diff --git a/packages/protocol/src/browser/client.ts b/packages/protocol/src/browser/client.ts
index b420a863..3a78e787 100644
--- a/packages/protocol/src/browser/client.ts
+++ b/packages/protocol/src/browser/client.ts
@@ -271,6 +271,7 @@ export class Client {
 					workingDirectory: init.getWorkingDirectory(),
 					os: protoToOperatingSystem(init.getOperatingSystem()),
 					shell: init.getShell(),
+					extensionsDirectory: init.getExtensionsDirectory(),
 					builtInExtensionsDirectory: init.getBuiltinExtensionsDir(),
 				};
 				this.initDataEmitter.emit(this._initData);
diff --git a/packages/protocol/src/common/connection.ts b/packages/protocol/src/common/connection.ts
index 0c53817a..f4f60ded 100644
--- a/packages/protocol/src/common/connection.ts
+++ b/packages/protocol/src/common/connection.ts
@@ -23,6 +23,7 @@ export interface InitData {
 	readonly homeDirectory: string;
 	readonly tmpDirectory: string;
 	readonly shell: string;
+	readonly extensionsDirectory: string;
 	readonly builtInExtensionsDirectory: string;
 }
 
diff --git a/packages/protocol/src/node/server.ts b/packages/protocol/src/node/server.ts
index 7c0de701..0f24cd58 100644
--- a/packages/protocol/src/node/server.ts
+++ b/packages/protocol/src/node/server.ts
@@ -14,6 +14,7 @@ export interface ServerOptions {
 	readonly dataDirectory: string;
 	readonly cacheDirectory: string;
 	readonly builtInExtensionsDirectory: string;
+	readonly extensionsDirectory: string;
 	readonly fork?: ForkProvider;
 }
 
@@ -93,6 +94,7 @@ export class Server {
 		initMsg.setDataDirectory(this.options.dataDirectory);
 		initMsg.setWorkingDirectory(this.options.workingDirectory);
 		initMsg.setBuiltinExtensionsDir(this.options.builtInExtensionsDirectory);
+		initMsg.setExtensionsDirectory(this.options.extensionsDirectory);
 		initMsg.setHomeDirectory(os.homedir());
 		initMsg.setTmpDirectory(os.tmpdir());
 		initMsg.setOperatingSystem(platformToProto(os.platform()));
diff --git a/packages/protocol/src/proto/client.proto b/packages/protocol/src/proto/client.proto
index b0b5d858..4681ecf6 100644
--- a/packages/protocol/src/proto/client.proto
+++ b/packages/protocol/src/proto/client.proto
@@ -41,4 +41,5 @@ message WorkingInit {
 	OperatingSystem operating_system = 5;
 	string shell = 6;
 	string builtin_extensions_dir = 7;
+	string extensions_directory = 8;
 }
diff --git a/packages/protocol/src/proto/client_pb.d.ts b/packages/protocol/src/proto/client_pb.d.ts
index 5306f7d9..9c4c1dd5 100644
--- a/packages/protocol/src/proto/client_pb.d.ts
+++ b/packages/protocol/src/proto/client_pb.d.ts
@@ -132,6 +132,9 @@ export class WorkingInit extends jspb.Message {
   getBuiltinExtensionsDir(): string;
   setBuiltinExtensionsDir(value: string): void;
 
+  getExtensionsDirectory(): string;
+  setExtensionsDirectory(value: string): void;
+
   serializeBinary(): Uint8Array;
   toObject(includeInstance?: boolean): WorkingInit.AsObject;
   static toObject(includeInstance: boolean, msg: WorkingInit): WorkingInit.AsObject;
@@ -151,6 +154,7 @@ export namespace WorkingInit {
     operatingSystem: WorkingInit.OperatingSystem,
     shell: string,
     builtinExtensionsDir: string,
+    extensionsDirectory: string,
   }
 
