diff --git a/README.md b/README.md
index c089f91b36..2ed4c4d474 100644
--- a/README.md
+++ b/README.md
@@ -58,6 +58,8 @@ Prior to version `20.0.0`, coverage reports could be obtained using the inbuilt
 
 To generate coverage results, set the `mapCoverage` property in the `jest` configuration section to `true`.
 
+> Please note that the `outDir` property in the `jest` configuration section is removed in coverage mode, due to [#201](https://github.com/kulshekhar/ts-jest/issues/201).
+
 ### React Native
 
 There is a few additional steps if you want to use it with React Native.
diff --git a/package.json b/package.json
index c4e5c31503..da13484532 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "ts-jest",
-  "version": "20.0.0",
+  "version": "20.0.1",
   "main": "index.js",
   "types": "./dist/index.d.ts",
   "description": "A preprocessor with sourcemap support to help use Typescript with Jest",
diff --git a/src/utils.ts b/src/utils.ts
index 7d5a6e2175..58dda7935d 100644
--- a/src/utils.ts
+++ b/src/utils.ts
@@ -104,6 +104,12 @@ export function getTSConfig(globals, collectCoverage: boolean = false) {
 
     config.inlineSourceMap = true;
     config.inlineSources = true;
+
+    if (config.outDir) {
+      // the coverage report is broken if `.outDir` is set
+      // see https://github.com/kulshekhar/ts-jest/issues/201
+      delete config.outDir;
+    }
   }
 
   if (config.allowSyntheticDefaultImports) {