diff --git a/.github/workflows/ci.yml b/.github/workflows/ci.yml
index ce1943bd3bd90e6c5d7bd36c3784153e53fd160e..15fd75f8a773bc6d735bc3f4cd11782e655f4fb2 100644
--- a/.github/workflows/ci.yml
+++ b/.github/workflows/ci.yml
@@ -112,6 +112,7 @@ jobs:
           echo "$HOME/.local/bin" >> $GITHUB_PATH
       - name: Install Dev Dependencies
         run: |
+          python -m pip install -U setuptools
           pdm install -v -dGtest
           pdm run pip install -U setuptools
           pdm info
diff --git a/.pre-commit-config.yaml b/.pre-commit-config.yaml
index 77332130c99914c342f47750bf50a4a334c69417..4fca84dc315301c7ba9443133c3d5a63ce2046a0 100644
--- a/.pre-commit-config.yaml
+++ b/.pre-commit-config.yaml
@@ -27,7 +27,7 @@ repos:
     rev: v0.971
     hooks:
       - id: mypy
-        args: [pdm]
+        args: [src]
         pass_filenames: false
         additional_dependencies:
           - types-requests
diff --git a/pyproject.toml b/pyproject.toml
index cc2c254bc083f0062cce046521b5635e1167a6c2..96a61f1de7027bdf627bc4235e91ebd95d54218e 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -57,8 +57,8 @@ pdm = "pdm.core:main"
 version = {source = "scm"}
 
 [tool.pdm.build]
-includes = ["pdm"]
 excludes = ["./**/.git"]
+package-dir = "src"
 source-includes = ["tests", "CHANGELOG.md", "LICENSE", "README.md"]
 # editables backend doesn't work well with namespace packages
 editable-backend = "path"
diff --git a/pdm/__init__.py b/src/pdm/__init__.py
similarity index 100%
rename from pdm/__init__.py
rename to src/pdm/__init__.py
diff --git a/pdm/__main__.py b/src/pdm/__main__.py
similarity index 100%
rename from pdm/__main__.py
rename to src/pdm/__main__.py
diff --git a/pdm/__version__.py b/src/pdm/__version__.py
similarity index 100%
rename from pdm/__version__.py
rename to src/pdm/__version__.py
diff --git a/pdm/_types.py b/src/pdm/_types.py
similarity index 100%
rename from pdm/_types.py
rename to src/pdm/_types.py
diff --git a/pdm/builders/__init__.py b/src/pdm/builders/__init__.py
similarity index 100%
rename from pdm/builders/__init__.py
rename to src/pdm/builders/__init__.py
diff --git a/pdm/builders/base.py b/src/pdm/builders/base.py
similarity index 100%
rename from pdm/builders/base.py
rename to src/pdm/builders/base.py
diff --git a/pdm/builders/editable.py b/src/pdm/builders/editable.py
similarity index 100%
rename from pdm/builders/editable.py
rename to src/pdm/builders/editable.py
diff --git a/pdm/builders/sdist.py b/src/pdm/builders/sdist.py
similarity index 100%
rename from pdm/builders/sdist.py
rename to src/pdm/builders/sdist.py
diff --git a/pdm/builders/wheel.py b/src/pdm/builders/wheel.py
similarity index 100%
rename from pdm/builders/wheel.py
rename to src/pdm/builders/wheel.py
diff --git a/pdm/cli/__init__.py b/src/pdm/cli/__init__.py
similarity index 100%
rename from pdm/cli/__init__.py
rename to src/pdm/cli/__init__.py
diff --git a/pdm/cli/actions.py b/src/pdm/cli/actions.py
similarity index 100%
rename from pdm/cli/actions.py
rename to src/pdm/cli/actions.py
diff --git a/pdm/cli/commands/__init__.py b/src/pdm/cli/commands/__init__.py
similarity index 100%
rename from pdm/cli/commands/__init__.py
rename to src/pdm/cli/commands/__init__.py
diff --git a/pdm/cli/commands/add.py b/src/pdm/cli/commands/add.py
similarity index 100%
rename from pdm/cli/commands/add.py
