diff --git a/MANIFEST.in b/MANIFEST.in
index fc060a5e..082c0c34 100644
--- a/MANIFEST.in
+++ b/MANIFEST.in
@@ -1,10 +1,7 @@
-include libsass/*.h
-include libsass/*.hpp
-include libsass/*.cpp
+recursive-include libsas *.c
+recursive-include libsas *.cpp
+recursive-include libsas *.h
+recursive-include libsas *.hpp
 include libsass/Makefile
-include libsass/Makefile.am
-include libsass/b64/*.h
-include libsass/utf8/*.h
-include win32/*.h
 include test/*.scss
 include README.rst
diff --git a/Makefile b/Makefile
index daaa3c93..d203291a 100644
--- a/Makefile
+++ b/Makefile
@@ -9,24 +9,24 @@
 #         $ make -j 4 && python -m unittest sasstests
 
 PY_HEADERS := -I/usr/include/python2.7
-C_SOURCES := $(wildcard libsass/*.c)
-C_OBJECTS = $(patsubst libsass/%.c,build2/libsass/c/%.o,$(C_SOURCES))
-CPP_SOURCES := $(wildcard libsass/*.cpp)
-CPP_OBJECTS = $(patsubst libsass/%.cpp,build2/libsass/cpp/%.o,$(CPP_SOURCES))
+C_SOURCES := $(wildcard libsass/src/*.c)
+C_OBJECTS = $(patsubst libsass/src/%.c,build2/libsass/c/%.o,$(C_SOURCES))
+CPP_SOURCES := $(wildcard libsass/src/*.cpp)
+CPP_OBJECTS = $(patsubst libsass/src/%.cpp,build2/libsass/cpp/%.o,$(CPP_SOURCES))
 
 all: _sass.so
 
-build2/libsass/c/%.o: libsass/%.c
+build2/libsass/c/%.o: libsass/src/%.c
 	@mkdir -p build2/libsass/c/
-	gcc -pthread -fno-strict-aliasing -DNDEBUG -g -fwrapv -O2 -Wall -Wstrict-prototypes -fPIC -I./libsass $(PY_HEADERS) -c $^ -o $@ -c -O2 -fPIC -std=c++0x -Wall -Wno-parentheses
+	gcc -pthread -fno-strict-aliasing -DNDEBUG -g -fwrapv -O2 -Wall -Wstrict-prototypes -fPIC -I./libsass/include $(PY_HEADERS) -c $^ -o $@ -c -O2 -fPIC -std=c++0x -Wall -Wno-parentheses
 
-build2/libsass/cpp/%.o: libsass/%.cpp
+build2/libsass/cpp/%.o: libsass/src/%.cpp
 	@mkdir -p build2/libsass/cpp/
-	gcc -pthread -fno-strict-aliasing -DNDEBUG -g -fwrapv -O2 -Wall -Wstrict-prototypes -fPIC -I./libsass $(PY_HEADERS) -c $^ -o $@ -c -O2 -fPIC -std=c++0x -Wall -Wno-parentheses
+	gcc -pthread -fno-strict-aliasing -DNDEBUG -g -fwrapv -O2 -Wall -Wstrict-prototypes -fPIC -I./libsass/include $(PY_HEADERS) -c $^ -o $@ -c -O2 -fPIC -std=c++0x -Wall -Wno-parentheses
 
 build2/pysass.o: pysass.cpp
 	@mkdir -p build2
-	gcc -pthread -fno-strict-aliasing -DNDEBUG -g -fwrapv -O2 -Wall -Wstrict-prototypes -fPIC -I./libsass $(PY_HEADERS) -c $^ -o $@ -c -O2 -fPIC -std=c++0x -Wall -Wno-parentheses
+	gcc -pthread -fno-strict-aliasing -DNDEBUG -g -fwrapv -O2 -Wall -Wstrict-prototypes -fPIC -I./libsass/include $(PY_HEADERS) -c $^ -o $@ -c -O2 -fPIC -std=c++0x -Wall -Wno-parentheses
 
 _sass.so: $(C_OBJECTS) $(CPP_OBJECTS) build2/pysass.o
 	g++ -pthread -shared -Wl,-O1 -Wl,-Bsymbolic-functions -Wl,-Bsymbolic-functions -Wl,-z,relro $^ -L./libsass -o $@ -fPIC -lstdc++
diff --git a/libsass b/libsass
index 0e6b4a28..61ac61a2 160000
--- a/libsass
+++ b/libsass
@@ -1 +1 @@
-Subproject commit 0e6b4a2850092356aa3ece07c6b249f0221caced
+Subproject commit 61ac61a2b2ffef30233c9eab93633cc2622a562f
diff --git a/pysass.cpp b/pysass.cpp
index dee6c1cd..bba86d88 100644
--- a/pysass.cpp
+++ b/pysass.cpp
@@ -1,6 +1,6 @@
 #include <string.h>
 #include <Python.h>
-#include "sass_context.h"
+#include <sass/context.h>
 
 #if PY_MAJOR_VERSION >= 3
 #define PySass_IF_PY3(three, two) (three)
diff --git a/sasstests.py b/sasstests.py
index 770e28b5..97efda65 100644
--- a/sasstests.py
+++ b/sasstests.py
@@ -56,10 +56,11 @@ def normalize_path(path):
     'version': 3,
     'file': 'test/a.css',
     'sources': ['test/a.scss'],
-    'sourcesContent': [],
     'names': [],
-    'mappings': ';AAKA,IAAI,CAAC;EAHH,gBAAgB,EAAE,KAAM,GAGpB;;'
-                'EAEJ,IAAI,CAAC,CAAC,CAAJ;IACA,KAAK,EAAE,IAAK,GADX',
+    'mappings': (
+        ';AAKA,IAAI,CAAC;EAHH,gBAAgB,EAAE,KAAM,GAQzB;;EALD,IAAI,CAEF,CAAC,'
+        'CAAC;IACA,KAAK,EAAE,IAAK,GACb'
+    ),
 }
 
