diff --git a/3rdparty/ext_pyqt/CMakeLists.txt b/3rdparty/ext_pyqt/CMakeLists.txt
--- a/3rdparty/ext_pyqt/CMakeLists.txt
+++ b/3rdparty/ext_pyqt/CMakeLists.txt
@@ -5,7 +5,6 @@
       message("WARNING: using system python3!")
       SET(PYTHON_EXECUTABLE_PATH python3)
     endif()
-
     ExternalProject_Add( ext_pyqt
         DOWNLOAD_DIR ${EXTERNALS_DOWNLOAD_DIR}
         URL http://files.kde.org/krita/build/dependencies/PyQt5_gpl-5.6.tar.gz
@@ -30,15 +29,15 @@
         --spec win32-g++
         --verbose
         --sipdir ${PREFIX_ext_pyqt}/share/sip
-        --destdir ${PREFIX_ext_pyqt}/share/krita/pykrita
-        --stubsdir ${PREFIX_ext_pyqt}/share/krita/pykrita/PyQt5
+        --destdir ${PREFIX_ext_pyqt}/lib/krita-python-libs
+        --stubsdir ${PREFIX_ext_pyqt}/lib/krita-python-libs/PyQt5
         --no-qml-plugin --no-python-dbus --no-qsci-api --no-tools
         --disable QtSql --disable QtTest --disable QtWinExtras
     )
     ExternalProject_Add( ext_pyqt
         DOWNLOAD_DIR ${EXTERNALS_DOWNLOAD_DIR}
-        URL https://sourceforge.net/projects/pyqt/files/PyQt5/PyQt-5.9/PyQt5_gpl-5.9.zip
-        URL_MD5 d978884753df265896eda436d8f4e07b
+        URL https://sourceforge.net/projects/pyqt/files/PyQt5/PyQt-5.9.2/PyQt5_gpl-5.9.2.zip
+        URL_MD5 67eacf2f486f77136c9758e03fe6889e
         PATCH_COMMAND  ${PATCH_COMMAND} -p1 -i ${CMAKE_CURRENT_SOURCE_DIR}/pyqt-configure-fix.patch
 
         CONFIGURE_COMMAND ${PYTHON_EXECUTABLE} <SOURCE_DIR>/configure.py ${_PYQT_conf}
diff --git a/3rdparty/ext_pyqt/pyqt-configure-fix.patch b/3rdparty/ext_pyqt/pyqt-configure-fix.patch
--- a/3rdparty/ext_pyqt/pyqt-configure-fix.patch
+++ b/3rdparty/ext_pyqt/pyqt-configure-fix.patch
@@ -1,15 +1,20 @@
---- a/configure.py	2017-07-03 18:25:14.000000000 +0800
-+++ b/configure.py	2017-07-15 01:19:44.622435500 +0800
-@@ -2168,10 +2168,8 @@
-     if source is None:
-         for disabled in run_test_program(mname, test, verbose):
-             if disabled:
--                inform("Disabled %s features: %s" % (mname,
--                        ', '.join(disabled)))
--
--            target_config.pyqt_disabled_features.extend(disabled)
-+                inform("Disabled %s features: %s" % (mname, disabled))
-+                target_config.pyqt_disabled_features.append(disabled)
- 
-     # Include the module in the build.
-     target_config.pyqt_modules.append(mname)
+--- a/configure.py
++++ b/configure.py
+@@ -965,7 +965,7 @@ class TargetConfiguration:
+         # it where it is.
+         if not self.static:
+             pro_lines.extend(['win32 {',
+-                    '    LIBS += ' + self.get_pylib_link_arguments(name=False),
++                    '    LIBS += ' + self.get_pylib_link_arguments(),
+                     '}'])
+ 
+     @staticmethod
+@@ -1977,7 +1977,7 @@ def run_make(target_config, verbose, exe, makefile_name):
+ 
+     remove_file(platform_exe)
+ 
+-    args = [make, '-f', makefile_name]
++    args = [make, '-f', makefile_name, 'CXXFLAGS=-D_hypot=hypot']
+ 
+     if makefile_target != '':
+         args.append(makefile_target)
diff --git a/3rdparty/ext_sip/CMakeLists.txt b/3rdparty/ext_sip/CMakeLists.txt
--- a/3rdparty/ext_sip/CMakeLists.txt
+++ b/3rdparty/ext_sip/CMakeLists.txt
@@ -23,15 +23,15 @@
     list(APPEND _SIP_conf
         --platform win32-g++
         -b ${PREFIX_ext_sip}/bin
-        -d ${PREFIX_ext_sip}/share/krita/pykrita
+        -d ${PREFIX_ext_sip}/lib/krita-python-libs
         -e ${PREFIX_ext_sip}/include
         --sipdir ${PREFIX_ext_sip}/share/sip
         --target-py-version 3.6
     )
     ExternalProject_Add( ext_sip
         DOWNLOAD_DIR ${EXTERNALS_DOWNLOAD_DIR}
-        URL https://sourceforge.net/projects/pyqt/files/sip/sip-4.19.3/sip-4.19.3.zip
-        URL_MD5 1098da9ee1915354fedf38fd6fbe22ce
+        URL https://sourceforge.net/projects/pyqt/files/sip/sip-4.19.6/sip-4.19.6.zip
+        URL_MD5 6a4080268c2aa9225965415fe8706967
 