rename to src/pdm/cli/commands/add.py
diff --git a/pdm/cli/commands/base.py b/src/pdm/cli/commands/base.py
similarity index 100%
rename from pdm/cli/commands/base.py
rename to src/pdm/cli/commands/base.py
diff --git a/pdm/cli/commands/build.py b/src/pdm/cli/commands/build.py
similarity index 100%
rename from pdm/cli/commands/build.py
rename to src/pdm/cli/commands/build.py
diff --git a/pdm/cli/commands/cache.py b/src/pdm/cli/commands/cache.py
similarity index 100%
rename from pdm/cli/commands/cache.py
rename to src/pdm/cli/commands/cache.py
diff --git a/pdm/cli/commands/completion.py b/src/pdm/cli/commands/completion.py
similarity index 100%
rename from pdm/cli/commands/completion.py
rename to src/pdm/cli/commands/completion.py
diff --git a/pdm/cli/commands/config.py b/src/pdm/cli/commands/config.py
similarity index 100%
rename from pdm/cli/commands/config.py
rename to src/pdm/cli/commands/config.py
diff --git a/pdm/cli/commands/export.py b/src/pdm/cli/commands/export.py
similarity index 100%
rename from pdm/cli/commands/export.py
rename to src/pdm/cli/commands/export.py
diff --git a/pdm/cli/commands/import_cmd.py b/src/pdm/cli/commands/import_cmd.py
similarity index 100%
rename from pdm/cli/commands/import_cmd.py
rename to src/pdm/cli/commands/import_cmd.py
diff --git a/pdm/cli/commands/info.py b/src/pdm/cli/commands/info.py
similarity index 100%
rename from pdm/cli/commands/info.py
rename to src/pdm/cli/commands/info.py
diff --git a/pdm/cli/commands/init.py b/src/pdm/cli/commands/init.py
similarity index 100%
rename from pdm/cli/commands/init.py
rename to src/pdm/cli/commands/init.py
diff --git a/pdm/cli/commands/install.py b/src/pdm/cli/commands/install.py
similarity index 100%
rename from pdm/cli/commands/install.py
rename to src/pdm/cli/commands/install.py
diff --git a/pdm/cli/commands/list.py b/src/pdm/cli/commands/list.py
similarity index 100%
rename from pdm/cli/commands/list.py
rename to src/pdm/cli/commands/list.py
diff --git a/pdm/cli/commands/lock.py b/src/pdm/cli/commands/lock.py
similarity index 100%
rename from pdm/cli/commands/lock.py
rename to src/pdm/cli/commands/lock.py
diff --git a/pdm/cli/commands/plugin.py b/src/pdm/cli/commands/plugin.py
similarity index 100%
rename from pdm/cli/commands/plugin.py
rename to src/pdm/cli/commands/plugin.py
diff --git a/pdm/cli/commands/publish/__init__.py b/src/pdm/cli/commands/publish/__init__.py
similarity index 100%
rename from pdm/cli/commands/publish/__init__.py
rename to src/pdm/cli/commands/publish/__init__.py
diff --git a/pdm/cli/commands/publish/package.py b/src/pdm/cli/commands/publish/package.py
similarity index 100%
rename from pdm/cli/commands/publish/package.py
rename to src/pdm/cli/commands/publish/package.py
diff --git a/pdm/cli/commands/publish/repository.py b/src/pdm/cli/commands/publish/repository.py
similarity index 100%
rename from pdm/cli/commands/publish/repository.py
rename to src/pdm/cli/commands/publish/repository.py
diff --git a/pdm/cli/commands/remove.py b/src/pdm/cli/commands/remove.py
similarity index 100%
rename from pdm/cli/commands/remove.py
rename to src/pdm/cli/commands/remove.py
diff --git a/pdm/cli/commands/run.py b/src/pdm/cli/commands/run.py
similarity index 100%
rename from pdm/cli/commands/run.py
rename to src/pdm/cli/commands/run.py
diff --git a/pdm/cli/commands/search.py b/src/pdm/cli/commands/search.py
