diff --git a/MANIFEST.in b/MANIFEST.in
index 2ec72dc24..f3233beaf 100644
--- a/MANIFEST.in
+++ b/MANIFEST.in
@@ -1,8 +1,6 @@
-include README.rst AUTHORS LICENSE CHANGES.rst MANIFEST.in
-exclude .coafile .coveragerc .gitattributes .gitignore .travis.yml Vagrantfile
+# stuff we need to include into the sdist is handled automatically by
+# setuptools_scm - it includes all git-committed files.
+# but we want to exclude some committed files/dirs not needed in the sdist:
+exclude .coafile .coveragerc .editorconfig .gitattributes .gitignore .mailmap .travis.yml Vagrantfile
 prune .travis
 prune .github
-graft src
-graft docs
-prune docs/_build
-global-exclude *.py[co] *.orig *.so *.dll
diff --git a/setup.py b/setup.py
index eaae5c417..2670bbfc8 100644
--- a/setup.py
+++ b/setup.py
@@ -807,10 +807,12 @@ setup(
             'borgfs = borg.archiver:main',
         ]
     },
+    # See also the MANIFEST.in file.
+    # We want to install all the files in the package directories...
     include_package_data=True,
-    package_data={
-        'borg': ['paperkey.html'],
-        'borg.testsuite': ['attic.tar.gz'],
+    # ...except the source files which have been compiled (C extensions):
+    exclude_package_data={
+        '': ['*.c', '*.h', '*.pyx', ],
     },
     cmdclass=cmdclass,
     ext_modules=ext_modules,