diff --git a/lib/jekyll.rb b/lib/jekyll.rb
index a669c911..ca729c87 100644
--- a/lib/jekyll.rb
+++ b/lib/jekyll.rb
@@ -58,8 +58,7 @@ module Jekyll
   DEFAULTS = {
     'source'        => Dir.pwd,
     'destination'   => File.join(Dir.pwd, '_site'),
-
-    'plugins'       => File.join(Dir.pwd, '_plugins'),
+    'plugins'       => '_plugins',
     'layouts'       => '_layouts',
     'keep_files'   => ['.git','.svn'],
 
diff --git a/lib/jekyll/site.rb b/lib/jekyll/site.rb
index 2deae484..74ebd112 100644
--- a/lib/jekyll/site.rb
+++ b/lib/jekyll/site.rb
@@ -18,7 +18,7 @@ module Jekyll
       self.safe            = config['safe']
       self.source          = File.expand_path(config['source'])
       self.dest            = File.expand_path(config['destination'])
-      self.plugins         = Array(config['plugins']).map { |d| File.expand_path(d) }
+      self.plugins         = plugins_path
       self.lsi             = config['lsi']
       self.pygments        = config['pygments']
       self.permalink_style = config['permalink'].to_sym
@@ -100,6 +100,17 @@ module Jekyll
       end
     end
 
+    # Internal: Setup the plugin search path
+    #
+    # Returns an Array of plugin search paths
+    def plugins_path
+      if (config['plugins'] == Jekyll::DEFAULTS['plugins'])
+        [File.join(self.source, config['plugins'])]
+      else
+        Array(config['plugins']).map { |d| File.expand_path(d) }
+      end
+    end
+
     # Read Site data from disk and load it into internal data structures.
     #
     # Returns nothing.
diff --git a/test/test_site.rb b/test/test_site.rb
index c698a887..64cc8437 100644
--- a/test/test_site.rb
+++ b/test/test_site.rb
@@ -7,6 +7,11 @@ class TestSite < Test::Unit::TestCase
       assert_equal [File.join(Dir.pwd, '_plugins')], site.plugins
     end
 
+    should "look for plugins under the site directory by default" do
+      site = Site.new(Jekyll::DEFAULTS.merge({'source' => source_dir}))
+      assert_equal [File.join(source_dir, '_plugins')], site.plugins
+    end
+
     should "have an array for plugins if passed as a string" do
       site = Site.new(Jekyll::DEFAULTS.merge({'plugins' => '/tmp/plugins'}))
       assert_equal ['/tmp/plugins'], site.plugins
@@ -26,6 +31,7 @@ class TestSite < Test::Unit::TestCase
       site = Site.new(Jekyll::DEFAULTS.merge({'plugins' => nil}))
       assert_equal [], site.plugins
     end
+
   end
   context "creating sites" do
     setup do