
+    fi
 
     local image_lines
     local images