   export enum OperatingSystem {
diff --git a/packages/protocol/src/proto/client_pb.js b/packages/protocol/src/proto/client_pb.js
index d98a648d..20bf41ea 100644
--- a/packages/protocol/src/proto/client_pb.js
+++ b/packages/protocol/src/proto/client_pb.js
@@ -794,7 +794,8 @@ proto.WorkingInit.toObject = function(includeInstance, msg) {
     workingDirectory: jspb.Message.getFieldWithDefault(msg, 4, ""),
     operatingSystem: jspb.Message.getFieldWithDefault(msg, 5, 0),
     shell: jspb.Message.getFieldWithDefault(msg, 6, ""),
-    builtinExtensionsDir: jspb.Message.getFieldWithDefault(msg, 7, "")
+    builtinExtensionsDir: jspb.Message.getFieldWithDefault(msg, 7, ""),
+    extensionsDirectory: jspb.Message.getFieldWithDefault(msg, 8, "")
   };
 
   if (includeInstance) {
@@ -859,6 +860,10 @@ proto.WorkingInit.deserializeBinaryFromReader = function(msg, reader) {
       var value = /** @type {string} */ (reader.readString());
       msg.setBuiltinExtensionsDir(value);
       break;
+    case 8:
+      var value = /** @type {string} */ (reader.readString());
+      msg.setExtensionsDirectory(value);
+      break;
     default:
       reader.skipField();
       break;
@@ -937,6 +942,13 @@ proto.WorkingInit.serializeBinaryToWriter = function(message, writer) {
       f
     );
   }
+  f = message.getExtensionsDirectory();
+  if (f.length > 0) {
+    writer.writeString(
+      8,
+      f
+    );
+  }
 };
 
 
@@ -1054,4 +1066,19 @@ proto.WorkingInit.prototype.setBuiltinExtensionsDir = function(value) {
 };
 
 
+/**
+ * optional string extensions_directory = 8;
+ * @return {string}
+ */
+proto.WorkingInit.prototype.getExtensionsDirectory = function() {
+  return /** @type {string} */ (jspb.Message.getFieldWithDefault(this, 8, ""));
+};
+
+
+/** @param {string} value */
+proto.WorkingInit.prototype.setExtensionsDirectory = function(value) {
+  jspb.Message.setProto3StringField(this, 8, value);
+};
+
+
 goog.object.extend(exports, proto);
diff --git a/packages/server/package.json b/packages/server/package.json
index 5244242f..a20ba976 100644
--- a/packages/server/package.json
+++ b/packages/server/package.json
@@ -9,7 +9,7 @@
 		"build:binary": "ts-node scripts/nbin.ts"
 	},
 	"dependencies": {
-		"@coder/nbin": "^1.0.4",
+		"@coder/nbin": "^1.0.5",
 		"commander": "^2.19.0",
 		"express": "^4.16.4",
 		"express-static-gzip": "^1.1.3",
diff --git a/packages/server/src/cli.ts b/packages/server/src/cli.ts
index d2a3505b..79010628 100644
--- a/packages/server/src/cli.ts
+++ b/packages/server/src/cli.ts
@@ -21,7 +21,9 @@ commander.version(process.env.VERSION || "development")
 	.description("Run VS Code on a remote server.")
 	.option("--cert <value>")
 	.option("--cert-key <value>")
-	.option("-d, --data-dir <value>", "Customize where user-data is stored.")
+	.option("-e, --extensions-dir <dir>", "Set the root path for extensions.")
+	.option("-d --user-data-dir <dir>", "	Specifies the directory that user data is kept in, useful when running as root.")
+	.option("--data-dir <value>", "DEPRECATED: Use '--user-data-dir' instead. Customize where user-data is stored.")
 	.option("-h, --host <value>", "Customize the hostname.", "0.0.0.0")
 	.option("-o, --open", "Open in the browser on startup.", false)
 	.option("-p, --port <number>", "Port to bind on.", 8443)
@@ -51,6 +53,9 @@ const bold = (text: string | number): string | number => {
 		readonly host: string;
 		readonly port: number;
 
