diff --git a/IPython/utils/path.py b/IPython/utils/path.py
index 5b6bb6d..5972503 100644
--- a/IPython/utils/path.py
+++ b/IPython/utils/path.py
@@ -318,6 +318,8 @@ def get_ipython_dir():
             # not using XDG
             ipdir = home_ipdir
 
+    ipdir = os.path.normpath(os.path.expanduser(ipdir))
+
     return _cast_unicode(ipdir, fs_encoding)
 
 
diff --git a/IPython/utils/tests/test_path.py b/IPython/utils/tests/test_path.py
index 1d5ab85..0b85d2b 100644
--- a/IPython/utils/tests/test_path.py
+++ b/IPython/utils/tests/test_path.py
@@ -91,7 +91,7 @@ def setup_environment():
 def teardown_environment():
     """Restore things that were remebered by the setup_environment function
     """
-    (oldenv, os.name, get_home_dir, IPython.__file__,) = oldstuff
+    (oldenv, os.name, path.get_home_dir, IPython.__file__,) = oldstuff
         
     for key in env.keys():
         if key not in oldenv:
@@ -269,6 +269,7 @@ def test_get_ipython_dir_4():
 @with_environment
 def test_get_ipython_dir_5():
     """test_get_ipython_dir_5, use .ipython if exists and XDG defined, but doesn't exist."""
+    path.get_home_dir = lambda : HOME_TEST_DIR
     os.name = "posix"
     env.pop('IPYTHON_DIR', None)
     env.pop('IPYTHONDIR', None)
@@ -290,6 +291,15 @@ def test_get_ipython_dir_6():
     nt.assert_equal(ipdir, xdg_ipdir)
 
 @with_environment
+def test_get_ipython_dir_7():
+    """test_get_ipython_dir_7, test home directory expansion on IPYTHON_DIR"""
+    home_dir = os.path.expanduser('~/')
+    env['IPYTHON_DIR'] = '~/somewhere'
+    ipdir = path.get_ipython_dir()
+    nt.assert_equal(ipdir, os.path.join(home_dir, 'somewhere'))
+
+
+@with_environment
 def test_get_xdg_dir_1():
     """test_get_xdg_dir_1, check xdg_dir"""
     reload(path)