similarity index 100%
rename from pdm/cli/commands/search.py
rename to src/pdm/cli/commands/search.py
diff --git a/pdm/cli/commands/show.py b/src/pdm/cli/commands/show.py
similarity index 100%
rename from pdm/cli/commands/show.py
rename to src/pdm/cli/commands/show.py
diff --git a/pdm/cli/commands/sync.py b/src/pdm/cli/commands/sync.py
similarity index 100%
rename from pdm/cli/commands/sync.py
rename to src/pdm/cli/commands/sync.py
diff --git a/pdm/cli/commands/update.py b/src/pdm/cli/commands/update.py
similarity index 100%
rename from pdm/cli/commands/update.py
rename to src/pdm/cli/commands/update.py
diff --git a/pdm/cli/commands/use.py b/src/pdm/cli/commands/use.py
similarity index 100%
rename from pdm/cli/commands/use.py
rename to src/pdm/cli/commands/use.py
diff --git a/pdm/cli/commands/venv/__init__.py b/src/pdm/cli/commands/venv/__init__.py
similarity index 100%
rename from pdm/cli/commands/venv/__init__.py
rename to src/pdm/cli/commands/venv/__init__.py
diff --git a/pdm/cli/commands/venv/activate.py b/src/pdm/cli/commands/venv/activate.py
similarity index 100%
rename from pdm/cli/commands/venv/activate.py
rename to src/pdm/cli/commands/venv/activate.py
diff --git a/pdm/cli/commands/venv/backends.py b/src/pdm/cli/commands/venv/backends.py
similarity index 100%
rename from pdm/cli/commands/venv/backends.py
rename to src/pdm/cli/commands/venv/backends.py
diff --git a/pdm/cli/commands/venv/create.py b/src/pdm/cli/commands/venv/create.py
similarity index 100%
rename from pdm/cli/commands/venv/create.py
rename to src/pdm/cli/commands/venv/create.py
diff --git a/pdm/cli/commands/venv/list.py b/src/pdm/cli/commands/venv/list.py
similarity index 100%
rename from pdm/cli/commands/venv/list.py
rename to src/pdm/cli/commands/venv/list.py
diff --git a/pdm/cli/commands/venv/purge.py b/src/pdm/cli/commands/venv/purge.py
similarity index 100%
rename from pdm/cli/commands/venv/purge.py
rename to src/pdm/cli/commands/venv/purge.py
diff --git a/pdm/cli/commands/venv/remove.py b/src/pdm/cli/commands/venv/remove.py
similarity index 100%
rename from pdm/cli/commands/venv/remove.py
rename to src/pdm/cli/commands/venv/remove.py
diff --git a/pdm/cli/commands/venv/utils.py b/src/pdm/cli/commands/venv/utils.py
similarity index 100%
rename from pdm/cli/commands/venv/utils.py
rename to src/pdm/cli/commands/venv/utils.py
diff --git a/pdm/cli/completions/__init__.py b/src/pdm/cli/completions/__init__.py
similarity index 100%
rename from pdm/cli/completions/__init__.py
rename to src/pdm/cli/completions/__init__.py
diff --git a/pdm/cli/completions/pdm.bash b/src/pdm/cli/completions/pdm.bash
similarity index 100%
rename from pdm/cli/completions/pdm.bash
rename to src/pdm/cli/completions/pdm.bash
diff --git a/pdm/cli/completions/pdm.fish b/src/pdm/cli/completions/pdm.fish
similarity index 100%
rename from pdm/cli/completions/pdm.fish
rename to src/pdm/cli/completions/pdm.fish
diff --git a/pdm/cli/completions/pdm.ps1 b/src/pdm/cli/completions/pdm.ps1
similarity index 100%
rename from pdm/cli/completions/pdm.ps1
rename to src/pdm/cli/completions/pdm.ps1
diff --git a/pdm/cli/completions/pdm.zsh b/src/pdm/cli/completions/pdm.zsh
similarity index 100%
rename from pdm/cli/completions/pdm.zsh
rename to src/pdm/cli/completions/pdm.zsh
diff --git a/pdm/cli/hooks.py b/src/pdm/cli/hooks.py
similarity index 100%