+		readonly userDataDir?: string;
+		readonly extensionsDir?: string;
+
 		readonly dataDir?: string;
 		readonly password?: string;
 		readonly open?: boolean;
@@ -67,7 +72,8 @@ const bold = (text: string | number): string | number => {
 	const noAuthValue = (commander as any).auth;
 	options.noAuth = !noAuthValue;
 
-	const dataDir = path.resolve(options.dataDir || path.join(dataHome, "code-server"));
+	const dataDir = path.resolve(options.userDataDir || options.dataDir || path.join(dataHome, "code-server"));
+	const extensionsDir = options.extensionsDir ? path.resolve(options.extensionsDir) : path.resolve(dataDir, "extensions");
 	const workingDir = path.resolve(args[0] || process.cwd());
 
 	if (!fs.existsSync(dataDir)) {
@@ -81,6 +87,7 @@ const bold = (text: string | number): string | number => {
 	await Promise.all([
 		fse.mkdirp(cacheHome),
 		fse.mkdirp(dataDir),
+		fse.mkdirp(extensionsDir),
 		fse.mkdirp(workingDir),
 	]);
 
@@ -144,10 +151,15 @@ const bold = (text: string | number): string | number => {
 	}
 
 	logger.info(`\u001B[1mcode-server ${process.env.VERSION ? `v${process.env.VERSION}` : "development"}`);
+
+	if (options.dataDir) {
+		logger.warn('"--data-dir" is deprecated. Use "--user-data-dir" instead.');
+	}
+
 	// TODO: fill in appropriate doc url
 	logger.info("Additional documentation: http://github.com/codercom/code-server");
-	logger.info("Initializing", field("data-dir", dataDir), field("working-dir", workingDir), field("log-dir", logDir));
-	const sharedProcess = new SharedProcess(dataDir, builtInExtensionsDir);
+	logger.info("Initializing", field("data-dir", dataDir), field("extensions-dir", extensionsDir), field("working-dir", workingDir), field("log-dir", logDir));
+	const sharedProcess = new SharedProcess(dataDir, extensionsDir, builtInExtensionsDir);
 	const sendSharedProcessReady = (socket: WebSocket): void => {
 		const active = new SharedProcessActive();
 		active.setSocketPath(sharedProcess.socketPath);
@@ -196,6 +208,7 @@ const bold = (text: string | number): string | number => {
 			}
 		},
 		serverOptions: {
+			extensionsDirectory: extensionsDir,
 			builtInExtensionsDirectory: builtInExtensionsDir,
 			dataDirectory: dataDir,
 			workingDirectory: workingDir,
diff --git a/packages/server/src/vscode/sharedProcess.ts b/packages/server/src/vscode/sharedProcess.ts
index a3c8e778..4f83ba27 100644
--- a/packages/server/src/vscode/sharedProcess.ts
+++ b/packages/server/src/vscode/sharedProcess.ts
@@ -38,6 +38,7 @@ export class SharedProcess {
 
 	public constructor(
 		private readonly userDataDir: string,
+		private readonly extensionsDir: string,
 		private readonly builtInExtensionsDir: string,
 	) {
 		this.retry.run();
@@ -95,10 +96,8 @@ export class SharedProcess {
 			this.activeProcess.kill();
 		}
 
-		const extensionsDir = path.join(this.userDataDir, "extensions");
 		const backupsDir = path.join(this.userDataDir, "Backups");
 		await Promise.all([
-			fse.mkdirp(extensionsDir),
 			fse.mkdirp(backupsDir),
 		]);
 
@@ -141,7 +140,7 @@ export class SharedProcess {
 					args: {
 						"builtin-extensions-dir": this.builtInExtensionsDir,
 						"user-data-dir": this.userDataDir,
-						"extensions-dir": extensionsDir,
+						"extensions-dir": this.extensionsDir,
 					},
 					logLevel: this.logger.level,
 					sharedIPCHandle: this.socketPath,
diff --git a/packages/server/yarn.lock b/packages/server/yarn.lock
index fbff8651..a1ca67b7 100644
--- a/packages/server/yarn.lock
+++ b/packages/server/yarn.lock
@@ -7,10 +7,10 @@
   resolved "https://registry.yarnpkg.com/@coder/logger/-/logger-1.0.3.tgz#e0e1ae5496fde5a3c6ef3d748fdfb26a55add8b8"
   integrity sha512-1o5qDZX2VZUNnzgz5KfAdMnaqaX6FNeTs0dUdg73MRHfQW94tFTIryFC1xTTCuzxGDjVHOHkaUAI4uHA2bheOA==
 
