diff --git a/account.go b/account.go
index bfb2e6a..abad32a 100644
--- a/account.go
+++ b/account.go
@@ -706,36 +706,50 @@ func (a *Account) newBlockTxOutHandler(result interface{}, e *btcjson.Error) boo
 	return false
 }
 
-// accountdir returns the directory path which holds an account's wallet, utxo,
+// accountdir returns the directory containing an account's wallet, utxo,
 // and tx files.
-func (a *Account) accountdir(cfg *config) string {
-	var wname string
-	if a.name == "" {
-		wname = "btcwallet"
+//
+// This function is deprecated and should only be used when looking up
+// old (before version 0.1.1) account directories so they may be updated
+// to the new directory structure.
+func accountdir(name string, cfg *config) string {
+	var adir string
+	if name == "" { // default account
+		adir = "btcwallet"
 	} else {
-		wname = fmt.Sprintf("btcwallet-%s", a.name)
+		adir = fmt.Sprintf("btcwallet-%s", name)
 	}
 
-	return filepath.Join(cfg.DataDir, wname)
+	return filepath.Join(cfg.DataDir, adir)
 }
 
-// checkCreateAccountDir checks that path exists and is a directory.
+func networkDir(net btcwire.BitcoinNet) string {
+	var netname string
+	if net == btcwire.MainNet {
+		netname = "mainnet"
+	} else {
+		netname = "testnet"
+	}
+	return filepath.Join(cfg.DataDir, netname)
+}
+
+// checkCreateDir checks that the path exists and is a directory.
 // If path does not exist, it is created.
-func (a *Account) checkCreateAccountDir(path string) error {
-	fi, err := os.Stat(path)
-	if err != nil {
+func checkCreateDir(path string) error {
+	if fi, err := os.Stat(path); err != nil {
 		if os.IsNotExist(err) {
 			// Attempt data directory creation
 			if err = os.MkdirAll(path, 0700); err != nil {
-				return fmt.Errorf("cannot create account directory: %s", err)
+				return fmt.Errorf("cannot create network directory: %s", err)
 			}
 		} else {
-			return fmt.Errorf("error checking account directory: %s", err)
+			return fmt.Errorf("error checking network directory: %s", err)
 		}
 	} else {
 		if !fi.IsDir() {
-			return fmt.Errorf("path '%s' is not a directory", cfg.DataDir)
+			return fmt.Errorf("path '%s' is not a directory", path)
 		}
 	}
+
 	return nil
 }
diff --git a/accountstore.go b/accountstore.go
index 6fd4d22..8fa6e57 100644
--- a/accountstore.go
+++ b/accountstore.go
@@ -24,7 +24,6 @@ import (
 	"github.com/conformal/btcwallet/wallet"
 	"github.com/conformal/btcwire"
 	"os"
-	"path/filepath"
 	"sync"
 )
 
@@ -346,20 +345,19 @@ func (store *AccountStore) OpenAccount(name string, cfg *config) error {
 
 	wlt := new(wallet.Wallet)
 
-	account := &Account{
+	a := &Account{
 		Wallet: wlt,
 		name:   name,
 	}
 
-	var finalErr error
-	adir := account.accountdir(cfg)
-	if err := account.checkCreateAccountDir(adir); err != nil {
+	netdir := networkDir(cfg.Net())
+	if err := checkCreateDir(netdir); err != nil {
 		return err
 	}
 
-	wfilepath := filepath.Join(adir, "wallet.bin")
-	utxofilepath := filepath.Join(adir, "utxo.bin")
-	txfilepath := filepath.Join(adir, "tx.bin")
+	wfilepath := accountFilename("wallet.bin", name, netdir)
+	utxofilepath := accountFilename("utxo.bin", name, netdir)
+	txfilepath := accountFilename("tx.bin", name, netdir)
 	var wfile, utxofile, txfile *os.File
 
 	// Read wallet file.
@@ -379,6 +377,7 @@ func (store *AccountStore) OpenAccount(name string, cfg *config) error {
 
