diff --git a/scripts/run b/scripts/run
index 62387d4a..dfb58706 100755
--- a/scripts/run
+++ b/scripts/run
@@ -114,7 +114,7 @@ if [ "$UNAME" == "Darwin" ] && [ -x $(which xhyve) ]; then
     mkisofs -R -V config-2 -o "${CLOUD_CONFIG_ISO}" "$(pwd)/cloud-init"
 
     echo PWD=`pwd`
-    exec sudo xhyve -A -H -P -u \
+    exec sudo -n xhyve -A -H -P -u \
         -m 4G \
         -s 0:0,hostbridge -s 31,lpc \
         -l com1,stdio \
diff --git a/tests/container/README.txt b/tests/container/README.txt
deleted file mode 100644
index 76616d3c..00000000
--- a/tests/container/README.txt
+++ /dev/null
@@ -1 +0,0 @@
-RancherOS In-VM Integration Tests
diff --git a/tests/container/rancheros/invmtest/test_sample.py b/tests/container/rancheros/invmtest/test_sample.py
deleted file mode 100644
index 1030a2e3..00000000
--- a/tests/container/rancheros/invmtest/test_sample.py
+++ /dev/null
@@ -1,6 +0,0 @@
-def func(x):
-    return x + 1
-
-
-def test_answer():
-    assert func(3) == 4
diff --git a/tests/container/requirements.txt b/tests/container/requirements.txt
deleted file mode 100644
index 8d2f15f3..00000000
--- a/tests/container/requirements.txt
+++ /dev/null
@@ -1,3 +0,0 @@
-flake8==2.4.0
-pytest==2.7.0
-tox==1.9.2
diff --git a/tests/container/setup.py b/tests/container/setup.py
deleted file mode 100644
index 2d44c6cc..00000000
--- a/tests/container/setup.py
+++ /dev/null
@@ -1,11 +0,0 @@
-from distutils.core import setup
-
-setup(
-    name='RancherOSInVMTests',
-    version='0.1',
-    packages=[
-        'rancheros.invmtest'
-    ],
-    license='ASL 2.0',
-    long_description=open('README.txt').read(),
-)
diff --git a/tests/container/tox.ini b/tests/container/tox.ini
deleted file mode 100644
index 7052d0fb..00000000
--- a/tests/container/tox.ini
+++ /dev/null
@@ -1,12 +0,0 @@
-[tox]
-envlist=flake8, py27
-
-[testenv]
-deps=-rrequirements.txt
-changedir={toxinidir}
-commands=py.test --durations=20 {posargs}
-
-[testenv:flake8]
-deps=-rrequirements.txt
-changedir={toxinidir}
-commands=flake8 rancheros
diff --git a/tests/integration/rancherostest/conftest.py b/tests/integration/rancherostest/conftest.py
index 6f64c247..e81b2083 100644
--- a/tests/integration/rancherostest/conftest.py
+++ b/tests/integration/rancherostest/conftest.py
@@ -1,10 +1,11 @@
 import os
 import pytest
+import subprocess
 
 
 @pytest.fixture(scope="session", autouse=True)
 def chdir_to_project_root():
     os.chdir('../..')
-    print('\nChdir to project root dir')
+    print('\nChdir to project root dir: ' + subprocess.check_output('pwd'))
     os.chmod('./tests/integration/assets/test.key', 0o600)
     print('Also, `chmod 600 tests/integration/assets/test.key` to make ssh happy')
diff --git a/tests/integration/rancherostest/test_00_system.py b/tests/integration/rancherostest/test_00_system.py
index 920d2bfe..32ab6dea 100644
--- a/tests/integration/rancherostest/test_00_system.py
+++ b/tests/integration/rancherostest/test_00_system.py
@@ -10,7 +10,7 @@ def qemu(request):
 
 def rancheros_version():
     with open('./scripts/version') as f:
-        for ln in iter(f.readline, ''):
+        for ln in f:
             (k, _, v) = ln.partition('=')
             if k == 'VERSION' and v.strip() != '':
                 return v.strip()
@@ -19,13 +19,14 @@ def rancheros_version():
 
 @pytest.mark.timeout(30)
 def test_system_boot(qemu):
-    with qemu.stdout as f:
-        for ln in iter(f.readline, ''):
-            ros_booted_substr = str.find(ln, 'RancherOS {v} started'.format(v=rancheros_version()))
-            print(str.strip(ln))
-            if ros_booted_substr > -1:
-                assert True
-                return
+    version = rancheros_version()
+    print('parsed version: ' + version)
+    for ln in u.iter_lines(qemu.stdout):
+        ros_booted_substr = str.find(ln, 'RancherOS {v} started'.format(v=version))
+        print(str.strip(ln))
+        if ros_booted_substr > -1:
+            assert True
+            return
     assert False
 
 
@@ -38,8 +39,8 @@ def test_run_system_container(qemu):
         './scripts/ssh sudo system-docker run --rm busybox /bin/true', shell=True,
         stdout=subprocess.PIPE, stderr=subprocess.STDOUT, universal_newlines=True)
 
-    with ssh, ssh.stdout as f:
-        for ln in iter(f.readline, ''):
-            print(str.strip(ln))
+    for ln in u.iter_lines(ssh.stdout):
+        print(str.strip(ln))
+    ssh.wait()
 
     assert ssh.returncode == 0
diff --git a/tests/integration/rancherostest/util.py b/tests/integration/rancherostest/util.py
index de6b4994..ec9e61a9 100644
--- a/tests/integration/rancherostest/util.py
+++ b/tests/integration/rancherostest/util.py
@@ -3,6 +3,9 @@ import subprocess
 import time
 
 
+def iter_lines(s):
+    return iter(s.readline, '')
+
 def run_qemu(request, run_args=[]):
     subprocess.check_call('rm -f ./state/empty-hd.img', shell=True)
     print('\nrm ./state/*')
diff --git a/tests/integration/requirements.txt b/tests/integration/requirements.txt
index 9f903942..1053a4a4 100644
--- a/tests/integration/requirements.txt
+++ b/tests/integration/requirements.txt
@@ -1,10 +1,11 @@
-PyYAML.Yandex==3.11.1
-flake8==2.4.0
-mccabe==0.3
-pep8==1.6.2
-py==1.4.27
+PyYAML==3.11
+flake8==2.4.1
+mccabe==0.3.1
+pep8==1.5.7
+pluggy==0.3.0
+py==1.4.30
 pyflakes==0.8.1
-pytest==2.7.0
-pytest-timeout==0.4
-tox==1.9.2
-virtualenv==12.1.1
+pytest==2.7.2
+tox==2.1.1
+virtualenv==13.1.2
+wsgiref==0.1.2
diff --git a/tests/integration/tox.ini b/tests/integration/tox.ini
index 20c60287..238c0f25 100644
--- a/tests/integration/tox.ini
+++ b/tests/integration/tox.ini
@@ -1,15 +1,15 @@
 [tox]
-envlist=flake8, py34
+envlist=flake8, py27
 
 [testenv]
 deps=-rrequirements.txt
-changedir={toxinidir}
+changedir=rancherostest
 commands=py.test --durations=20 {posargs}
 
 [testenv:flake8]
 deps=-rrequirements.txt
-changedir={toxinidir}
-commands=flake8 rancherostest
+changedir=rancherostest
+commands=flake8 .
 
 [flake8]
 max-line-length = 120