diff --git a/nixos/doc/manual/release-notes/rl-1709.xml b/nixos/doc/manual/release-notes/rl-1709.xml
index 25766439759..d0f0216686a 100644
--- a/nixos/doc/manual/release-notes/rl-1709.xml
+++ b/nixos/doc/manual/release-notes/rl-1709.xml
@@ -68,6 +68,16 @@ following incompatible changes:</para>
       <literal>db-config.sqlite</literal> which will be automatically recreated.
     </para>
   </listitem>
+  <listitem>
+    <para>
+      The ipfs package now doesn't ignore the <literal>dataDir</literal> option anymore. If you've ever set this option to anything other than the default you'll have to either unset it (so the default gets used) or migrate the old data manually with
+<programlisting>
+dataDir=&lt;valueOfDataDir&gt;
+mv /var/lib/ipfs/.ipfs/* $dataDir
+rmdir /var/lib/ipfs/.ipfs
+</programlisting>
+    </para>
+  </listitem>
 </itemizedlist>
 
 
diff --git a/nixos/modules/services/network-filesystems/ipfs.nix b/nixos/modules/services/network-filesystems/ipfs.nix
index bd46147c6bc..10c1d751ac5 100644
--- a/nixos/modules/services/network-filesystems/ipfs.nix
+++ b/nixos/modules/services/network-filesystems/ipfs.nix
@@ -9,7 +9,10 @@ let
 
   ipfsFlags = ''${if cfg.autoMigrate then "--migrate" else ""} ${if cfg.enableGC then "--enable-gc" else ""} ${toString cfg.extraFlags}'';
 
-  pathEnv = { IPFS_PATH = cfg.dataDir; };
+  # Before Version 17.09, ipfs would always use "/var/lib/ipfs/.ipfs" as it's dataDir
+  defaultDataDir = if versionAtLeast config.system.stateVersion "17.09" then
+    "/var/lib/ipfs" else
+    "/var/lib/ipfs/.ipfs";
 
   # Wrapping the ipfs binary with the environment variable IPFS_PATH set to dataDir because we can't set it in the user environment
   wrapped = runCommand "ipfs" { buildInputs = [ makeWrapper ]; } ''
@@ -42,7 +45,7 @@ in
 
       dataDir = mkOption {
         type = types.str;
-        default = "/var/lib/ipfs";
+        default = defaultDataDir;
         description = "The data dir for IPFS";
       };
 
@@ -117,16 +120,15 @@ in
       after = [ "local-fs.target" ];
       before = [ "ipfs.service" "ipfs-offline.service" ];
 
+      environment.IPFS_PATH = cfg.dataDir;
+
       path  = [ pkgs.ipfs pkgs.su pkgs.bash ];
 
       preStart = ''
         install -m 0755 -o ${cfg.user} -g ${cfg.group} -d ${cfg.dataDir}
       '';
-
-      environment = pathEnv;
-
       script =  ''
-        if [[ ! -d ${cfg.dataDir}/.ipfs ]]; then
+        if [[ ! -f ${cfg.dataDir}/config ]]; then
           ${ipfs}/bin/ipfs init ${optionalString cfg.emptyRepo "-e"}
         fi
         ${ipfs}/bin/ipfs --local config Addresses.API ${cfg.apiAddress}
@@ -151,9 +153,9 @@ in
       conflicts = [ "ipfs-offline.service" ];
       wants = [ "ipfs-init.service" ];
 
-      path  = [ pkgs.ipfs ];
+      environment.IPFS_PATH = cfg.dataDir;
 
-      environment = pathEnv;
+      path  = [ pkgs.ipfs ];
 
       serviceConfig = {
         ExecStart = "${ipfs}/bin/ipfs daemon ${ipfsFlags}";
@@ -172,9 +174,9 @@ in
       conflicts = [ "ipfs.service" ];
       wants = [ "ipfs-init.service" ];
 
-      path  = [ pkgs.ipfs ];
+      environment.IPFS_PATH = cfg.dataDir;
 
-      environment = pathEnv;
+      path  = [ pkgs.ipfs ];
 
       serviceConfig = {
         ExecStart = "${ipfs}/bin/ipfs daemon ${ipfsFlags} --offline";