 	// Read tx file.  If this fails, return a ErrNoTxs error and let
 	// the caller decide if a rescan is necessary.
+	var finalErr error
 	if txfile, err = os.Open(txfilepath); err != nil {
 		log.Errorf("cannot open tx file: %s", err)
 		// This is not a error we should immediately return with,
@@ -392,7 +391,7 @@ func (store *AccountStore) OpenAccount(name string, cfg *config) error {
 			log.Errorf("cannot read tx file: %s", err)
 			finalErr = ErrNoTxs
 		} else {
-			account.TxStore.s = txs
+			a.TxStore.s = txs
 		}
 	}
 
@@ -409,7 +408,7 @@ func (store *AccountStore) OpenAccount(name string, cfg *config) error {
 			log.Errorf("cannot read utxo file: %s", err)
 			finalErr = ErrNoUtxos
 		} else {
-			account.UtxoStore.s = utxos
+			a.UtxoStore.s = utxos
 		}
 	}
 
@@ -417,16 +416,16 @@ func (store *AccountStore) OpenAccount(name string, cfg *config) error {
 	case ErrNoTxs:
 		// Do nothing special for now.  This will be implemented when
 		// the tx history file is properly written.
-		store.accounts[name] = account
+		store.accounts[name] = a
 
 	case ErrNoUtxos:
 		// Add wallet, but mark wallet as needing a full rescan since
 		// the wallet creation block.  This will take place when btcd
 		// connects.
-		account.fullRescan = true
-		store.accounts[name] = account
+		a.fullRescan = true
+		store.accounts[name] = a
 	case nil:
-		store.accounts[name] = account
+		store.accounts[name] = a
 
 	default:
 		log.Warnf("cannot open wallet: %v", err)
diff --git a/cmd.go b/cmd.go
index de03fa7..1dd2299 100644
--- a/cmd.go
+++ b/cmd.go
@@ -204,7 +204,11 @@ func main() {
 		}()
 	}
 
-	// Open default account
+	// Check and update any old file locations.
+	updateOldFileLocations()
+
+	// Open default account.
+	// TODO(jrick): open all available accounts.
 	err = accountstore.OpenAccount("", cfg)
 	if err != nil {
 		log.Warnf("cannot open default account: %v", err)
diff --git a/config.go b/config.go
index a41791f..abb2bb8 100644
--- a/config.go
+++ b/config.go
@@ -30,7 +30,6 @@ import (
 const (
 	defaultCAFilename     = "btcd.cert"
 	defaultConfigFilename = "btcwallet.conf"
-	defaultDataDirname    = "data"
 	defaultBtcNet         = btcwire.TestNet3
 	defaultLogLevel       = "info"
 )
@@ -217,6 +216,13 @@ func loadConfig() (*config, []string, error) {
 	return &cfg, remainingArgs, nil
 }
 
+func (c *config) Net() btcwire.BitcoinNet {
+	if cfg.MainNet {
+		return btcwire.MainNet
+	}
+	return btcwire.TestNet3
+}
+
 // validLogLevel returns whether or not logLevel is a valid debug log level.
 func validLogLevel(logLevel string) bool {
 	switch logLevel {
diff --git a/disksync.go b/disksync.go
index 2a529b8..d00e6eb 100644
--- a/disksync.go
+++ b/disksync.go
@@ -34,6 +34,19 @@ var (
 	}
 )
 
+// accountFilename returns the filepath of an account file given the
+// filename suffix ("wallet.bin", "tx.bin", or "utxo.bin"), account
+// name and the network directory holding the file.
+func accountFilename(suffix, account, netdir string) string {
+	if account == "" {
+		// default account
+		return filepath.Join(netdir, suffix)
+	}
+
+	// non-default account
+	return filepath.Join(netdir, fmt.Sprintf("%v-%v", account, suffix))
+}
+
 // DirtyAccountSyncer synces dirty accounts for cases where the updated
 // information was not required to be immediately written to disk.  Accounts
 // may be added to dirtyAccounts and will be checked and processed every 10
@@ -63,20 +76,20 @@ func DirtyAccountSyncer() {
 
