diff --git a/package.json b/package.json
index fcc6c2b8e2d6..8bb64fae2793 100644
--- a/package.json
+++ b/package.json
@@ -65,6 +65,7 @@
     "inflection": "^1.7.0",
     "inquirer": "^3.0.0",
     "isbinaryfile": "^3.0.0",
+    "istanbul-instrumenter-loader": "^2.0.0",
     "json-loader": "^0.5.4",
     "karma-sourcemap-loader": "^0.3.7",
     "karma-webpack": "^2.0.0",
@@ -91,7 +92,6 @@
     "silent-error": "^1.0.0",
     "source-map": "^0.5.6",
     "source-map-loader": "^0.1.5",
-    "sourcemap-istanbul-instrumenter-loader": "^0.2.0",
     "style-loader": "^0.13.1",
     "stylus": "^0.54.5",
     "stylus-loader": "^2.4.0",
diff --git a/packages/@angular/cli/blueprints/ng2/files/karma.conf.js b/packages/@angular/cli/blueprints/ng2/files/karma.conf.js
index f22d900ecc6a..f93d48027f98 100644
--- a/packages/@angular/cli/blueprints/ng2/files/karma.conf.js
+++ b/packages/@angular/cli/blueprints/ng2/files/karma.conf.js
@@ -8,7 +8,7 @@ module.exports = function (config) {
     plugins: [
       require('karma-jasmine'),
       require('karma-chrome-launcher'),
-      require('karma-remap-istanbul'),
+      require('karma-coverage-istanbul-reporter'),
       require('@angular/cli/plugins/karma')
     ],
     files: [
@@ -20,18 +20,16 @@ module.exports = function (config) {
     mime: {
       'text/x-typescript': ['ts','tsx']
     },
-    remapIstanbulReporter: {
-      reports: {
-        html: 'coverage',
-        lcovonly: './coverage/coverage.lcov'
-      }
+    coverageIstanbulReporter: {
+      reports: [ 'html', 'lcovonly' ],
+      fixWebpackSourcePaths: true
     },
     angularCli: {
       config: './angular-cli.json',
       environment: 'dev'
     },
     reporters: config.angularCli && config.angularCli.codeCoverage
-              ? ['progress', 'karma-remap-istanbul']
+              ? ['progress', 'coverage-istanbul']
               : ['progress'],
     port: 9876,
     colors: true,
diff --git a/packages/@angular/cli/blueprints/ng2/files/package.json b/packages/@angular/cli/blueprints/ng2/files/package.json
index 7d5794f31a54..7baa4fe6becd 100644
--- a/packages/@angular/cli/blueprints/ng2/files/package.json
+++ b/packages/@angular/cli/blueprints/ng2/files/package.json
@@ -37,7 +37,7 @@
     "karma-chrome-launcher": "^2.0.0",
     "karma-cli": "^1.0.1",
     "karma-jasmine": "^1.0.2",
-    "karma-remap-istanbul": "^0.6.0",
+    "karma-coverage-istanbul-reporter": "^0.2.0",
     "protractor": "~5.1.0",
     "ts-node": "1.2.1",
     "tslint": "^4.3.0",
diff --git a/packages/@angular/cli/models/webpack-configs/test.js b/packages/@angular/cli/models/webpack-configs/test.js
index a0074d4d3452..bc62d00cdff6 100644
--- a/packages/@angular/cli/models/webpack-configs/test.js
+++ b/packages/@angular/cli/models/webpack-configs/test.js
@@ -18,7 +18,7 @@ const ProgressPlugin  = require('webpack/lib/ProgressPlugin');
  * know they are used.
  *
  * require('source-map-loader')
- * require('sourcemap-istanbul-instrumenter-loader')
+ * require('istanbul-instrumenter-loader')
  *
  */
 
@@ -31,13 +31,12 @@ const getTestConfig = function (projectRoot, environment, appConfig, testConfig)
 
   if (testConfig.codeCoverage) {
     extraRules.push({
-      test: /\.(js|ts)$/, loader: 'sourcemap-istanbul-instrumenter-loader',
+      test: /\.(js|ts)$/, loader: 'istanbul-instrumenter-loader',
       enforce: 'post',
       exclude: [
         /\.(e2e|spec)\.ts$/,
         /node_modules/
-      ],
-      query: { 'force-sourcemap': true }
+      ]
     });
   }
 
diff --git a/packages/@angular/cli/package.json b/packages/@angular/cli/package.json
index 8f698a0b0f20..674e228b887d 100644
--- a/packages/@angular/cli/package.json
+++ b/packages/@angular/cli/package.json
@@ -72,7 +72,7 @@
     "semver": "^5.1.0",
     "silent-error": "^1.0.0",
     "source-map-loader": "^0.1.5",
-    "sourcemap-istanbul-instrumenter-loader": "^0.2.0",
+    "istanbul-instrumenter-loader": "^2.0.0",
     "style-loader": "^0.13.1",
     "stylus": "^0.54.5",
     "stylus-loader": "^2.4.0",
diff --git a/tests/e2e/tests/misc/coverage.ts b/tests/e2e/tests/misc/coverage.ts
index 6e6242bbb406..077d51fe36a4 100644
--- a/tests/e2e/tests/misc/coverage.ts
+++ b/tests/e2e/tests/misc/coverage.ts
@@ -5,5 +5,5 @@ import {ng} from '../../utils/process';
 export default function() {
   return ng('test', '--single-run', '--code-coverage')
     .then(() => expectFileToExist('coverage/src/app'))
-    .then(() => expectFileToExist('coverage/coverage.lcov'));
+    .then(() => expectFileToExist('coverage/lcov.info'));
 }