diff --git a/CHANGELOG.md b/CHANGELOG.md
index 949c3856..5b22b7a7 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -12,6 +12,7 @@
 
 ### Changed
 
+* Moved to src/ based layout for generated packages
 * Moved from setup.cfg/.py to pyproject.toml [#351](https://github.com/NLeSC/python-template/issues/351)
 * Moved from prospector to ruff [#336](https://github.com/NLeSC/python-template/issues/336)
 * Renamed `project_name` to `directory_name` in cookiecutter questionnaire
diff --git a/README.md b/README.md
index b48dc112..e23cebc9 100644
--- a/README.md
+++ b/README.md
@@ -89,19 +89,6 @@ Good job! You have now generated the skeleton for your package:
 
 ```text
 my-python-project/
-├── CHANGELOG.md
-├── CITATION.cff
-├── CODE_OF_CONDUCT.md
-├── CONTRIBUTING.md
-├── docs
-│   ├── conf.py
-│   ├── index.rst
-│   ├── make.bat
-│   ├── Makefile
-│   ├── _static
-│   │   └── theme_overrides.css
-│   └── _templates
-│       └── .gitignore
 ├── .editorconfig
 ├── .githooks
 │   └── pre-commit
@@ -115,26 +102,37 @@ my-python-project/
 │   └── workflows
 │       ├── build.yml
 │       ├── cffconvert.yml
-│       ├── lint.yml
+│       ├── documentation.yml
 │       ├── markdown-link-check.yml
 │       ├── next_steps.yml
 │       └── sonarcloud.yml
 ├── .gitignore
+├── .mlc-config.json
+├── .readthedocs.yaml
+├── CHANGELOG.md
+├── CITATION.cff
+├── CODE_OF_CONDUCT.md
+├── CONTRIBUTING.md
 ├── LICENSE
 ├── MANIFEST.in
-├── .mlc-config.json
-├── my_python_package
-│   ├── __init__.py
-│   ├── my_module.py
-│   └── __version__.py
-├── next_steps.md
 ├── NOTICE
-├── project_setup.md
-├── .pylintrc
-├── pyproject.toml
 ├── README.dev.md
 ├── README.md
+├── docs
+│   ├── Makefile
+│   ├── _templates
+│   │   └── .gitignore
+│   ├── conf.py
+│   ├── index.rst
+│   └── make.bat
+├── next_steps.md
+├── project_setup.md
+├── pyproject.toml
 ├── sonar-project.properties
+├── src
+│   └── my_python_package
+│       ├── __init__.py
+│       └── my_module.py
 └── tests
     ├── __init__.py
     └── test_my_module.py
diff --git a/tests/test_project.py b/tests/test_project.py
index 399dd799..c594fe46 100644
--- a/tests/test_project.py
+++ b/tests/test_project.py
@@ -83,11 +83,11 @@ def test_subpackage(baked_with_development_dependencies, project_env_bin_dir):
     """Test if subpackages end up in (wheel) distributions"""
     project_dir = baked_with_development_dependencies
     bin_dir = project_env_bin_dir
-    subpackage = (project_dir / 'my_python_package' / 'mysub')
+    subpackage = (project_dir / 'src' / 'my_python_package' / 'mysub')
     subpackage.mkdir()
     (subpackage / '__init__.py').write_text('FOO = "bar"\n', encoding="utf-8")
 
-    subsubpackage = (project_dir / 'my_python_package' / 'mysub' / 'mysub2')
+    subsubpackage = (project_dir / 'src' / 'my_python_package' / 'mysub' / 'mysub2')
     subsubpackage.mkdir()
     (subsubpackage / '__init__.py').write_text('FOO = "bar"\n', encoding="utf-8")
 
@@ -179,7 +179,7 @@ def test_bumpversion(baked_with_development_dependencies, project_env_bin_dir):
     original_version = '0.1.0'
     assert original_version in (project_dir / 'pyproject.toml').read_text('utf-8')
     assert original_version in (project_dir / 'CITATION.cff').read_text('utf-8')
-    assert original_version in (project_dir / 'my_python_package' / '__init__.py').read_text('utf-8')
