diff --git a/autogen-all.sh b/autogen-all.sh
index 88fb15f7..83af1f0b 100755
--- a/autogen-all.sh
+++ b/autogen-all.sh
@@ -15,7 +15,7 @@
 
 prog=$(basename "$0")
 
-packages=". lang/cpp lang/qt"
+packages=". lang/cpp lang/qt lang/python"
 
 fatal () {
     echo "${prog}:" "$*" >&2
diff --git a/configure.ac b/configure.ac
index 7ec79226..03324be3 100644
--- a/configure.ac
+++ b/configure.ac
@@ -238,7 +238,7 @@ have_macos_system=no
 build_w32_glib=no
 available_languages="cl"
 default_languages="cl"
-for lang in cpp qt; do
+for lang in cpp qt python; do
   if test -d $srcdir/lang/$lang; then
     available_languages="$available_languages $lang"
   fi
@@ -364,6 +364,10 @@ LIST_MEMBER("qt", $enabled_languages)
 if test "$found" = "1"; then
   nested_languages="$nested_languages qt"
 fi
+LIST_MEMBER("python", $enabled_languages)
+if test "$found" = "1"; then
+  nested_languages="$nested_languages python"
+fi
 
 AC_SUBST(NESTED_LANGUAGES, $nested_languages)
 
@@ -851,6 +855,10 @@ LIST_MEMBER("qt", $enabled_languages)
 if test "$found" = "1"; then
   AC_CONFIG_SUBDIRS([lang/qt])
 fi
+LIST_MEMBER("python", $enabled_languages)
+if test "$found" = "1"; then
+  AC_CONFIG_SUBDIRS([lang/python])
+fi
 
 AC_OUTPUT
 
diff --git a/lang/python/configure.ac b/lang/python/configure.ac
index 34033ed3..116d7d0b 100644
--- a/lang/python/configure.ac
+++ b/lang/python/configure.ac
@@ -409,8 +409,26 @@ AM_CONDITIONAL(USE_GPGRT_CONFIG, [test -n "$GPGRT_CONFIG" \
 
 # And for gpgme.
 have_gpgme=no
-AM_PATH_GPGME("$NEED_GPGME_VERSION",
-              have_gpgme=yes, have_gpgme=no)
+builddir=`pwd`
+# Check if Python bindings are built as nested package of gpgme
+if test "${srcdir%/lang/python}/lang/python" == "$srcdir" -a \
+        "${builddir%/lang/python}/lang/python" == "$builddir"; then
+  AC_MSG_CHECKING(for GpgME - assuming nested build)
+  gpgme_build_dir=${builddir%/lang/python}
+  if test -f "$gpgme_build_dir/src/gpgme.h"; then
+    GPGME_CFLAGS="-I$gpgme_build_dir/src"
+    GPGME_LIBS="-L$gpgme_build_dir/src/.libs -lgpgme"
+    have_gpgme=yes
+    AC_MSG_RESULT(yes)
+  else
+    AC_MSG_RESULT(no)
+  fi
+fi
+
+if test "$have_gpgme" = "no"; then
+  AM_PATH_GPGME("$NEED_GPGME_VERSION",
+                have_gpgme=yes, have_gpgme=no)
+fi
 
 
 #
diff --git a/lang/python/setup.py.in b/lang/python/setup.py.in
index fe20b0ef..3d44341d 100755
--- a/lang/python/setup.py.in
+++ b/lang/python/setup.py.in
@@ -33,10 +33,6 @@ import shutil
 import subprocess
 import sys
 
-# Out-of-tree build of the gpg bindings.
-gpgme_h = ''
-include_dirs = [os.getcwd()]
-library_dirs = []
 
 if hasattr(subprocess, 'DEVNULL'):
     devnull = subprocess.DEVNULL
@@ -52,12 +48,17 @@ major, minor, patch = map(int, version.split('.'))
 if not (major > 1 or (major == 1 and minor >= 7)):
     sys.exit('Need at least GPGME version 1.7, found {}.'.format(version_raw))
 
-define_macros = []
+library_dirs = []
+libs = []
 if '@GPGME_LIBS@':
-    libs = '@GPGME_LIBS@'.split(' ')
-else:
-    libs = []
+    for item in '@GPGME_LIBS@'.split(' '):
+        if item.startswith('-L'):
+            library_dirs.append(item[2:])
+        else:
+            libs.append(item)
 
+include_dirs = [os.getcwd()]
+define_macros = []
 if '@GPGME_CFLAGS@':
     for item in '@GPGME_CFLAGS@'.split(' '):
         if item.startswith('-I'):
@@ -87,23 +88,23 @@ if uname_s.startswith('MINGW32'):
                 extra_dirs.append(os.path.join(tgt, item))
                 break
     include_dirs += extra_dirs
-    for item in [x[2:] for x in libs if x.startswith('-L')]:
+    extra_dirs = []
+    for item in library_dirs:
         for ln, mnt, tgt in tmplist:
             if item.startswith(mnt):
                 item = os.path.normpath(item[ln:])
                 while item[0] == os.path.sep:
                     item = item[1:]
-                library_dirs.append(os.path.join(tgt, item))
+                extra_dirs.append(os.path.join(tgt, item))
                 break
+    library_dirs += extra_dirs
 
-if not gpgme_h:
-    if os.path.exists(os.path.join('@prefix@', 'include', 'gpgme.h')):
-        gpgme_h = os.path.join('@prefix@', 'include', 'gpgme.h')
-    else:
-        for include_dir in (include_dirs or ['/usr/include']):
-            if os.path.exists(os.path.join(include_dir, 'gpgme.h')):
-                gpgme_h = os.path.join(include_dir, 'gpgme.h')
-                break
+gpgme_h = None
+for include_dir in (include_dirs +
+                    [os.path.join('@prefix@', 'include'), '/usr/include']):
+    if os.path.exists(os.path.join(include_dir, 'gpgme.h')):
+        gpgme_h = os.path.join(include_dir, 'gpgme.h')
+        break
 
 if not gpgme_h:
     sys.exit('gpgme.h not found.')