diff --git a/.gitignore b/.gitignore
index 2b7c267b0..cd6a7fc9e 100644
--- a/.gitignore
+++ b/.gitignore
@@ -17,6 +17,11 @@ include/
 *.orig
 *~
 
+.eggs/
+
+# this file is managed by setuptools_scm
+_pytest/__init__.py
+
 doc/*/_build
 build/
 dist/
diff --git a/_pytest/__init__.py b/_pytest/__init__.py
deleted file mode 100644
index 5b3715e54..000000000
--- a/_pytest/__init__.py
+++ /dev/null
@@ -1,2 +0,0 @@
-#
-__version__ = '2.8.0.dev4'
diff --git a/_pytest/genscript.py b/_pytest/genscript.py
index c7026f703..0572bfcd6 100755
--- a/_pytest/genscript.py
+++ b/_pytest/genscript.py
@@ -31,7 +31,12 @@ def pkg_to_mapping(name):
     else: # package
         for pyfile in toplevel.visit('*.py'):
             pkg = pkgname(name, toplevel, pyfile)
-            name2src[pkg] = pyfile.read()
+            if pkg == '_pytest.__init__':
+                # remove the coding comment line to avoid  python bug
+                lines = pyfile.read().splitlines(True)
+                name2src[pkg] = ''.join(lines[1:])
+            else:
+                name2src[pkg] = pyfile.read()
         # with wheels py source code might be not be installed
         # and the resulting genscript is useless, just bail out.
         assert name2src, "no source code found for %r at %r" %(name, toplevel)
diff --git a/pytest.py b/pytest.py
index 8549ba781..161c44822 100644
--- a/pytest.py
+++ b/pytest.py
@@ -15,7 +15,7 @@ from _pytest.config import (
     main, UsageError, _preloadplugins, cmdline,
     hookspec, hookimpl
 )
-from _pytest import __version__
+from _pytest import version as __version__
 
 _preloadplugins() # to populate pytest.* namespace so help(pytest) works
 
diff --git a/setup.py b/setup.py
index 218c14da8..69b6f5e5c 100644
--- a/setup.py
+++ b/setup.py
@@ -63,7 +63,7 @@ def main():
         name='pytest',
         description='pytest: simple powerful testing with Python',
         long_description=long_description,
-        version=get_version(),
+        use_scm_version={'write_to': '_pytest/__init__.py'},
         url='http://pytest.org',
         license='MIT license',
         platforms=['unix', 'linux', 'osx', 'cygwin', 'win32'],
@@ -75,6 +75,7 @@ def main():
         # the following should be enabled for release
         install_requires=install_requires,
         extras_require=extras_require,
+        setup_requires=['setuptools_scm'],
         packages=['_pytest', '_pytest.assertion'],
         py_modules=['pytest'],
         zip_safe=False,