diff --git a/packages/angular-cli/commands/build.ts b/packages/angular-cli/commands/build.ts
index 1072ed950d9e..b58acf7e8bf7 100644
--- a/packages/angular-cli/commands/build.ts
+++ b/packages/angular-cli/commands/build.ts
@@ -25,8 +25,8 @@ const BuildCommand = Command.extend({
       aliases: ['t', { 'dev': 'development' }, { 'prod': 'production' }]
     },
     { name: 'environment',    type: String,  default: '', aliases: ['e'] },
-    { name: 'output-path',    type: 'Path',  default: 'dist/',       aliases: ['o'] },
-    { name: 'watch',          type: Boolean, default: false,         aliases: ['w'] },
+    { name: 'output-path',    type: 'Path',  default: null, aliases: ['o'] },
+    { name: 'watch',          type: Boolean, default: false, aliases: ['w'] },
     { name: 'watcher',        type: String },
     { name: 'suppress-sizes', type: Boolean, default: false },
     { name: 'base-href',      type: String,  default: null, aliases: ['bh'] },
diff --git a/packages/angular-cli/commands/serve.ts b/packages/angular-cli/commands/serve.ts
index c820102a2eb3..da67a503fb3a 100644
--- a/packages/angular-cli/commands/serve.ts
+++ b/packages/angular-cli/commands/serve.ts
@@ -22,7 +22,6 @@ export interface ServeTaskOptions {
   liveReloadLiveCss?: boolean;
   target?: string;
   environment?: string;
-  outputPath?: string;
   ssl?: boolean;
   sslKey?: string;
   sslCert?: string;
diff --git a/packages/angular-cli/tasks/build-webpack.ts b/packages/angular-cli/tasks/build-webpack.ts
index 47491c209722..148ee583dd5d 100644
--- a/packages/angular-cli/tasks/build-webpack.ts
+++ b/packages/angular-cli/tasks/build-webpack.ts
@@ -5,22 +5,24 @@ import * as webpack from 'webpack';
 import { BuildOptions } from '../commands/build';
 import { NgCliWebpackConfig } from '../models/webpack-config';
 import { webpackOutputOptions } from '../models/';
+import { CliConfig } from '../models/config';
 
 // Configure build and output;
 let lastHash: any = null;
 
 export default <any>Task.extend({
-  // Options: String outputPath
   run: function (runTaskOptions: BuildOptions) {
 
     const project = this.cliProject;
 
-    rimraf.sync(path.resolve(project.root, runTaskOptions.outputPath));
+    const outputDir = runTaskOptions.outputPath || CliConfig.fromProject().config.apps[0].outDir;
+    rimraf.sync(path.resolve(project.root, outputDir));
+
     const config = new NgCliWebpackConfig(
       project,
       runTaskOptions.target,
       runTaskOptions.environment,
-      runTaskOptions.outputPath,
+      outputDir,
       runTaskOptions.baseHref
     ).config;
 
diff --git a/tests/e2e/tests/build/output-dir.ts b/tests/e2e/tests/build/output-dir.ts
index 837ee7f49ed0..0e34c8450fb9 100644
--- a/tests/e2e/tests/build/output-dir.ts
+++ b/tests/e2e/tests/build/output-dir.ts
@@ -2,11 +2,20 @@ import {ng} from '../../utils/process';
 import {expectFileToExist} from '../../utils/fs';
 import {expectToFail} from '../../utils/utils';
 import {expectGitToBeClean} from '../../utils/git';
+import {updateJsonFile} from '../../utils/project';
 
 
 export default function() {
   return ng('build', '-o', './build-output')
     .then(() => expectFileToExist('./build-output/index.html'))
     .then(() => expectFileToExist('./build-output/main.bundle.js'))
+    .then(() => expectToFail(expectGitToBeClean))
+    .then(() => updateJsonFile('angular-cli.json', configJson => {
+      const app = configJson['apps'][0];
+      app['outDir'] = 'config-build-output';
+    }))
+    .then(() => ng('build'))
+    .then(() => expectFileToExist('./config-build-output/index.html'))
+    .then(() => expectFileToExist('./config-build-output/main.bundle.js'))
     .then(() => expectToFail(expectGitToBeClean));
 }