diff --git a/notebooks/Test.ipynb b/notebooks/Test.ipynb
index 50caafd6..05d38416 100644
--- a/notebooks/Test.ipynb
+++ b/notebooks/Test.ipynb
@@ -36,19 +36,31 @@
      "cell_type": "code",
      "collapsed": false,
      "input": [
-      "getStringTarget :: String -> String\n",
-      "getStringTarget = go \"\" . reverse\n",
-      "  where\n",
-      "    go acc rest = case rest of\n",
-      "      '\"':'\\\\':rem -> go ('\"':acc) rem\n",
-      "      '\"':rem ->  acc\n",
-      "      ' ':'\\\\':rem -> go (' ':acc) rem\n",
-      "      ' ':rem ->  acc\n",
-      "      x:rem -> go (x:acc) rem\n",
-      "      [] ->  acc\n",
-      "\n",
-      "\" ~/archive/\n",
-      ":load \" ~/archive/"
+      "import System.Directory\n",
+      "getDirectoryContents \".\""
+     ],
+     "language": "python",
+     "metadata": {
+      "hidden": false
+     },
+     "outputs": [
+      {
+       "metadata": {},
+       "output_type": "display_data",
+       "text": [
+        "[\".\",\"..\",\".hdevtools.sock\",\"blog\",\"experiments\",\"hackathon\",\"haskell-course-preludes\",\"haskell-style-guide\",\"ihaskell\",\"ihaskell-app\",\"linal\",\"notes\",\"slinky.nb\",\"tasha\"]"
+       ]
+      }
+     ],
+     "prompt_number": 9
+    },
+    {
+     "cell_type": "code",
+     "collapsed": false,
+     "input": [
+      ":!cd code\n",
+      ":!pwd\n",
+      "setCurrentDirectory \"code\""
      ],
      "language": "python",
      "metadata": {
@@ -57,37 +69,23 @@
      "outputs": [
       {
        "html": [
-        "<span class='err-msg'>Parse error (line 12, column 13): lexical error in string/character literal at end of input</span>"
+        "<span class='err-msg'>No such directory: 'code'</span>"
        ],
        "metadata": {},
        "output_type": "display_data",
        "text": [
-        "Parse error (line 12, column 13): lexical error in string/character literal at end of input"
+        "No such directory: 'code'"
        ]
-      }
-     ],
-     "prompt_number": 1
-    },
-    {
-     "cell_type": "code",
-     "collapsed": false,
-     "input": [
-      "getStringTarget \"absdf\\\" he\\\\\\\"llo\""
-     ],
-     "language": "python",
-     "metadata": {
-      "hidden": false
-     },
-     "outputs": [
+      },
       {
        "metadata": {},
        "output_type": "display_data",
        "text": [
-        "\"he\\\"llo\""
+        "/Users/silver/code"
        ]
       }
      ],
-     "prompt_number": 13
+     "prompt_number": 8
     },
     {
      "cell_type": "code",
diff --git a/src/IHaskell/Eval/Evaluate.hs b/src/IHaskell/Eval/Evaluate.hs
index 8153c7b7..05f8ee66 100644
--- a/src/IHaskell/Eval/Evaluate.hs
+++ b/src/IHaskell/Eval/Evaluate.hs
@@ -106,6 +106,7 @@ globalImports :: [String]
 globalImports =
   [ "import IHaskell.Display()"
   , "import qualified Prelude as IHaskellPrelude"
+  , "import qualified System.Directory as IHaskellDirectory"
   , "import qualified IHaskell.Display"
   , "import qualified IHaskell.IPython.Stdin"
   , "import qualified System.Posix.IO as IHaskellIO"
@@ -498,24 +499,32 @@ evalCommand _ (Directive LoadFile name) state = wrapExecution state $ do
   modName <- intercalate "." <$> getModuleName contents
   doLoadModule filename modName
 
-evalCommand publish (Directive ShellCmd ('!':cmd)) state = wrapExecution state $ liftIO $
+evalCommand publish (Directive ShellCmd ('!':cmd)) state = wrapExecution state $
   case words cmd of
     "cd":dirs -> do
       -- Get home so we can replace '~` with it.
-      homeEither <- try  $ getEnv "HOME" :: IO (Either SomeException String)
+      homeEither <- liftIO (try $ getEnv "HOME" :: IO (Either SomeException String))
       let home = case homeEither of
                   Left _ -> "~"
                   Right val -> val
 
       let directory = replace "~" home $ unwords dirs
-      exists <- doesDirectoryExist directory
+      exists <- liftIO $ doesDirectoryExist directory
       if exists
       then do
-        setCurrentDirectory directory
+        -- Set the directory in IHaskell native code, for future shell
+        -- commands. This doesn't set it for user code, though.
+        liftIO $ setCurrentDirectory directory
+
+        -- Set the directory for user code.
+        let cmd = printf "IHaskellDirectory.setCurrentDirectory \"%s\"" $
+                  replace " " "\\ " $
+                  replace "\"" "\\\"" directory
+        runStmt cmd RunToCompletion
         return mempty
       else
         return $ displayError $ printf "No such directory: '%s'" directory
-    cmd -> do
+    cmd -> liftIO $ do
       (readEnd, writeEnd) <- createPipe
       handle <- fdToHandle writeEnd
       pipe <- fdToHandle readEnd