-"@coder/nbin@^1.0.4":
-  version "1.0.4"
-  resolved "https://registry.yarnpkg.com/@coder/nbin/-/nbin-1.0.4.tgz#13a3d110fe116ed5d5fdbd1384f0335745dfd859"
-  integrity sha512-mtd5hzPHWBwKpTCYdJdLdiY4CFCEb8HUtv3NgH8SSLFiPDwY7H1UlpqeamIty27NZ+9NLnrBd/DfaE3aVo7rxQ==
+"@coder/nbin@^1.0.5":
+  version "1.0.5"
+  resolved "https://registry.yarnpkg.com/@coder/nbin/-/nbin-1.0.5.tgz#6a9e9982eb179d6bcc9c2e7dfebb608b7c4605d9"
+  integrity sha512-rai1/WgvH2j8SlRweOSk0JmrAzBx8bc22P+pThnPHj5terd0GScshqNR3EIoL/cdC2Ii4wjfOYodYbl/QynYGg==
   dependencies:
     "@coder/logger" "^1.0.3"
     fs-extra "^7.0.1"
diff --git a/packages/vscode/src/fill/environmentService.ts b/packages/vscode/src/fill/environmentService.ts
index c585de13..9f86d8a7 100644
--- a/packages/vscode/src/fill/environmentService.ts
+++ b/packages/vscode/src/fill/environmentService.ts
@@ -8,7 +8,7 @@ export class EnvironmentService extends environment.EnvironmentService {
 	}
 
 	public get extensionsPath(): string {
-		return path.join(paths.getAppDataPath(), "extensions");
+		return paths.getExtensionsDirectory();
 	}
 }
 
diff --git a/packages/vscode/src/fill/paths.ts b/packages/vscode/src/fill/paths.ts
index 393d9861..ed284fb3 100644
--- a/packages/vscode/src/fill/paths.ts
+++ b/packages/vscode/src/fill/paths.ts
@@ -4,6 +4,7 @@ class Paths {
 	private _appData: string | undefined;
 	private _defaultUserData: string | undefined;
 	private _socketPath: string | undefined;
+	private _extensionsDirectory: string | undefined;
 	private _builtInExtensionsDirectory: string | undefined;
 	private _workingDirectory: string | undefined;
 
@@ -31,6 +32,14 @@ class Paths {
 		return this._socketPath;
 	}
 
+	public get extensionsDirectory(): string {
+		if (!this._extensionsDirectory) {
+			throw new Error("trying to access extensions directory before it has been set");
+		}
+
+		return this._extensionsDirectory;
+	}
+
 	public get builtInExtensionsDirectory(): string {
 		if (!this._builtInExtensionsDirectory) {
 			throw new Error("trying to access builtin extensions directory before it has been set");
@@ -52,6 +61,7 @@ class Paths {
 		this._appData = data.dataDirectory;
 		this._defaultUserData = data.dataDirectory;
 		this._socketPath = sharedData.socketPath;
+		this._extensionsDirectory = data.extensionsDirectory;
 		this._builtInExtensionsDirectory = data.builtInExtensionsDirectory;
 		this._workingDirectory = data.workingDirectory;
 	}
@@ -61,5 +71,6 @@ export const _paths = new Paths();
 export const getAppDataPath = (): string => _paths.appData;
 export const getDefaultUserDataPath = (): string => _paths.defaultUserData;
 export const getWorkingDirectory = (): string => _paths.workingDirectory;
+export const getExtensionsDirectory = (): string => _paths.extensionsDirectory;
 export const getBuiltInExtensionsDirectory = (): string => _paths.builtInExtensionsDirectory;
 export const getSocketPath = (): string => _paths.socketPath;