rename from pdm/cli/hooks.py
rename to src/pdm/cli/hooks.py
diff --git a/pdm/cli/options.py b/src/pdm/cli/options.py
similarity index 100%
rename from pdm/cli/options.py
rename to src/pdm/cli/options.py
diff --git a/pdm/cli/utils.py b/src/pdm/cli/utils.py
similarity index 100%
rename from pdm/cli/utils.py
rename to src/pdm/cli/utils.py
diff --git a/pdm/compat.py b/src/pdm/compat.py
similarity index 100%
rename from pdm/compat.py
rename to src/pdm/compat.py
diff --git a/pdm/core.py b/src/pdm/core.py
similarity index 100%
rename from pdm/core.py
rename to src/pdm/core.py
diff --git a/pdm/exceptions.py b/src/pdm/exceptions.py
similarity index 100%
rename from pdm/exceptions.py
rename to src/pdm/exceptions.py
diff --git a/pdm/formats/__init__.py b/src/pdm/formats/__init__.py
similarity index 100%
rename from pdm/formats/__init__.py
rename to src/pdm/formats/__init__.py
diff --git a/pdm/formats/base.py b/src/pdm/formats/base.py
similarity index 100%
rename from pdm/formats/base.py
rename to src/pdm/formats/base.py
diff --git a/pdm/formats/flit.py b/src/pdm/formats/flit.py
similarity index 100%
rename from pdm/formats/flit.py
rename to src/pdm/formats/flit.py
diff --git a/pdm/formats/pipfile.py b/src/pdm/formats/pipfile.py
similarity index 100%
rename from pdm/formats/pipfile.py
rename to src/pdm/formats/pipfile.py
diff --git a/pdm/formats/poetry.py b/src/pdm/formats/poetry.py
similarity index 100%
rename from pdm/formats/poetry.py
rename to src/pdm/formats/poetry.py
diff --git a/pdm/formats/requirements.py b/src/pdm/formats/requirements.py
similarity index 100%
rename from pdm/formats/requirements.py
rename to src/pdm/formats/requirements.py
diff --git a/pdm/formats/setup_py.py b/src/pdm/formats/setup_py.py
similarity index 100%
rename from pdm/formats/setup_py.py
rename to src/pdm/formats/setup_py.py
diff --git a/pdm/installers/__init__.py b/src/pdm/installers/__init__.py
similarity index 100%
rename from pdm/installers/__init__.py
rename to src/pdm/installers/__init__.py
diff --git a/pdm/installers/installers.py b/src/pdm/installers/installers.py
similarity index 100%
rename from pdm/installers/installers.py
rename to src/pdm/installers/installers.py
diff --git a/pdm/installers/manager.py b/src/pdm/installers/manager.py
similarity index 100%
rename from pdm/installers/manager.py
rename to src/pdm/installers/manager.py
diff --git a/pdm/installers/packages.py b/src/pdm/installers/packages.py
similarity index 100%
rename from pdm/installers/packages.py
rename to src/pdm/installers/packages.py
diff --git a/pdm/installers/synchronizers.py b/src/pdm/installers/synchronizers.py
similarity index 100%
rename from pdm/installers/synchronizers.py
rename to src/pdm/installers/synchronizers.py
diff --git a/pdm/installers/uninstallers.py b/src/pdm/installers/uninstallers.py
similarity index 100%
rename from pdm/installers/uninstallers.py
rename to src/pdm/installers/uninstallers.py
diff --git a/pdm/models/__init__.py b/src/pdm/models/__init__.py
similarity index 100%
rename from pdm/models/__init__.py
rename to src/pdm/models/__init__.py
diff --git a/pdm/models/auth.py b/src/pdm/models/auth.py
similarity index 100%
rename from pdm/models/auth.py
rename to src/pdm/models/auth.py
diff --git a/pdm/models/caches.py b/src/pdm/models/caches.py
similarity index 100%
rename from pdm/models/caches.py
rename to src/pdm/models/caches.py
diff --git a/pdm/models/candidates.py b/src/pdm/models/candidates.py
similarity index 100%
rename from pdm/models/candidates.py
rename to src/pdm/models/candidates.py
diff --git a/pdm/models/environment.py b/src/pdm/models/environment.py
similarity index 100%
rename from pdm/models/environment.py
rename to src/pdm/models/environment.py
diff --git a/pdm/models/in_process/__init__.py b/src/pdm/models/in_process/__init__.py
similarity index 100%
rename from pdm/models/in_process/__init__.py
rename to src/pdm/models/in_process/__init__.py
diff --git a/pdm/models/in_process/get_abi_tag.py b/src/pdm/models/in_process/get_abi_tag.py
similarity index 100%
rename from pdm/models/in_process/get_abi_tag.py
rename to src/pdm/models/in_process/get_abi_tag.py
diff --git a/pdm/models/in_process/parse_setup.py b/src/pdm/models/in_process/parse_setup.py
similarity index 100%
rename from pdm/models/in_process/parse_setup.py
rename to src/pdm/models/in_process/parse_setup.py
diff --git a/pdm/models/in_process/pep508.py b/src/pdm/models/in_process/pep508.py
similarity index 100%
rename from pdm/models/in_process/pep508.py
rename to src/pdm/models/in_process/pep508.py
diff --git a/pdm/models/in_process/sysconfig_get_paths.py b/src/pdm/models/in_process/sysconfig_get_paths.py
similarity index 100%
rename from pdm/models/in_process/sysconfig_get_paths.py
rename to src/pdm/models/in_process/sysconfig_get_paths.py
diff --git a/pdm/models/markers.py b/src/pdm/models/markers.py
similarity index 100%
rename from pdm/models/markers.py
rename to src/pdm/models/markers.py
diff --git a/pdm/models/project_info.py b/src/pdm/models/project_info.py
similarity index 100%
rename from pdm/models/project_info.py
rename to src/pdm/models/project_info.py
diff --git a/pdm/models/python.py b/src/pdm/models/python.py
similarity index 100%
rename from pdm/models/python.py
rename to src/pdm/models/python.py
diff --git a/pdm/models/python_max_versions.json b/src/pdm/models/python_max_versions.json
similarity index 100%
rename from pdm/models/python_max_versions.json
rename to src/pdm/models/python_max_versions.json
diff --git a/pdm/models/repositories.py b/src/pdm/models/repositories.py
similarity index 100%
rename from pdm/models/repositories.py
rename to src/pdm/models/repositories.py
diff --git a/pdm/models/requirements.py b/src/pdm/models/requirements.py
similarity index 100%
rename from pdm/models/requirements.py
rename to src/pdm/models/requirements.py
diff --git a/pdm/models/search.py b/src/pdm/models/search.py
similarity index 100%
rename from pdm/models/search.py
rename to src/pdm/models/search.py
diff --git a/pdm/models/session.py b/src/pdm/models/session.py
similarity index 100%
rename from pdm/models/session.py
rename to src/pdm/models/session.py
diff --git a/pdm/models/setup.py b/src/pdm/models/setup.py
similarity index 100%
rename from pdm/models/setup.py
rename to src/pdm/models/setup.py
diff --git a/pdm/models/specifiers.py b/src/pdm/models/specifiers.py
similarity index 100%
rename from pdm/models/specifiers.py
rename to src/pdm/models/specifiers.py
diff --git a/pdm/models/versions.py b/src/pdm/models/versions.py
similarity index 100%
rename from pdm/models/versions.py
rename to src/pdm/models/versions.py
diff --git a/pdm/models/working_set.py b/src/pdm/models/working_set.py
