diff --git a/distributed-canisters.nix b/distributed-canisters.nix
index b10234a15d..cf40e30a34 100644
--- a/distributed-canisters.nix
+++ b/distributed-canisters.nix
@@ -33,7 +33,7 @@ pkgs.runCommandNoCCLocal "distributed-canisters" {} ''
 
     for ext in did wasm
     do
-      cp $canister_root/canisters/$canister_name/$canister_name.$ext $output_dir
+      cp $canister_root/.dfx/local/canisters/$canister_name/$canister_name.$ext $output_dir
     done
   done
 ''
diff --git a/e2e/bats/bootstrap.bash b/e2e/bats/bootstrap.bash
index 40ff79a6d0..8a08648aac 100644
--- a/e2e/bats/bootstrap.bash
+++ b/e2e/bats/bootstrap.bash
@@ -20,10 +20,10 @@ teardown() {
     ID=$(dfx canister id hello)
 
     assert_command curl http://localhost:8000/_/candid?canisterId="$ID" -o ./web.txt
-    assert_command diff canisters/hello/hello.did ./web.txt
+    assert_command diff .dfx/local/canisters/hello/hello.did ./web.txt
     assert_command curl http://localhost:8000/_/candid?canisterId="$ID"\&format=js -o ./web.txt
     # Relax diff as it's produced by two different compilers.
-    assert_command diff --ignore-all-space --ignore-blank-lines canisters/hello/hello.did.js ./web.txt
+    assert_command diff --ignore-all-space --ignore-blank-lines .dfx/local/canisters/hello/hello.did.js ./web.txt
 }
 
 @test "forbid starting webserver with a forwarded port" {
diff --git a/e2e/bats/build.bash b/e2e/bats/build.bash
index 03c0304738..df7a20ce06 100644
--- a/e2e/bats/build.bash
+++ b/e2e/bats/build.bash
@@ -44,9 +44,9 @@ teardown() {
   dfx_start
   dfx canister create --all
   assert_command dfx build
-  cp canisters/e2e_project/main.wasm ./old.wasm
+  cp .dfx/local/canisters/e2e_project/main.wasm ./old.wasm
   assert_command dfx build
-  assert_command diff canisters/e2e_project/main.wasm ./old.wasm
+  assert_command diff .dfx/local/canisters/e2e_project/main.wasm ./old.wasm
 }
 
 @test "build outputs warning" {
@@ -97,3 +97,21 @@ teardown() {
     assert_command dfx canister --network tungsten create --all
     assert_command dfx build --network tungsten
 }
+
+@test "build output for local network is in expected directory" {
+  dfx_start
+  dfx canister create --all
+  assert_command dfx build
+  assert_command ls .dfx/local/canisters/e2e_project/
+  assert_command ls .dfx/local/canisters/e2e_project/main.wasm
+}
+
+@test "build output for non-local network is in expected directory" {
+  dfx_start
+  assert_command dfx config networks.tungsten.providers '[ "http://127.0.0.1:8000" ]'
+  dfx canister --network tungsten create --all
+  assert_command dfx build --network tungsten
+  assert_command ls .dfx/tungsten/canisters/e2e_project/
+  assert_command ls .dfx/tungsten/canisters/e2e_project/main.wasm
+}
+
diff --git a/src/dfx/src/commands/bootstrap.rs b/src/dfx/src/commands/bootstrap.rs
index 4ea32b3195..3fe5a037d3 100644
--- a/src/dfx/src/commands/bootstrap.rs
+++ b/src/dfx/src/commands/bootstrap.rs
@@ -3,7 +3,7 @@ use crate::lib::environment::Environment;
 use crate::lib::error::{DfxError, DfxResult};
 use crate::lib::message::UserMessage;
 use crate::lib::network::network_descriptor::NetworkDescriptor;
-use crate::lib::provider::get_network_descriptor;
+use crate::lib::provider::{get_network_context, get_network_descriptor};
 use crate::lib::webserver::webserver;
 use clap::{App, Arg, ArgMatches, SubCommand};
 use slog::info;
@@ -55,12 +55,22 @@ pub fn construct() -> App<'static, 'static> {
 /// Runs the bootstrap server.
 pub fn exec(env: &dyn Environment, args: &ArgMatches<'_>) -> DfxResult {
     let logger = env.get_logger();
+    let config = env
+        .get_config()
+        .ok_or(DfxError::CommandMustBeRunInAProject)?;
     let config_defaults = get_config_defaults_from_file(env);
     let base_config_bootstrap = config_defaults.get_bootstrap().to_owned();
     let config_bootstrap = apply_arguments(&base_config_bootstrap, env, args)?;
 
