diff --git a/rhodecode/lib/db_manage.py b/rhodecode/lib/db_manage.py
--- a/rhodecode/lib/db_manage.py
+++ b/rhodecode/lib/db_manage.py
@@ -306,6 +306,7 @@ class DbManage(object):
         and disables dotencode
         """
         settings_model = SettingsModel(sa=self.sa)
+        from rhodecode.lib.vcs.backends.hg import largefiles_store
 
         # Build HOOKS
         hooks = [
@@ -336,12 +337,12 @@ class DbManage(object):
         self.sa.add(largefiles)
 
         # set default largefiles cache dir, defaults to
-        # /repo location/.cache/largefiles
+        # /repo_store_location/.cache/largefiles
         largefiles = RhodeCodeUi()
         largefiles.ui_section = 'largefiles'
         largefiles.ui_key = 'usercache'
-        largefiles.ui_value = os.path.join(repo_store_path, '.cache',
-                                           'largefiles')
+        largefiles.ui_value = largefiles_store(repo_store_path)
+
         self.sa.add(largefiles)
 
         # enable hgsubversion disabled by default
diff --git a/rhodecode/lib/vcs/backends/hg/__init__.py b/rhodecode/lib/vcs/backends/hg/__init__.py
--- a/rhodecode/lib/vcs/backends/hg/__init__.py
+++ b/rhodecode/lib/vcs/backends/hg/__init__.py
@@ -21,6 +21,7 @@
 """
 HG module
 """
+import os
 import logging
 
 from rhodecode.lib.vcs import connection
@@ -46,3 +47,10 @@ def discover_hg_version(raise_on_exc=Fal
         if raise_on_exc:
             raise
         return ''
+
+
+def largefiles_store(base_location):
+    """
+    Return a largefile store relative to base_location
+    """
+    return os.path.join(base_location, '.cache', 'largefiles')
diff --git a/rhodecode/tests/database/conftest.py b/rhodecode/tests/database/conftest.py
--- a/rhodecode/tests/database/conftest.py
+++ b/rhodecode/tests/database/conftest.py
@@ -92,6 +92,9 @@ class DBBackend(object):
     def __init__(
             self, config_file, db_name=None, basetemp=None,
             connection_string=None):
+
+        from rhodecode.lib.vcs.backends.hg import largefiles_store
+
         self.fixture_store = os.path.join(self._store, self._type)
         self.db_name = db_name or self._base_db_name
         self._base_ini_file = config_file
@@ -99,6 +102,7 @@ class DBBackend(object):
         self.stdout = ''
         self._basetemp = basetemp or tempfile.gettempdir()
         self._repos_location = os.path.join(self._basetemp, 'rc_test_repos')
+        self._repos_hg_largefiles_store = largefiles_store(self._basetemp)
         self.connection_string = connection_string
 
     @property
@@ -154,6 +158,9 @@ class DBBackend(object):
                      self._type, destroy=True) as _ini_file:
             if not os.path.isdir(self._repos_location):
                 os.makedirs(self._repos_location)
+            if not os.path.isdir(self._repos_hg_largefiles_store):
+                os.makedirs(self._repos_hg_largefiles_store)
+
             self.execute(
                 "paster setup-rhodecode {0} --user=marcink "
                 "--email=marcin@rhodeocode.com --password={1} "