diff --git a/pex/util.py b/pex/util.py
index ca4bf5273..ae54d7662 100644
--- a/pex/util.py
+++ b/pex/util.py
@@ -5,6 +5,7 @@
 
 import contextlib
 import os
+import re
 import sys
 import tempfile
 from hashlib import sha1
@@ -133,20 +134,25 @@ def _compute_hash(cls, names, stream_factory):
         return digest.hexdigest()
 
     @classmethod
-    def _iter_files(cls, directory):
+    def _iter_non_pyc_files(cls, directory):
         # type: (str) -> Iterator[str]
         normpath = os.path.realpath(os.path.normpath(directory))
-        for root, _, files in os.walk(normpath):
+        for root, dirs, files in os.walk(normpath):
+            dirs[:] = [d for d in dirs if d != "__pycache__"]
             for f in files:
-                yield os.path.relpath(os.path.join(root, f), normpath)
+                # For Python 2.7, `.pyc` files are compiled as siblings to `.py` files (there is no
+                # __pycache__ dir. We rely on the fact that the temporary files created by CPython
+                # have object id (integer) suffixes to avoid picking up either finished `.pyc` files
+                # or files where Python bytecode compilation is in-flight; i.e.:
+                # `.pyc.0123456789`-style files.
+                if not re.search(r"\.pyc(?:\.[0-9]+)?$", f):
+                    yield os.path.relpath(os.path.join(root, f), normpath)
 
     @classmethod
     def pex_hash(cls, d):
         # type: (str) -> str
-        """Return a reproducible hash of the contents of a directory."""
-        names = sorted(
-            f for f in cls._iter_files(d) if not (f.endswith(".pyc") or f.startswith("."))
-        )
+        """Return a reproducible hash of the contents of a loose PEX; excluding all `.pyc` files."""
+        names = sorted(f for f in cls._iter_non_pyc_files(d) if not f.startswith("."))
 
         def stream_factory(name):
             # type: (str) -> IO
@@ -157,8 +163,8 @@ def stream_factory(name):
     @classmethod
     def dir_hash(cls, d):
         # type: (str) -> str
-        """Return a reproducible hash of the contents of a directory."""
-        names = sorted(f for f in cls._iter_files(d) if not f.endswith(".pyc"))
+        """Return a reproducible hash of the contents of a directory; excluding all `.pyc` files."""
+        names = sorted(cls._iter_non_pyc_files(d))
 
         def stream_factory(name):
             # type: (str) -> IO
diff --git a/tests/test_util.py b/tests/test_util.py
index 26bc5de67..171e0ac81 100644
--- a/tests/test_util.py
+++ b/tests/test_util.py
@@ -6,7 +6,7 @@
 from hashlib import sha1
 from textwrap import dedent
 
-from pex.common import safe_mkdir, temporary_dir
+from pex.common import safe_mkdir, safe_open, temporary_dir, touch
 from pex.compatibility import nested, to_bytes
 from pex.pex import PEX
 from pex.pex_builder import PEXBuilder
@@ -74,14 +74,38 @@ def test_hash():
         assert hash_output == empty_hash.hexdigest()
 
 
-CONTENT = {
-    "__main__.py": 200,
-    ".deps/morfgorf": 10000,
-    "twitter/__init__.py": 0,
-    "twitter/common/python/foo.py": 4000,
-    "twitter/common/python/bar.py": 8000,
-    "twitter/common/python/bar.pyc": 6000,
-}
+def test_dir_hash():
+    # type: () -> None
+    with temporary_dir() as tmp_dir:
+        safe_mkdir(os.path.join(tmp_dir, "a", "b"))
+        with safe_open(os.path.join(tmp_dir, "c", "d", "e.py"), "w") as fp:
+            fp.write("contents1")
+        with safe_open(os.path.join(tmp_dir, "f.py"), "w") as fp:
+            fp.write("contents2")
+        hash1 = CacheHelper.dir_hash(tmp_dir)
+
+        os.rename(os.path.join(tmp_dir, "c"), os.path.join(tmp_dir, "c-renamed"))
+        assert hash1 != CacheHelper.dir_hash(tmp_dir)
+
+        os.rename(os.path.join(tmp_dir, "c-renamed"), os.path.join(tmp_dir, "c"))
+        assert hash1 == CacheHelper.dir_hash(tmp_dir)
+
+        touch(os.path.join(tmp_dir, "c", "d", "e.pyc"))
+        assert hash1 == CacheHelper.dir_hash(tmp_dir)
+        touch(os.path.join(tmp_dir, "c", "d", "e.pyc.123456789"))
+        assert hash1 == CacheHelper.dir_hash(tmp_dir)
+
+        pycache_dir = os.path.join(tmp_dir, "__pycache__")
+        safe_mkdir(pycache_dir)
+        touch(os.path.join(pycache_dir, "f.pyc"))
+        assert hash1 == CacheHelper.dir_hash(tmp_dir)
+        touch(os.path.join(pycache_dir, "f.pyc.123456789"))
+        assert hash1 == CacheHelper.dir_hash(tmp_dir)
+
+        touch(os.path.join(pycache_dir, "f.py"))
+        assert hash1 == CacheHelper.dir_hash(
+            tmp_dir
+        ), "All content under __pycache__ directories should be ignored."
 
 
 try: