diff --git a/CHANGELOG.md b/CHANGELOG.md
index 41edf8079..972472ef5 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,5 +1,15 @@
 ## 1.2.0 (unreleased)
 
+BACKWARDS INCOMPATIBILITIES:
+
+  - WINDOWS USERS: Vagrant now defaults to using the 'USERPROFILE' environmental
+    variable for the home directory if it is set. This means that the default
+    location for the Vagrant home directory is now `%USERPROFILE%/.vagrant.d`.
+    On Cygwin, this will cause existing Cygwin users to "lose" their boxes.
+    To work around this, either set `VAGRANT_HOME` to your Cygwin ".vagrant.d"
+    folder or move your ".vagrant.d" folder to `USERPROFILE`. The latter is
+    recommended for long-term support.
+
 FEATURES:
 
   - Providers can now parallelize! If they explicitly support it, Vagrant
diff --git a/lib/vagrant/environment.rb b/lib/vagrant/environment.rb
index 0d9d37688..40bf6673e 100644
--- a/lib/vagrant/environment.rb
+++ b/lib/vagrant/environment.rb
@@ -14,7 +14,6 @@ module Vagrant
   # defined as basically a folder with a "Vagrantfile." This class allows
   # access to the VMs, CLI, etc. all in the scope of this environment.
   class Environment
-    DEFAULT_HOME = "~/.vagrant.d"
     DEFAULT_LOCAL_DATA = ".vagrant"
 
     # The `cwd` that this environment represents
@@ -554,7 +553,7 @@ module Vagrant
     def setup_home_path
       @home_path = Pathname.new(File.expand_path(@home_path ||
                                                  ENV["VAGRANT_HOME"] ||
-                                                 DEFAULT_HOME))
+                                                 default_home_path))
       @logger.info("Home path: #{@home_path}")
 
       # Setup the list of child directories that need to be created if they
@@ -654,6 +653,23 @@ module Vagrant
       end
     end
 
+    # This returns the default home directory path for Vagrant, which
+    # can differ depending on the system.
+    #
+    # @return [Pathname]
+    def default_home_path
+      path = "~/.vagrant.d"
+
+      # On Windows, we default ot the USERPROFILE directory if it
+      # is available. This is more compatible with Cygwin and sharing
+      # the home directory across shells.
+      if Util::Platform.windows? && ENV["USERPROFILE"]
+        path = "#{ENV["USERPROFILE"]}/.vagrant.d"
+      end
+
+      Pathname.new(path)
+    end
+
     # Finds the Vagrantfile in the given directory.
     #
     # @param [Pathname] path Path to search in.
diff --git a/test/unit/vagrant/environment_test.rb b/test/unit/vagrant/environment_test.rb
index 65eba12d4..e2cb2da08 100644
--- a/test/unit/vagrant/environment_test.rb
+++ b/test/unit/vagrant/environment_test.rb
@@ -144,9 +144,37 @@ describe Vagrant::Environment do
       end
     end
 
-    it "is set to the DEFAULT_HOME by default" do
-      expected = Pathname.new(File.expand_path(described_class::DEFAULT_HOME))
-      described_class.new.home_path.should == expected
+    context "default home path" do
+      before :each do
+        Vagrant::Util::Platform.stub(:windows? => false)
+      end
+
+      it "is set to '~/.vagrant.d' by default" do
+        expected = Pathname.new(File.expand_path("~/.vagrant.d"))
+        described_class.new.home_path.should == expected
+      end
+
+      it "is set to '~/.vagrant.d' if on Windows but no USERPROFILE" do
+        Vagrant::Util::Platform.stub(:windows? => true)
+
+        expected = Pathname.new(File.expand_path("~/.vagrant.d"))
+
+        with_temp_env("USERPROFILE" => nil) do
+          described_class.new.home_path.should == expected
+        end
+      end
+
+      it "is set to '%USERPROFILE%/.vagrant.d' if on Windows and USERPROFILE is set" do
+        Vagrant::Util::Platform.stub(:windows? => true)
+
+        Dir.mktmpdir do |dir|
+          expected = Pathname.new(File.expand_path("#{dir}/.vagrant.d"))
+
+          with_temp_env("USERPROFILE" => dir) do
+            described_class.new.home_path.should == expected
+          end
+        end
+      end
     end
 
     it "throws an exception if inaccessible" do