+    assert original_version in (project_dir / 'src' / 'my_python_package' / '__init__.py').read_text('utf-8')
     assert original_version in (project_dir / 'docs' / 'conf.py').read_text('utf-8')
 
     result = run([f'{bin_dir}bump-my-version', 'major'], project_dir)
@@ -188,5 +188,5 @@ def test_bumpversion(baked_with_development_dependencies, project_env_bin_dir):
     expected_version = '1.0.0'
     assert expected_version in (project_dir / 'pyproject.toml').read_text('utf-8')
     assert expected_version in (project_dir / 'CITATION.cff').read_text('utf-8')
-    assert expected_version in (project_dir / 'my_python_package' / '__init__.py').read_text('utf-8')
+    assert expected_version in (project_dir / 'src' / 'my_python_package' / '__init__.py').read_text('utf-8')
     assert expected_version in (project_dir / 'docs' / 'conf.py').read_text('utf-8')
diff --git a/{{cookiecutter.directory_name}}/.githooks/pre-commit b/{{cookiecutter.directory_name}}/.githooks/pre-commit
index a0f9c2e0..8279d5a5 100755
--- a/{{cookiecutter.directory_name}}/.githooks/pre-commit
+++ b/{{cookiecutter.directory_name}}/.githooks/pre-commit
@@ -6,7 +6,7 @@ echo "Script $0 triggered ..."
 echo "Starting ruff analysis..."
 
 # quietly run ruff
-ruff . --fix
+ruff check . --fix
 
 # use return code to abort commit if necessary
 if [ $? != "0" ]; then
diff --git a/{{cookiecutter.directory_name}}/docs/conf.py b/{{cookiecutter.directory_name}}/docs/conf.py
index e0f32f0b..c73e3d3b 100644
--- a/{{cookiecutter.directory_name}}/docs/conf.py
+++ b/{{cookiecutter.directory_name}}/docs/conf.py
@@ -61,7 +61,7 @@
 
 # -- Use autoapi.extension to run sphinx-apidoc -------
 
-autoapi_dirs = ['../{{ cookiecutter.package_name }}']
+autoapi_dirs = ['../src/{{ cookiecutter.package_name }}']
 
 # -- Options for HTML output ----------------------------------------------
 
diff --git a/{{cookiecutter.directory_name}}/pyproject.toml b/{{cookiecutter.directory_name}}/pyproject.toml
index 9dd96e77..e8bfc765 100644
--- a/{{cookiecutter.directory_name}}/pyproject.toml
+++ b/{{cookiecutter.directory_name}}/pyproject.toml
@@ -72,7 +72,7 @@ testpaths = ["tests"]
 
 [tool.coverage.run]
 branch = true
-source = ["{{ cookiecutter.package_name }}"]
+source = ["src/{{ cookiecutter.package_name }}"]
 command_line = "-m pytest"
 
 [tool.isort]
@@ -80,14 +80,9 @@ lines_after_imports = 2
 force_single_line = 1
 no_lines_before = ["FUTURE", "STDLIB", "THIRDPARTY", "FIRSTPARTY", "LOCALFOLDER"]
 known_first_party = "{{ cookiecutter.package_name }}"
-src_paths = ["{{ cookiecutter.package_name }}", "tests"]
+src_paths = ["src/{{ cookiecutter.package_name }}", "tests"]
 line_length = 120
 
-# For completeness, until we move to an src-based layout
-[tool.setuptools.packages.find]
-include = ["{{ cookiecutter.package_name }}*"]
-exclude = ["tests*"]
-
 [tool.tox]
 legacy_tox_ini = """
 [tox]
@@ -99,6 +94,35 @@ extras = dev
 """
 
 [tool.ruff]
+exclude = [
+    ".bzr",
+    ".direnv",
+    ".eggs",
+    ".git",
+    ".hg",
+    ".mypy_cache",
+    ".nox",
+    ".pants.d",
+    ".ruff_cache",
+    ".svn",
+    ".tox",
+    ".venv",
+    "__pypackages__",
+    "_build",
+    "buck-out",
+    "build",
+    "dist",
+    "node_modules",
+    "venv",
+    ".venv",
+    "scripts",
+]
+
+target-version = "py39"
+line-length = 120
+
+
+[tool.ruff.lint]