 // writeDirtyToDisk checks for the dirty flag on an account's wallet,
 // txstore, and utxostore, writing them to disk if any are dirty.
-func (w *Account) writeDirtyToDisk() error {
+func (a *Account) writeDirtyToDisk() error {
 	// Temporary files append the current time to the normal file name.
 	// In caes of failure, the most recent temporary file can be inspected
 	// for validity, and moved to replace the main file.
 	timeStr := fmt.Sprintf("%v", time.Now().Unix())
 
-	adir := w.accountdir(cfg)
-	if err := w.checkCreateAccountDir(adir); err != nil {
+	netdir := networkDir(cfg.Net())
+	if err := checkCreateDir(netdir); err != nil {
 		return err
 	}
 
-	wfilepath := filepath.Join(adir, "wallet.bin")
-	txfilepath := filepath.Join(adir, "tx.bin")
-	utxofilepath := filepath.Join(adir, "utxo.bin")
+	wfilepath := accountFilename("wallet.bin", a.name, netdir)
+	txfilepath := accountFilename("tx.bin", a.name, netdir)
+	utxofilepath := accountFilename("utxo.bin", a.name, netdir)
 
 	// UTXOs and transactions are synced to disk first.  This prevents
 	// any races from saving a wallet marked to be synced with block N
@@ -84,18 +97,18 @@ func (w *Account) writeDirtyToDisk() error {
 	// with block N-1.
 
 	// UTXOs
-	w.UtxoStore.RLock()
-	dirty := w.TxStore.dirty
-	w.UtxoStore.RUnlock()
+	a.UtxoStore.RLock()
+	dirty := a.TxStore.dirty
+	a.UtxoStore.RUnlock()
 	if dirty {
-		w.UtxoStore.Lock()
-		defer w.UtxoStore.Unlock()
+		a.UtxoStore.Lock()
+		defer a.UtxoStore.Unlock()
 		tmpfilepath := utxofilepath + "-" + timeStr
 		tmpfile, err := os.Create(tmpfilepath)
 		if err != nil {
 			return err
 		}
-		if _, err = w.UtxoStore.s.WriteTo(tmpfile); err != nil {
+		if _, err = a.UtxoStore.s.WriteTo(tmpfile); err != nil {
 			return err
 		}
 		tmpfile.Close()
@@ -106,22 +119,22 @@ func (w *Account) writeDirtyToDisk() error {
 			return err
 		}
 
-		w.UtxoStore.dirty = false
+		a.UtxoStore.dirty = false
 	}
 
 	// Transactions
-	w.TxStore.RLock()
-	dirty = w.TxStore.dirty
-	w.TxStore.RUnlock()
+	a.TxStore.RLock()
+	dirty = a.TxStore.dirty
+	a.TxStore.RUnlock()
 	if dirty {
-		w.TxStore.Lock()
-		defer w.TxStore.Unlock()
+		a.TxStore.Lock()
+		defer a.TxStore.Unlock()
 		tmpfilepath := txfilepath + "-" + timeStr
 		tmpfile, err := os.Create(tmpfilepath)
 		if err != nil {
 			return err
 		}
-		if _, err = w.TxStore.s.WriteTo(tmpfile); err != nil {
+		if _, err = a.TxStore.s.WriteTo(tmpfile); err != nil {
 			return err
 		}
 		tmpfile.Close()
@@ -132,22 +145,22 @@ func (w *Account) writeDirtyToDisk() error {
 			return err
 		}
 