         CONFIGURE_COMMAND ${PYTHON_EXECUTABLE} <SOURCE_DIR>/configure.py ${_SIP_conf}
         BUILD_COMMAND mingw32-make -j${SUBMAKE_JOBS} LDFLAGS=${SECURITY_SHARED_LINKER_FLAGS}
diff --git a/CMakeLists.txt b/CMakeLists.txt
--- a/CMakeLists.txt
+++ b/CMakeLists.txt
@@ -641,13 +641,6 @@
 
 add_definitions(${QT_DEFINITIONS} ${QT_QTDBUS_DEFINITIONS})
 
-if(WIN32)
-    set(LIB_INSTALL_DIR ${LIB_INSTALL_DIR}
-                        RUNTIME DESTINATION ${BIN_INSTALL_DIR}
-                        LIBRARY ${INSTALL_TARGETS_DEFAULT_ARGS}
-                        ARCHIVE ${INSTALL_TARGETS_DEFAULT_ARGS} )
-endif()
-
 ##
 ## Test endianness
 ##
diff --git a/cmake/modules/FindPyQt5.cmake b/cmake/modules/FindPyQt5.cmake
--- a/cmake/modules/FindPyQt5.cmake
+++ b/cmake/modules/FindPyQt5.cmake
@@ -31,7 +31,7 @@
 
 
   if (WIN32)
-    EXECUTE_PROCESS(COMMAND ${CMAKE_COMMAND} -E env "PYTHONPATH=${CMAKE_PREFIX_PATH}/share/krita/pykrita" ${PYTHON_EXECUTABLE} ${_find_pyqt5_py} OUTPUT_VARIABLE pyqt5_config)
+    EXECUTE_PROCESS(COMMAND ${CMAKE_COMMAND} -E env "PYTHONPATH=${CMAKE_PREFIX_PATH}/lib/krita-python-libs" ${PYTHON_EXECUTABLE} ${_find_pyqt5_py} OUTPUT_VARIABLE pyqt5_config)
   else (WIN32)
     EXECUTE_PROCESS(COMMAND ${PYTHON_EXECUTABLE} ${_find_pyqt5_py} OUTPUT_VARIABLE pyqt5_config)
   endif (WIN32)
diff --git a/cmake/modules/FindPythonLibrary.cmake b/cmake/modules/FindPythonLibrary.cmake
--- a/cmake/modules/FindPythonLibrary.cmake
+++ b/cmake/modules/FindPythonLibrary.cmake
@@ -12,11 +12,6 @@
 # PYTHON_LONG_VERSION - The version of the Python interpreter found as a human
 #     readable string.
 #
-# PYTHON_SITE_PACKAGES_INSTALL_DIR - this cache variable can be used for installing
-#                              own python modules. You may want to adjust this to be the
-#                              same as ${PYTHON_SITE_PACKAGES_DIR}, but then admin
-#                              privileges may be required for installation.
-#
 # PYTHON_SITE_PACKAGES_DIR - Location of the Python site-packages directory.
 #
 # PYTHON_INCLUDE_PATH - Directory holding the python.h include file.
@@ -34,8 +29,6 @@
 
 if (PYTHONINTERP_FOUND)
 
