diff --git a/src/rustup-utils/src/utils.rs b/src/rustup-utils/src/utils.rs
index ffbf69164a..af94a14530 100644
--- a/src/rustup-utils/src/utils.rs
+++ b/src/rustup-utils/src/utils.rs
@@ -618,6 +618,9 @@ pub fn do_rustup_home_upgrade() -> bool {
 
 // Creates a ~/.rustup folder and a ~/.multirust symlink
 pub fn create_rustup_home() -> Result<()> {
+    // If there's an existing install, then try to upgrade
+    do_rustup_home_upgrade();
+
     // If RUSTUP_HOME is set then don't make any assumptions about where it's
     // ok to put ~/.multirust
     if env::var_os("RUSTUP_HOME").is_some() { return Ok(()) }
@@ -638,6 +641,10 @@ fn create_legacy_multirust_symlink() -> Result<()> {
     let newhome = rustup_home_in_user_dir()?;
     let oldhome = legacy_multirust_home()?;
 
+    if oldhome.exists() {
+        return Ok(());
+    }
+
     raw::symlink_dir(&newhome, &oldhome)
         .chain_err(|| format!("unable to symlink {} from {}",
                               newhome.display(), oldhome.display()))?;
diff --git a/tests/cli-self-upd.rs b/tests/cli-self-upd.rs
index e3013cff07..ae70999ca3 100644
--- a/tests/cli-self-upd.rs
+++ b/tests/cli-self-upd.rs
@@ -1084,9 +1084,13 @@ fn install_creates_legacy_home_symlink() {
         let mut cmd = clitools::cmd(config, "rustup-init", &["-y"]);
         // It'll only do this behavior when RUSTUP_HOME isn't set
         cmd.env_remove("RUSTUP_HOME");
-
         assert!(cmd.output().unwrap().status.success());
 
+        let mut cmd = clitools::cmd(config, "rustc", &["--version"]);
+        cmd.env_remove("RUSTUP_HOME");
+        let out = String::from_utf8(cmd.output().unwrap().stdout).unwrap();
+        assert!(out.contains("hash-s-2"));
+
         let rustup_dir = config.homedir.join(".rustup");
         assert!(rustup_dir.exists());
         let multirust_dir = config.homedir.join(".multirust");
@@ -1095,6 +1099,48 @@ fn install_creates_legacy_home_symlink() {
     });
 }
 
+// Do upgrade over multirust. #848
+#[test]
+fn install_over_unupgraded_multirust_dir() {
+    setup(&|config| {
+        let rustup_dir = config.homedir.join(".rustup");
+        let multirust_dir = config.homedir.join(".multirust");
+
+        // Install rustup
+        let mut cmd = clitools::cmd(config, "rustup-init", &["-y", "--default-toolchain=nightly"]);
+        cmd.env_remove("RUSTUP_HOME");
+        assert!(cmd.output().unwrap().status.success());
+
+        let mut cmd = clitools::cmd(config, "rustc", &["--version"]);
+        cmd.env_remove("RUSTUP_HOME");
+        let out = String::from_utf8(cmd.output().unwrap().stdout).unwrap();
+        assert!(out.contains("hash-n-2"));
+
+        // Move .rustup to .multirust so the next rustup-init will be
+        // an upgrade from ~/.multirust to ~/.rustup
+        raw::remove_dir(&multirust_dir).unwrap();
+        fs::rename(&rustup_dir, &multirust_dir).unwrap();
+        assert!(!rustup_dir.exists());
+        assert!(multirust_dir.exists());
+
+        // Do the upgrade
+        let mut cmd = clitools::cmd(config, "rustup-init", &["-y"]);
+        cmd.env_remove("RUSTUP_HOME");
+        assert!(cmd.output().unwrap().status.success());
+
+        // Directories should be set up correctly
+        assert!(rustup_dir.exists());
+        assert!(multirust_dir.exists());
+        assert!(fs::symlink_metadata(&multirust_dir).unwrap().file_type().is_symlink());
+
+        // We should still be on nightly
+        let mut cmd = clitools::cmd(config, "rustc", &["--version"]);
+        cmd.env_remove("RUSTUP_HOME");
+        let out = String::from_utf8(cmd.output().unwrap().stdout).unwrap();
+        assert!(out.contains("hash-n-2"));
+    });
+}
+
 #[test]
 fn uninstall_removes_legacy_home_symlink() {
     setup(&|config| {