similarity index 100%
rename from pdm/models/working_set.py
rename to src/pdm/models/working_set.py
diff --git a/pdm/pep582/sitecustomize.py b/src/pdm/pep582/sitecustomize.py
similarity index 100%
rename from pdm/pep582/sitecustomize.py
rename to src/pdm/pep582/sitecustomize.py
diff --git a/pdm/project/__init__.py b/src/pdm/project/__init__.py
similarity index 100%
rename from pdm/project/__init__.py
rename to src/pdm/project/__init__.py
diff --git a/pdm/project/config.py b/src/pdm/project/config.py
similarity index 100%
rename from pdm/project/config.py
rename to src/pdm/project/config.py
diff --git a/pdm/project/core.py b/src/pdm/project/core.py
similarity index 100%
rename from pdm/project/core.py
rename to src/pdm/project/core.py
diff --git a/pdm/project/metadata.py b/src/pdm/project/metadata.py
similarity index 100%
rename from pdm/project/metadata.py
rename to src/pdm/project/metadata.py
diff --git a/pdm/py.typed b/src/pdm/py.typed
similarity index 100%
rename from pdm/py.typed
rename to src/pdm/py.typed
diff --git a/pdm/resolver/__init__.py b/src/pdm/resolver/__init__.py
similarity index 100%
rename from pdm/resolver/__init__.py
rename to src/pdm/resolver/__init__.py
diff --git a/pdm/resolver/core.py b/src/pdm/resolver/core.py
similarity index 100%
rename from pdm/resolver/core.py
rename to src/pdm/resolver/core.py
diff --git a/pdm/resolver/providers.py b/src/pdm/resolver/providers.py
similarity index 100%
rename from pdm/resolver/providers.py
rename to src/pdm/resolver/providers.py
diff --git a/pdm/resolver/python.py b/src/pdm/resolver/python.py
similarity index 100%
rename from pdm/resolver/python.py
rename to src/pdm/resolver/python.py
diff --git a/pdm/resolver/reporters.py b/src/pdm/resolver/reporters.py
similarity index 100%
rename from pdm/resolver/reporters.py
rename to src/pdm/resolver/reporters.py
diff --git a/pdm/signals.py b/src/pdm/signals.py
similarity index 100%
rename from pdm/signals.py
rename to src/pdm/signals.py
diff --git a/pdm/termui.py b/src/pdm/termui.py
similarity index 100%
rename from pdm/termui.py
rename to src/pdm/termui.py
diff --git a/pdm/utils.py b/src/pdm/utils.py
similarity index 100%
rename from pdm/utils.py
rename to src/pdm/utils.py
diff --git a/tests/conftest.py b/tests/conftest.py
index fcac6c39b34a72dc131f7be48effb183655e694e..5d866325e1f6fd93bb70348166fa287cf2ac94b5 100644
--- a/tests/conftest.py
+++ b/tests/conftest.py
@@ -33,7 +33,7 @@ from pdm.models.requirements import (
 from pdm.models.session import PDMSession
 from pdm.project.config import Config
 from pdm.project.core import Project
-from pdm.utils import normalize_name, path_to_url
+from pdm.utils import find_python_in_path, normalize_name, path_to_url
 from tests import FIXTURES
 
 os.environ.update(CI="1", PDM_CHECK_UPDATE="0")
@@ -290,7 +290,7 @@ def project_no_init(tmp_path, mocker, core, index, monkeypatch):
     )
     tmp_path.joinpath("caches").mkdir(parents=True)
     p.global_config["cache_dir"] = tmp_path.joinpath("caches").as_posix()
-    p.project_config["python.path"] = getattr(sys, "_base_executable", sys.executable)
+    p.project_config["python.path"] = find_python_in_path(sys.base_prefix).as_posix()
     monkeypatch.delenv("VIRTUAL_ENV", raising=False)
     monkeypatch.delenv("CONDA_PREFIX", raising=False)
     monkeypatch.delenv("PEP582_PACKAGES", raising=False)