diff --git a/install.sh b/install.sh
index 459c48f..5e6817e 100755
--- a/install.sh
+++ b/install.sh
@@ -6,9 +6,9 @@ nvm_has() {
   type "$1" > /dev/null 2>&1
 }
 
-if [ -z "$NVM_DIR" ]; then
-  NVM_DIR="$HOME/.nvm"
-fi
+nvm_install_dir() {
+  echo ${NVM_DIR:-"$HOME/.nvm"}
+}
 
 nvm_latest_version() {
   echo "v0.31.2"
@@ -56,45 +56,50 @@ nvm_download() {
 }
 
 install_nvm_from_git() {
-  if [ -d "$NVM_DIR/.git" ]; then
-    echo "=> nvm is already installed in $NVM_DIR, trying to update using git"
+  local INSTALL_DIR
+  INSTALL_DIR="$(nvm_install_dir)"
+
+  if [ -d "$INSTALL_DIR/.git" ]; then
+    echo "=> nvm is already installed in $INSTALL_DIR, trying to update using git"
     printf "\r=> "
-    cd "$NVM_DIR" && (command git fetch 2> /dev/null || {
-      echo >&2 "Failed to update nvm, run 'git fetch' in $NVM_DIR yourself." && exit 1
+    cd "$INSTALL_DIR" && (git fetch 2> /dev/null || {
+      echo >&2 "Failed to update nvm, run 'git fetch' in $INSTALL_DIR yourself." && exit 1
     })
   else
     # Cloning to $NVM_DIR
-    echo "=> Downloading nvm from git to '$NVM_DIR'"
+    echo "=> Downloading nvm from git to '$INSTALL_DIR'"
     printf "\r=> "
-    mkdir -p "$NVM_DIR"
-    command git clone "$(nvm_source git)" "$NVM_DIR"
+    mkdir -p "$INSTALL_DIR"
+    git clone "$(nvm_source)" "$INSTALL_DIR"
   fi
-  cd "$NVM_DIR" && command git checkout --quiet "$(nvm_latest_version)"
-  if [ ! -z "$(cd "$NVM_DIR" && git show-ref refs/heads/master)" ]; then
+  cd "$INSTALL_DIR" && command git checkout --quiet "$(nvm_latest_version)"
+  if [ ! -z "$(cd "$INSTALL_DIR" && git show-ref refs/heads/master)" ]; then
     if git branch --quiet 2>/dev/null; then
-      cd "$NVM_DIR" && command git branch --quiet -D master >/dev/null 2>&1
+      cd "$INSTALL_DIR" && command git branch --quiet -D master >/dev/null 2>&1
     else
       echo >&2 "Your version of git is out of date. Please update it!"
-      cd "$NVM_DIR" && command git branch -D master >/dev/null 2>&1
+      cd "$INSTALL_DIR" && command git branch -D master >/dev/null 2>&1
     fi
   fi
   return
 }
 
 install_nvm_as_script() {
+  local INSTALL_DIR
+  INSTALL_DIR="$(nvm_install_dir)"
   local NVM_SOURCE_LOCAL
   NVM_SOURCE_LOCAL=$(nvm_source script)
   local NVM_EXEC_SOURCE
   NVM_EXEC_SOURCE=$(nvm_source script-nvm-exec)
 
-  # Downloading to $NVM_DIR
-  mkdir -p "$NVM_DIR"
-  if [ -f "$NVM_DIR/nvm.sh" ]; then
-    echo "=> nvm is already installed in $NVM_DIR, trying to update the script"
+  # Downloading to $INSTALL_DIR
+  mkdir -p "$INSTALL_DIR"
+  if [ -f "$INSTALL_DIR/nvm.sh" ]; then
+    echo "=> nvm is already installed in $INSTALL_DIR, trying to update the script"
   else
-    echo "=> Downloading nvm as script to '$NVM_DIR'"
+    echo "=> Downloading nvm as script to '$INSTALL_DIR'"
   fi
-  nvm_download -s "$NVM_SOURCE_LOCAL" -o "$NVM_DIR/nvm.sh" || {
+  nvm_download -s "$NVM_SOURCE_LOCAL" -o "$INSTALL_DIR/nvm.sh" || {
     echo >&2 "Failed to download '$NVM_SOURCE_LOCAL'"
     return 1
   }
@@ -228,8 +233,10 @@ nvm_do_install() {
 
   local NVM_PROFILE
   NVM_PROFILE=$(nvm_detect_profile)
+  local INSTALL_DIR
+  INSTALL_DIR="$(nvm_install_dir)"
 
-  SOURCE_STR="\nexport NVM_DIR=\"$NVM_DIR\"\n[ -s \"\$NVM_DIR/nvm.sh\" ] && . \"\$NVM_DIR/nvm.sh\"  # This loads nvm"
+  SOURCE_STR="\nexport NVM_DIR=\"$INSTALL_DIR\"\n[ -s \"\$NVM_DIR/nvm.sh\" ] && . \"\$NVM_DIR/nvm.sh\"  # This loads nvm"
 
   if [ -z "$NVM_PROFILE" ] ; then
     echo "=> Profile not found. Tried $NVM_PROFILE (as defined in \$PROFILE), ~/.bashrc, ~/.bash_profile, ~/.zshrc, and ~/.profile."
@@ -261,7 +268,8 @@ nvm_do_install() {
 nvm_reset() {
   unset -f nvm_reset nvm_has nvm_latest_version \
     nvm_source nvm_download install_nvm_as_script install_nvm_from_git \
-    nvm_detect_profile nvm_check_global_modules nvm_do_install
+    nvm_detect_profile nvm_check_global_modules nvm_do_install \
+    nvm_install_dir
 }
 
 [ "_$NVM_ENV" = "_testing" ] || nvm_do_install
diff --git a/test/install_script/nvm_install_dir b/test/install_script/nvm_install_dir
new file mode 100755
index 0000000..8ce5a42
--- /dev/null
+++ b/test/install_script/nvm_install_dir
@@ -0,0 +1,25 @@
+#!/bin/sh
+
+cleanup () {
+  unset -f die cleanup
+  unset install_dir
+}
+die () { echo $@ ; cleanup ; exit 1; }
+
+NVM_ENV=testing . ../../install.sh
+HOME="__home__"
+
+
+# NVM_DIR is set
+NVM_DIR="some_dir" 
+install_dir=$(nvm_install_dir)
+[ "_$install_dir" = "_$NVM_DIR" ] || die "nvm_install_dir should use \$NVM_DIR if it exists. Current output: $install_dir"
+
+unset NVM_DIR
+
+# NVM_DIR is not set
+install_dir=$(nvm_install_dir)
+[ "_$install_dir" = "_$HOME/.nvm" ] || die "nvm_install_dir should default to \$HOME/.nvm. Current output: $install_dir"
+
+cleanup
+