 # Enable Pyflakes `E` and `F` codes by default.
 select = [
     "F",  # Pyflakes
@@ -136,39 +160,14 @@ ignore = [
 fixable = ["A", "B", "C", "D", "E", "F", "I"]
 unfixable = []
 
-exclude = [
-    ".bzr",
-    ".direnv",
-    ".eggs",
-    ".git",
-    ".hg",
-    ".mypy_cache",
-    ".nox",
-    ".pants.d",
-    ".ruff_cache",
-    ".svn",
-    ".tox",
-    ".venv",
-    "__pypackages__",
-    "_build",
-    "buck-out",
-    "build",
-    "dist",
-    "node_modules",
-    "venv",
-    ".venv",
-    "scripts",
-]
 per-file-ignores = {}
 
 
 # Allow unused variables when underscore-prefixed.
 dummy-variable-rgx = "^(_+|(_+[a-zA-Z0-9_]*[a-zA-Z0-9]+?))$"
 
-target-version = "py39"
-line-length = 120
 
-[tool.ruff.isort]
+[tool.ruff.lint.isort]
 known-first-party = ["{{ cookiecutter.package_name }}"]
 force-single-line = true
 no-lines-before = ["future","standard-library","third-party","first-party","local-folder"]
@@ -177,7 +176,7 @@ no-lines-before = ["future","standard-library","third-party","first-party","loca
 current_version = "{{ cookiecutter.version }}"
 
 [[tool.bumpversion.files]]
-filename = "{{ cookiecutter.package_name }}/__init__.py"
+filename = "src/{{ cookiecutter.package_name }}/__init__.py"
 
 [[tool.bumpversion.files]]
 filename = "pyproject.toml"
diff --git a/{{cookiecutter.directory_name}}/sonar-project.properties b/{{cookiecutter.directory_name}}/sonar-project.properties
index 02e14401..512f6831 100644
--- a/{{cookiecutter.directory_name}}/sonar-project.properties
+++ b/{{cookiecutter.directory_name}}/sonar-project.properties
@@ -1,7 +1,7 @@
 sonar.organization={{ cookiecutter.github_organization }}
 sonar.projectKey={{ cookiecutter.github_organization }}_{{ cookiecutter.directory_name }}
 sonar.host.url=https://sonarcloud.io
-sonar.sources={{ cookiecutter.package_name }}/
+sonar.sources=src/{{ cookiecutter.package_name }}/
 sonar.tests=tests/
 sonar.links.homepage={{ cookiecutter.repository_url }}
 sonar.links.scm={{ cookiecutter.repository }}
diff --git a/{{cookiecutter.directory_name}}/{{cookiecutter.package_name}}/__init__.py b/{{cookiecutter.directory_name}}/src/{{cookiecutter.package_name}}/__init__.py
similarity index 100%
rename from {{cookiecutter.directory_name}}/{{cookiecutter.package_name}}/__init__.py
rename to {{cookiecutter.directory_name}}/src/{{cookiecutter.package_name}}/__init__.py
diff --git a/{{cookiecutter.directory_name}}/{{cookiecutter.package_name}}/my_module.py b/{{cookiecutter.directory_name}}/src/{{cookiecutter.package_name}}/my_module.py
similarity index 100%
rename from {{cookiecutter.directory_name}}/{{cookiecutter.package_name}}/my_module.py
rename to {{cookiecutter.directory_name}}/src/{{cookiecutter.package_name}}/my_module.py