-    let build_output_root = PathBuf::from(config_defaults.get_build().get_output());
     let network_descriptor = get_network_descriptor(env, args)?;
+
+    let network_name = get_network_context()?;
+
+    let build_root = config_defaults.get_build().get_output();
+
+    let build_output_root = config.get_temp_path().join(network_name);
+    let build_output_root = build_output_root.join(build_root);
+
     let providers = get_providers(&network_descriptor)?;
 
     let (sender, receiver) = crossbeam::unbounded();
diff --git a/src/dfx/src/commands/build.rs b/src/dfx/src/commands/build.rs
index 83f0f9eedc..0a5c1010b6 100644
--- a/src/dfx/src/commands/build.rs
+++ b/src/dfx/src/commands/build.rs
@@ -67,7 +67,7 @@ pub fn exec(env: &dyn Environment, args: &ArgMatches<'_>) -> DfxResult {
 
     // TODO: remove the forcing of generating canister id once we have an update flow.
     canister_pool.build_or_fail(
-        BuildConfig::from_config(&config)
+        BuildConfig::from_config(&config)?
             .with_skip_frontend(args.is_present("skip-frontend"))
             .with_build_mode_check(build_mode_check),
     )?;
diff --git a/src/dfx/src/commands/start.rs b/src/dfx/src/commands/start.rs
index 366607e0ff..f9ff842da2 100644
--- a/src/dfx/src/commands/start.rs
+++ b/src/dfx/src/commands/start.rs
@@ -2,7 +2,7 @@ use crate::config::dfinity::Config;
 use crate::lib::environment::Environment;
 use crate::lib::error::{DfxError, DfxResult};
 use crate::lib::message::UserMessage;
-use crate::lib::provider::get_network_descriptor;
+use crate::lib::provider::{get_network_context, get_network_descriptor};
 use crate::lib::proxy::{CoordinateProxy, ProxyConfig};
 use crate::lib::proxy_process::spawn_and_update_proxy;
 use crate::lib::replica_config::ReplicaConfig;
@@ -157,11 +157,15 @@ pub fn exec(env: &dyn Environment, args: &ArgMatches<'_>) -> DfxResult {
     // By default we reach to no external IC nodes.
     let providers = Vec::new();
 
-    let build_output_root =
-        PathBuf::from(config.get_config().get_defaults().get_build().get_output());
-
     let network_descriptor = get_network_descriptor(env, args)?;
 
+    let network_name = get_network_context()?;
+
+    let build_root = config.get_config().get_defaults().get_build().get_output();
+
+    let build_output_root = config.get_temp_path().join(network_name);
+    let build_output_root = build_output_root.join(build_root);
+
     let proxy_config = ProxyConfig {
         logger: env.get_logger().clone(),
         client_api_port: address_and_port.port(),
diff --git a/src/dfx/src/config/dfinity.rs b/src/dfx/src/config/dfinity.rs
index 16a801afe2..51362f5c41 100644
--- a/src/dfx/src/config/dfinity.rs
+++ b/src/dfx/src/config/dfinity.rs
@@ -314,6 +314,9 @@ impl Config {
     pub fn get_path(&self) -> &PathBuf {
         &self.path
     }
+    pub fn get_temp_path(&self) -> PathBuf {
+        self.get_path().parent().unwrap().join(".dfx")
+    }
     pub fn get_json(&self) -> &Value {
         &self.json
     }
diff --git a/src/dfx/src/lib/builders/mod.rs b/src/dfx/src/lib/builders/mod.rs
index 2e61b52659..97b21afe25 100644
--- a/src/dfx/src/lib/builders/mod.rs
+++ b/src/dfx/src/lib/builders/mod.rs
@@ -2,7 +2,9 @@ use crate::config::dfinity::{Config, Profile};
 use crate::lib::canister_info::CanisterInfo;
 use crate::lib::environment::Environment;
 use crate::lib::error::DfxResult;
+
 use crate::lib::models::canister::CanisterPool;
+use crate::lib::provider::get_network_context;
 use ic_agent::CanisterId;
 use std::path::PathBuf;
 use std::sync::Arc;
@@ -84,17 +86,18 @@ pub struct BuildConfig {
 }
 
 impl BuildConfig {
-    pub fn from_config(config: &Config) -> Self {
-        let workspace_root = config.get_path().parent().unwrap();
-        let config = config.get_config();
-        let build_root = workspace_root.join(config.get_defaults().get_build().get_output());
-
-        BuildConfig {
-            profile: config.profile.unwrap_or(Profile::Debug),
+    pub fn from_config(config: &Config) -> DfxResult<Self> {
+        let config_intf = config.get_config();
+        let network_name = get_network_context()?;
+        let build_root = config.get_temp_path().join(network_name);
+        let build_root = build_root.join(config_intf.get_defaults().get_build().get_output());
+
+        Ok(BuildConfig {
+            profile: config_intf.profile.unwrap_or(Profile::Debug),
             skip_frontend: false,
             build_mode_check: false,
             idl_root: build_root.join("idl/"),
-        }
+        })
     }
 