 B_EXPECTED_CSS = '''\
@@ -457,10 +458,10 @@ def test_build_one(self):
                     'version': 3,
                     'file': '../test/b.css',
                     'sources': ['../test/b.scss'],
-                    'sourcesContent': [],
                     'names': [],
-                    'mappings': ';AACE,CAAC,CAAC,CAAC,CAAD;'
-                                'EACA,SAAS,EAAE,IAAK,GADf',
+                    'mappings': (
+                        ';AAAA,CAAC,CACC,CAAC,CAAC;EACA,SAAS,EAAE,IAAK,GACjB'
+                    ),
                 },
                 os.path.join(d, 'css', 'b.scss.css.map')
             )
@@ -476,11 +477,11 @@ def test_build_one(self):
                     'version': 3,
                     'file': '../test/d.css',
                     'sources': ['../test/d.scss'],
-                    'sourcesContent': [],
                     'names': [],
-                    'mappings': ';;AAKA,IAAI,CAAC;EAHH,gBAAgB,EAAE,KAAM,GAGpB;'
-                                ';EAEJ,IAAI,CAAC,CAAC,CAAJ'
-                                ';IACA,IAAI,EAAE,0BAA2B,GADhC',
+                    'mappings': (
+                        ';;AAKA,IAAI,CAAC;EAHH,gBAAgB,EAAE,KAAM,GAQzB;;EALD,'
+                        'IAAI,CAEF,CAAC,CAAC;IACA,IAAI,EAAE,0BAA2B,GAClC'
+                    ),
                 },
                 os.path.join(d, 'css', 'd.scss.css.map')
             )
@@ -757,7 +758,7 @@ def test_error(self):
             except sass.CompileError as e:
                 msg, = e.args
                 assert msg.decode('UTF-8').startswith(
-                    'Error: invalid property name'
+                    'Error: Invalid CSS after '
                 ), msg
                 return
             except Exception as e:
diff --git a/setup.py b/setup.py
index 388e3549..f1224e68 100644
--- a/setup.py
+++ b/setup.py
@@ -20,10 +20,9 @@
     use_setuptools()
     from setuptools import Extension, setup
 
-LIBSASS_DIR = 'libsass'
+LIBSASS_SOURCE_DIR = os.path.join('libsass', 'src')
 
-
-if not os.path.isfile(os.path.join(LIBSASS_DIR, 'Makefile')) and \
+if not os.path.isfile(os.path.join('libsass', 'Makefile')) and \
    os.path.isdir('.git'):
     print(file=sys.stderr)
     print('You seem to miss initializing submodules; '
@@ -31,12 +30,19 @@
     print('  git submodule update --init', file=sys.stderr)
     print(file=sys.stderr)
 
-libsass_files = os.listdir(LIBSASS_DIR)
-libsass_sources = [f for f in libsass_files if f.endswith(('.c', '.cpp'))]
-libsass_headers = [f for f in libsass_files if f.endswith(('.h', '.hpp'))]
-headers = [os.path.join(LIBSASS_DIR, f) for f in libsass_headers]
-sources = [os.path.join(LIBSASS_DIR, f) for f in libsass_sources]
-sources.append('pysass.cpp')
+sources = ['pysass.cpp']
+headers = []
+for directory in (
+        os.path.join('libsass', 'src'),
+        os.path.join('libsass', 'include')
+):
+    for pth, _, filenames in os.walk(directory):
+        for filename in filenames:
+            filename = os.path.join(pth, filename)
+            if filename.endswith(('.c', '.cpp')):
+                sources.append(filename)
+            elif filename.endswith('.h'):
+                headers.append(filename)
 
 if sys.platform == 'win32':
     from distutils.msvc9compiler import get_build_version
@@ -98,7 +104,7 @@ def customize_compiler(compiler):
         # Dirty workaround to avoid link error...
         # Python distutils doesn't provide any way to configure different
         # flags for each cc and c++.
-        cencode_path = os.path.join(LIBSASS_DIR, 'cencode.c')
+        cencode_path = os.path.join(LIBSASS_SOURCE_DIR, 'cencode.c')
         cencode_body = ''
         with open(cencode_path) as f:
             cencode_body = f.read()
@@ -131,9 +137,9 @@ def restore_cencode():
 sass_extension = Extension(
     '_sass',
     sources,
-    library_dirs=[os.path.join('.', LIBSASS_DIR)],
-    include_dirs=[os.path.join('.', LIBSASS_DIR)],
-    depends=libsass_headers,
+    library_dirs=[os.path.join('.', 'libsass', 'src')],
+    include_dirs=[os.path.join('.', 'libsass', 'include')],
+    depends=headers,
     extra_compile_args=flags,
     extra_link_args=link_flags,
 )
@@ -216,8 +222,6 @@ def run(self):
     package_data={
         '': [
             'README.rst',
-            os.path.join(LIBSASS_DIR, 'Makefile'),
-            os.path.join(LIBSASS_DIR, 'Makefile.am'),
             'test/*.sass'
         ]
     },