-		w.TxStore.dirty = false
+		a.TxStore.dirty = false
 	}
 
 	// Wallet
-	w.mtx.RLock()
-	dirty = w.dirty
-	w.mtx.RUnlock()
+	a.mtx.RLock()
+	dirty = a.dirty
+	a.mtx.RUnlock()
 	if dirty {
-		w.mtx.Lock()
-		defer w.mtx.Unlock()
+		a.mtx.Lock()
+		defer a.mtx.Unlock()
 		tmpfilepath := wfilepath + "-" + timeStr
 		tmpfile, err := os.Create(tmpfilepath)
 		if err != nil {
 			return err
 		}
-		if _, err = w.WriteTo(tmpfile); err != nil {
+		if _, err = a.WriteTo(tmpfile); err != nil {
 			return err
 		}
 		tmpfile.Close()
@@ -158,7 +171,7 @@ func (w *Account) writeDirtyToDisk() error {
 			return err
 		}
 
-		w.dirty = false
+		a.dirty = false
 	}
 
 	return nil
diff --git a/sockets.go b/sockets.go
index 459b6e2..1b17112 100644
--- a/sockets.go
+++ b/sockets.go
@@ -810,14 +810,7 @@ func BtcdHandshake(ws *websocket.Conn) error {
 			return true
 		}
 
-		var walletNetwork btcwire.BitcoinNet
-		if cfg.MainNet {
-			walletNetwork = btcwire.MainNet
-		} else {
-			walletNetwork = btcwire.TestNet3
-		}
-
-		correctNetwork <- btcwire.BitcoinNet(fnet) == walletNetwork
+		correctNetwork <- btcwire.BitcoinNet(fnet) == cfg.Net()
 