-    option(INSTALL_PYTHON_FILES_IN_PYTHON_PREFIX "Install the Python files in the Python packages dir" FALSE)
-
     # Set the Python libraries to what we actually found for interpreters
     set(Python_ADDITIONAL_VERSIONS "${PYTHON_VERSION_MAJOR}.${PYTHON_VERSION_MINOR}")
     # These are kept for compatibility
@@ -55,18 +48,6 @@
                    )
 
     message(STATUS "Python system site-packages directory: ${PYTHON_SITE_PACKAGES_DIR}")
-    if(INSTALL_PYTHON_FILES_IN_PYTHON_PREFIX)
-        set(PYTHON_SITE_PACKAGES_INSTALL_DIR ${PYTHON_SITE_PACKAGES_DIR})
-    else()
-        execute_process(COMMAND ${PYTHON_EXECUTABLE} -c "from distutils.sysconfig import get_python_lib; print(get_python_lib(True, prefix='${CMAKE_INSTALL_PREFIX}'))"
-                        OUTPUT_VARIABLE PYTHON_SITE_PACKAGES_INSTALL_DIR
-                        OUTPUT_STRIP_TRAILING_WHITESPACE
-                       )
-    endif()
-
-    if(NOT PYTHON_SITE_PACKAGES_INSTALL_DIR STREQUAL PYTHON_SITE_PACKAGES_DIR)
-        message(STATUS "The Python files will be installed to ${PYTHON_SITE_PACKAGES_INSTALL_DIR}. Make sure to add them to the Python search path (e.g. by setting PYTHONPATH)")
-    endif()
 
 endif(PYTHONINTERP_FOUND)
 
diff --git a/cmake/modules/FindSIP.cmake b/cmake/modules/FindSIP.cmake
--- a/cmake/modules/FindSIP.cmake
+++ b/cmake/modules/FindSIP.cmake
@@ -34,7 +34,7 @@
   FIND_FILE(_find_sip_py FindSIP.py PATHS ${CMAKE_MODULE_PATH})
 
   if (WIN32)
-    EXECUTE_PROCESS(COMMAND ${CMAKE_COMMAND} -E env "PYTHONPATH=${CMAKE_PREFIX_PATH}/share/krita/pykrita" ${PYTHON_EXECUTABLE} ${_find_sip_py} OUTPUT_VARIABLE sip_config)
+    EXECUTE_PROCESS(COMMAND ${CMAKE_COMMAND} -E env "PYTHONPATH=${CMAKE_PREFIX_PATH}/lib/krita-python-libs" ${PYTHON_EXECUTABLE} ${_find_sip_py} OUTPUT_VARIABLE sip_config)
   else (WIN32)
     EXECUTE_PROCESS(COMMAND ${PYTHON_EXECUTABLE} ${_find_sip_py} OUTPUT_VARIABLE sip_config)
   endif (WIN32)
diff --git a/cmake/modules/SIPMacros.cmake b/cmake/modules/SIPMacros.cmake
--- a/cmake/modules/SIPMacros.cmake
+++ b/cmake/modules/SIPMacros.cmake
@@ -100,11 +100,11 @@
         DEPENDS ${_abs_module_sip} ${SIP_EXTRA_FILES_DEPEND}
     )
     # not sure if type MODULE could be uses anywhere, limit to cygwin for now
-    IF (CYGWIN)
+    IF (WIN32 OR CYGWIN)
         ADD_LIBRARY(${_logical_name} MODULE ${_sip_output_files} )
-    ELSE (CYGWIN)
+    ELSE (WIN32 OR CYGWIN)
         ADD_LIBRARY(${_logical_name} SHARED ${_sip_output_files} )
-    ENDIF (CYGWIN)
+    ENDIF (WIN32 OR CYGWIN)
     TARGET_LINK_LIBRARIES(${_logical_name} ${PYTHON_LIBRARY})
     TARGET_LINK_LIBRARIES(${_logical_name} ${EXTRA_LINK_LIBRARIES})
     SET_TARGET_PROPERTIES(${_logical_name} PROPERTIES PREFIX "" OUTPUT_NAME ${_child_module_name})
diff --git a/packaging/windows/package-complete.cmd b/packaging/windows/package-complete.cmd
--- a/packaging/windows/package-complete.cmd
+++ b/packaging/windows/package-complete.cmd
@@ -593,6 +593,7 @@
 endlocal
 :: Krita plugins
 xcopy /Y %KRITA_INSTALL_DIR%\lib\kritaplugins\*.dll %pkg_root%\lib\kritaplugins\
+xcopy /Y /S /I %KRITA_INSTALL_DIR%\lib\krita-python-libs %pkg_root%\lib\krita-python-libs
 