     pub fn with_skip_frontend(self, skip_frontend: bool) -> Self {
diff --git a/src/dfx/src/lib/canister_info.rs b/src/dfx/src/lib/canister_info.rs
index 4c281343f9..f8837cd0f6 100644
--- a/src/dfx/src/lib/canister_info.rs
+++ b/src/dfx/src/lib/canister_info.rs
@@ -4,6 +4,7 @@ use crate::lib::canister_info::assets::AssetsCanisterInfo;
 use crate::lib::canister_info::custom::CustomCanisterInfo;
 use crate::lib::canister_info::motoko::MotokoCanisterInfo;
 use crate::lib::error::{DfxError, DfxResult};
+use crate::lib::provider::get_network_context;
 use ic_agent::CanisterId;
 use std::collections::BTreeMap;
 use std::path::{Path, PathBuf};
@@ -47,7 +48,9 @@ impl CanisterInfo {
     ) -> DfxResult<CanisterInfo> {
         let workspace_root = config.get_path().parent().unwrap();
         let build_defaults = config.get_config().get_defaults().get_build();
-        let build_root = workspace_root.join(build_defaults.get_output());
+        let network_name = get_network_context()?;
+        let build_root = config.get_temp_path().join(network_name);
+        let build_root = build_root.join(build_defaults.get_output());
         std::fs::create_dir_all(&build_root)?;
 
         let canister_map = (&config.get_config().canisters).as_ref().ok_or_else(|| {
diff --git a/src/dfx/src/lib/error/mod.rs b/src/dfx/src/lib/error/mod.rs
index d7ab42fca0..f4bb345b60 100644
--- a/src/dfx/src/lib/error/mod.rs
+++ b/src/dfx/src/lib/error/mod.rs
@@ -106,6 +106,9 @@ pub enum DfxError {
     /// Could not parse an URL for some reason.
     InvalidUrl(String, url::ParseError),
 
+    /// The value of the --network argument was not set.
+    ComputeNetworkNotSet,
+
     /// The value of the --network argument was not found in dfx.json.
     ComputeNetworkNotFound(String),
 
@@ -182,6 +185,9 @@ impl Display for DfxError {
                     "The `_language-service` command is meant to be run by editors to start a language service. You probably don't want to run it from a terminal.\nIf you _really_ want to, you can pass the --force-tty flag.",
                 )?;
             }
+            DfxError::ComputeNetworkNotSet => {
+                f.write_str("Expected to find a network context, but found none")?;
+            }
             DfxError::NoLocalNetworkProviderFound => {
                 f.write_str("Expected there to be a local network with a bind address")?;
             }
diff --git a/src/dfx/src/lib/provider.rs b/src/dfx/src/lib/provider.rs
index 10aac5acbe..82e6b41585 100644
--- a/src/dfx/src/lib/provider.rs
+++ b/src/dfx/src/lib/provider.rs
@@ -3,18 +3,40 @@ use crate::lib::environment::{AgentEnvironment, Environment};
 use crate::lib::error::{DfxError, DfxResult};
 use crate::lib::network::network_descriptor::NetworkDescriptor;
 use clap::ArgMatches;
+use lazy_static::lazy_static;
+use std::sync::{Arc, RwLock};
 use url::Url;
 
+lazy_static! {
+    static ref NETWORK_CONTEXT: Arc<RwLock<Option<String>>> = Arc::new(RwLock::new(None));
+}
+
+fn set_network_context(args: &ArgMatches<'_>) {
+    let name = args.value_of("network").unwrap_or("local").to_string();
+
+    let mut n = NETWORK_CONTEXT.write().unwrap();
+    *n = Some(name);
+}
+
+pub fn get_network_context() -> DfxResult<String> {
+    NETWORK_CONTEXT
+        .read()
+        .unwrap()
+        .clone()
+        .ok_or_else(|| DfxError::ComputeNetworkNotSet)
+}
+
 // always returns at least one url
 pub fn get_network_descriptor<'a>(
     env: &'a (dyn Environment + 'a),
     args: &ArgMatches<'_>,
 ) -> DfxResult<NetworkDescriptor> {
-    let network_name = args.value_of("network").unwrap_or("local");
+    set_network_context(args);
     let config = env
         .get_config()
         .ok_or(DfxError::CommandMustBeRunInAProject)?;
     let config = config.as_ref().get_config();
+    let network_name = get_network_context()?;
     match config.get_network(&network_name) {
         Some(ConfigNetwork::ConfigNetworkProvider(network_provider)) => {
             let provider_urls = match &network_provider.providers {