 		// No additional replies expected, remove handler.
 		return true
diff --git a/updates.go b/updates.go
new file mode 100644
index 0000000..ae0e8a9
--- /dev/null
+++ b/updates.go
@@ -0,0 +1,162 @@
+/*
+ * Copyright (c) 2013 Conformal Systems LLC <info@conformal.com>
+ *
+ * Permission to use, copy, modify, and distribute this software for any
+ * purpose with or without fee is hereby granted, provided that the above
+ * copyright notice and this permission notice appear in all copies.
+ *
+ * THE SOFTWARE IS PROVIDED "AS IS" AND THE AUTHOR DISCLAIMS ALL WARRANTIES
+ * WITH REGARD TO THIS SOFTWARE INCLUDING ALL IMPLIED WARRANTIES OF
+ * MERCHANTABILITY AND FITNESS. IN NO EVENT SHALL THE AUTHOR BE LIABLE FOR
+ * ANY SPECIAL, DIRECT, INDIRECT, OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
+ * WHATSOEVER RESULTING FROM LOSS OF USE, DATA OR PROFITS, WHETHER IN AN
+ * ACTION OF CONTRACT, NEGLIGENCE OR OTHER TORTIOUS ACTION, ARISING OUT OF
+ * OR IN CONNECTION WITH THE USE OR PERFORMANCE OF THIS SOFTWARE.
+ */
+
+package main
+
+import (
+	"errors"
+	"os"
+	"path/filepath"
+	"strings"
+)
+
+// ErrNotAccountDir describes an error where a directory in the btcwallet
+// data directory cannot be parsed as a directory holding account files.
+var ErrNotAccountDir = errors.New("directory is not an account directory")
+
+// updateOldFileLocations moves files for wallets, transactions, and
+// recorded unspent transaction outputs to more recent locations.
+//
+// If any errors are encounted during this function, the application is
+// closed.
+func updateOldFileLocations() {
+	// Before version 0.1.1, accounts were saved with the following
+	// format:
+	//
+	//   ~/.btcwallet/
+	//     - btcwallet/
+	//       - wallet.bin
+	//       - tx.bin
+	//       - utxo.bin
+	//     - btcwallet-AccountA/
+	//       - wallet.bin
+	//       - tx.bin
+	//       - utxo.bin
+	//
+	// This format does not scale well (see Github issue #16), and
+	// since version 0.1.1, the above directory format has changed
+	// to the following:
+	//
+	//   ~/.btcwallet/
+	//     - testnet/
+	//       - wallet.bin
+	//       - tx.bin
+	//       - utxo.bin
+	//       - AccountA-wallet.bin
+	//       - AccountA-tx.bin
+	//       - AccountA-utxo.bin
+	//
+	// Previous account files are placed in the testnet directory
+	// as 0.1.0 and earlier only ran on testnet.
+
+	datafi, err := os.Open(cfg.DataDir)
+	if err != nil {
+		return
+	}
+	defer datafi.Close()
+
+	// Get info on all files in the data directory.
+	fi, err := datafi.Readdir(0)
+	if err != nil {
+		log.Errorf("Cannot read files in data directory: %v", err)
+		os.Exit(1)
+	}
+
+	// Create testnet directory, if it doesn't already exist.
+	netdir := filepath.Join(cfg.DataDir, "testnet")
+	if err := checkCreateDir(netdir); err != nil {
+		log.Errorf("Cannot continue without a testnet directory: %v", err)
+		os.Exit(1)
+	}
+
+	// Check all files in the datadir for old accounts to update.
+	for i := range fi {
+		// Ignore non-directories.
+		if !fi[i].IsDir() {
+			continue
+		}
+
+		account, err := parseOldAccountDir(cfg.DataDir, fi[i].Name())
+		switch err {
+		case nil:
+			break
+
+		case ErrNotAccountDir:
+			continue
+
+		default: // all other non-nil errors
+			log.Errorf("Cannot open old account directory: %v", err)
+			os.Exit(1)
+		}
+
+		log.Infof("Updating old file locations for account %v\n", account)
+
+		// Move old wallet.bin, if any.
+		old := filepath.Join(cfg.DataDir, fi[i].Name(), "wallet.bin")
+		if fileExists(old) {
+			new := accountFilename("wallet.bin", account, netdir)
+			if err := os.Rename(old, new); err != nil {
+				log.Errorf("Cannot move old %v for account %v to new location: %v",
+					"wallet.bin", account, err)
+				os.Exit(1)
+			}
+		}
+
+		// Move old tx.bin, if any.
+		old = filepath.Join(cfg.DataDir, fi[i].Name(), "tx.bin")
+		if fileExists(old) {
+			new := accountFilename("tx.bin", account, netdir)
+			if err := os.Rename(old, new); err != nil {
+				log.Errorf("Cannot move old %v for account %v to new location: %v",
+					"tx.bin", account, err)
+				os.Exit(1)
+			}
+		}
+
+		// Move old utxo.bin, if any.
+		old = filepath.Join(cfg.DataDir, fi[i].Name(), "utxo.bin")
+		if fileExists(old) {
+			new := accountFilename("utxo.bin", account, netdir)
+			if err := os.Rename(old, new); err != nil {
+				log.Errorf("Cannot move old %v for account %v to new location: %v",
+					"utxo.bin", account, err)
+				os.Exit(1)
+			}
+		}
+
+		// Cleanup old account directory.
+		os.RemoveAll(filepath.Join(cfg.DataDir, fi[i].Name()))
+	}
+}
+
+type oldAccountDir struct {
+	account string
+	dir     *os.File
+}
+
+func parseOldAccountDir(dir, base string) (string, error) {
+	if base == "btcwallet" {
+		return "", nil
+	}
+
+	const accountPrefix = "btcwallet-"
+	if strings.HasPrefix(base, accountPrefix) {
+		account := strings.TrimPrefix(base, accountPrefix)
+		return account, nil
+	}
+
+	return "", ErrNotAccountDir
+}
diff --git a/version.go b/version.go
index cf6ec3f..cdae29b 100644
--- a/version.go
+++ b/version.go
@@ -30,7 +30,7 @@ const semanticAlphabet = "0123456789ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqr
 const (
 	appMajor uint = 0
 	appMinor uint = 1
-	appPatch uint = 0
+	appPatch uint = 1
 
 	// appPreRelease MUST only contain characters from semanticAlphabet
 	// per the semantic versioning spec.