 :: Share
 xcopy /Y /S /I %KRITA_INSTALL_DIR%\share\color %pkg_root%\share\color
@@ -680,6 +681,11 @@
 	set relpath=!relpath:~%pkg_root_len_plus_one%!
 	call :split-debug "%%F" !relpath!
 )
+for /r "%pkg_root%\lib\krita-python-libs\" %%F in (*.pyd) do (
+	set relpath=%%F
+	set relpath=!relpath:~%pkg_root_len_plus_one%!
+	call :split-debug "%%F" !relpath!
+)
 endlocal
 
 if not "%ARG_PRE_ZIP_HOOK%" == "" (
diff --git a/plugins/extensions/pykrita/plugin/CMakeLists.txt b/plugins/extensions/pykrita/plugin/CMakeLists.txt
--- a/plugins/extensions/pykrita/plugin/CMakeLists.txt
+++ b/plugins/extensions/pykrita/plugin/CMakeLists.txt
@@ -35,7 +35,7 @@
 # Install "built-in" api
 install(
     DIRECTORY krita
-    DESTINATION ${DATA_INSTALL_DIR}/krita/pykrita
+    DESTINATION ${LIB_INSTALL_DIR}/krita-python-libs
     FILES_MATCHING PATTERN "*.py"
 )
 
diff --git a/plugins/extensions/pykrita/plugin/config.h.cmake b/plugins/extensions/pykrita/plugin/config.h.cmake
--- a/plugins/extensions/pykrita/plugin/config.h.cmake
+++ b/plugins/extensions/pykrita/plugin/config.h.cmake
@@ -18,7 +18,6 @@
 // Boston, MA 02110-1301, USA.
 
 #define PYKRITA_PYTHON_LIBRARY "${PYTHON_LIBRARY}"
-#define PYKRITA_PYTHON_SITE_PACKAGES_INSTALL_DIR "${PYTHON_SITE_PACKAGES_INSTALL_DIR}"
 
 /// Name of the file where per-plugin configuration is stored
 #define CONFIG_FILE "kritapykritarc"
diff --git a/plugins/extensions/pykrita/plugin/utilities.h b/plugins/extensions/pykrita/plugin/utilities.h
--- a/plugins/extensions/pykrita/plugin/utilities.h
+++ b/plugins/extensions/pykrita/plugin/utilities.h
@@ -98,7 +98,7 @@
      * Set the Python paths by calling Py_SetPath. This should be called before
      * initialization to ensure the proper libraries get loaded.
      */
-    static bool setPath(const QStringList& paths);
+    static bool setPath(const QStringList& scriptPaths);
 
     /**
      * Make sure the Python interpreter is initialized. Ideally should be only
diff --git a/plugins/extensions/pykrita/plugin/utilities.cpp b/plugins/extensions/pykrita/plugin/utilities.cpp
--- a/plugins/extensions/pykrita/plugin/utilities.cpp
+++ b/plugins/extensions/pykrita/plugin/utilities.cpp
@@ -143,6 +143,7 @@
 QLibrary* s_pythonLibrary = 0;
 #endif
 PyThreadState* s_pythonThreadState = 0;
+bool isPythonPathSet = false;
 }                                                           // anonymous namespace
 
 const char* Python::PYKRITA_ENGINE = "pykrita";
@@ -278,47 +279,80 @@
     return true;
 }
 
-bool Python::setPath(const QStringList& paths)
-{
-    if (Py_IsInitialized()) {
-        warnScript << "Setting paths when Python interpreter is already initialized";
+namespace
+{
+
+QString findKritaPythonLibsPath()
+{
+    QDir rootDir(KoResourcePaths::getApplicationRoot());
+    //Q_FOREACH (const QFileInfo &entry, rootDir.entryInfoList(QStringList() << "lib*", QDir::Dirs)) {
+    Q_FOREACH (const QFileInfo &entry, rootDir.entryInfoList(QStringList() << "lib*", QDir::Dirs | QDir::NoDotAndDotDot)) {
+        QDir libDir(entry.absoluteFilePath());
+        if (libDir.cd("krita-python-libs")) {
+            return libDir.absolutePath();
+        } else {
+            // Handle cases like Linux where libs are placed in a sub-dir
+            // with the ABI name
+            Q_FOREACH (const QFileInfo &subEntry, libDir.entryInfoList(QDir::Dirs | QDir::NoDotAndDotDot)) {
+                QDir subDir(subEntry.absoluteFilePath());
+                if (subDir.cd("krita-python-libs")) {
+                    return subDir.absolutePath();
+                }
+            }
+        }
     }
+    return QString();
+}
+
+} // namespace
+
+bool Python::setPath(const QStringList& scriptPaths)
+{
+    KIS_SAFE_ASSERT_RECOVER_RETURN_VALUE(!Py_IsInitialized(), false);
+    KIS_SAFE_ASSERT_RECOVER_RETURN_VALUE(!isPythonPathSet, false);
 #ifdef Q_OS_WIN
     constexpr char pathSeparator = ';';
 #else
     constexpr char pathSeparator = ':';
 #endif
-    QString joinedPaths = paths.join(pathSeparator);
-    // Append the default search path
-    // TODO: Properly handle embedded Python
+    QString originalPaths;
+    // Start with the script paths
+    QStringList paths(scriptPaths);
+
+    // Append the Krita libraries path
+    QString pythonLibsPath = findKritaPythonLibsPath();
+    if (pythonLibsPath.isEmpty()) {
+        errScript << "Cannot find krita-python-libs";
+        return false;
+    }
+    dbgScript << "Found krita-python-libs at" << pythonLibsPath;
+    paths.append(pythonLibsPath);
+
 #ifdef Q_OS_WIN
-    QString currentPaths;
-    // Find embeddable Python
-    // TODO: Don't hard-code the paths
+    // Find embeddable Python at <root>/python
     QDir pythonDir(KoResourcePaths::getApplicationRoot());
     if (pythonDir.cd("python")) {
-        dbgScript << "Found embeddable Python at" << pythonDir.absolutePath();
-        currentPaths = pythonDir.absolutePath() + pathSeparator
-                     + pythonDir.absoluteFilePath("python36.zip");
+        dbgScript << "Found bundled Python at" << pythonDir.absolutePath();
+        // The default paths for Windows embeddable Python is ./python36.zip;./
+        // HACK: Assuming bundled Python is version 3.6.*
+        // FIXME: Should we read python36._pth for the paths or use Py_GetPath?
+        paths.append(pythonDir.absoluteFilePath("python36.zip"));
+        paths.append(pythonDir.absolutePath());
     } else {
-# if 1
-        // Use local Python???
-        currentPaths = QString::fromWCharArray(Py_GetPath());
-        warnScript << "Embeddable Python not found.";
-        warnScript << "Default paths:" << currentPaths;
-# else
-        // Or should we fail?
-        errScript << "Embeddable Python not found, not setting Python paths";
+        errScript << "Bundled Python not found, cannot set Python library paths";
         return false;
-# endif
     }
 #else
-    QString currentPaths = QString::fromLocal8Bit(qgetenv("PYTHONPATH"));
+    // TODO: Handle embedded Python or virtualenv
+    // If using a system Python install, respect the current PYTHONPATH
+    originalPaths = QString::fromLocal8Bit(qgetenv("PYTHONPATH"));
 #endif
-    if (!currentPaths.isEmpty()) {
-        joinedPaths = joinedPaths + pathSeparator + currentPaths;
+
+    QString joinedPaths = paths.join(pathSeparator);
+    if (!originalPaths.isEmpty()) {
+        joinedPaths = joinedPaths + pathSeparator + originalPaths;
     }
-    dbgScript << "Setting paths:" << joinedPaths;
+    infoScript << "Setting python paths:" << joinedPaths;
 #ifdef Q_OS_WIN
     QVector<wchar_t> joinedPathsWChars(joinedPaths.size() + 1, 0);
     joinedPaths.toWCharArray(joinedPathsWChars.data());
@@ -326,6 +360,7 @@
 #else
     qputenv("PYTHONPATH", joinedPaths.toLocal8Bit());
 #endif
+    isPythonPathSet = true;
     return true;
 }
 
diff --git a/plugins/extensions/pykrita/sip/CMakeLists.txt b/plugins/extensions/pykrita/sip/CMakeLists.txt
--- a/plugins/extensions/pykrita/sip/CMakeLists.txt
+++ b/plugins/extensions/pykrita/sip/CMakeLists.txt
@@ -18,7 +18,7 @@
 set(SIP_TAGS ALL WS_X11 ${PYQT5_VERSION_TAG})
 set(SIP_EXTRA_OPTIONS -g -x PyKDE_QVector)
 
-set(PYTHON_SITE_PACKAGES_INSTALL_DIR ${DATA_INSTALL_DIR}/krita/pykrita/)
+set(PYTHON_SITE_PACKAGES_INSTALL_DIR ${LIB_INSTALL_DIR}/krita-python-libs)
 file(GLOB PYKRITA_KRITA_sip_files ./krita/*.sip)
 set(SIP_EXTRA_FILES_DEPEND ${PYKRITA_KRITA_sip_files})
 add_sip_python_module(PyKrita.krita ./krita/kritamod.sip kritalibkis kritaui kritaimage kritalibbrush)