diff --git a/Gemfile b/Gemfile
index 23989523..6e03ed09 100644
--- a/Gemfile
+++ b/Gemfile
@@ -3,4 +3,4 @@ source 'https://rubygems.org'
 # Specify your gem's dependencies in spring.gemspec
 gemspec
 
-gem 'listen', "~> 1.0", :require => false
+gem 'listen', "~> 2.7", :require => false
diff --git a/lib/spring/watcher/listen.rb b/lib/spring/watcher/listen.rb
index 6bc7c939..2b0fce9a 100644
--- a/lib/spring/watcher/listen.rb
+++ b/lib/spring/watcher/listen.rb
@@ -1,5 +1,11 @@
-gem "listen", "~> 1.0"
+gem "listen", "~> 2.7"
 require "listen"
+
+# fork() doesn't preserve threads, so a clean
+# Celluloid shutdown isn't possible, but we can
+# reduce the 10 second timeout
+Celluloid.shutdown_timeout = 2
+
 require "listen/version"
 
 module Spring
@@ -9,9 +15,7 @@ class Listen < Abstract
 
       def start
         unless @listener
-          @listener = ::Listen.to(*base_directories, relative_paths: false)
-          @listener.latency(latency)
-          @listener.change(&method(:changed))
+          @listener = ::Listen.to(*base_directories, latency: latency, &method(:changed))
           @listener.start
         end
       end
@@ -45,7 +49,7 @@ def base_directories
         ([root] +
           files.reject       { |f| f.start_with? "#{root}/" }.map { |f| File.expand_path("#{f}/..") } +
           directories.reject { |d| d.start_with? "#{root}/" }
-        ).uniq
+        ).uniq.map { |path| Pathname.new(path) }
       end
     end
   end
diff --git a/test/acceptance/app_test.rb b/test/acceptance/app_test.rb
index 90896b06..5a48c5b4 100644
--- a/test/acceptance/app_test.rb
+++ b/test/acceptance/app_test.rb
@@ -68,9 +68,16 @@ def self.omg
   end
 
   setup do
-    generator.generate_if_missing
-    generator.install_spring
-    generator.copy_to(app.root)
+    begin
+      generator.generate_if_missing
+      generator.install_spring
+      generator.copy_to(app.root)
+      app.stop_spring
+    rescue Exception => e
+      STDERR.puts "FATAL: setup() caused an exception, so running tests makes no sense."
+      STDERR.puts "The exception was: #{e.inspect}, backtrace:\n\t#{e.backtrace.join("\n\t")}\n"
+      abort
+    end
   end
 
   teardown do
@@ -123,7 +130,7 @@ def self.omg
   end
 
   test "app gets reloaded when preloaded files change (listen watcher)" do
-    File.write(app.gemfile, "#{app.gemfile.read}gem 'listen', '~> 1.0'")
+    File.write(app.gemfile, "#{app.gemfile.read}\ngem 'listen', '~> 2.7'")
     File.write(app.spring_config, "Spring.watch_method = :listen")
     app.bundle
 
diff --git a/test/acceptance/helper.rb b/test/acceptance/helper.rb
index 8d79c087..218809fb 100644
--- a/test/acceptance/helper.rb
+++ b/test/acceptance/helper.rb
@@ -130,7 +130,7 @@ def run(command, opts = {})
 
         Bundler.with_clean_env do
           Process.spawn(
-            env,
+            env.merge(opts.fetch(:env, {})),
             command.to_s,
             out:   stdout.last,
             err:   stderr.last,
@@ -139,7 +139,8 @@ def run(command, opts = {})
           )
         end
 
-        _, status = Timeout.timeout(opts.fetch(:timeout, DEFAULT_TIMEOUT)) { Process.wait2 }
+        max_time = opts.fetch(:timeout, DEFAULT_TIMEOUT)
+        _, status = Timeout.timeout(max_time) { Process.wait2 }
 
         if pid = spring_env.pid
           @server_pid = pid
@@ -154,7 +155,7 @@ def run(command, opts = {})
 
         output.merge(status: status, command: command)
       rescue Timeout::Error => e
-        raise e, "Output:\n\n#{dump_streams(command, read_streams)}"
+        raise "#{e.to_s}: Output:\n\n#{dump_streams(command, read_streams)} \n(command took more than #{max_time} seconds)"
       end
 
       def with_timing
@@ -192,13 +193,19 @@ def read_stream(stream)
         output
       end
 
+      def prefix(line)
+        "  >#{line}"
+      end
+
       def dump_streams(command, streams)
-        output = "$ #{command}\n"
+        output = prefix("$ #{command}\n")
 
         streams.each do |name, stream|
           unless stream.chomp.empty?
-            output << "--- #{name} ---\n"
-            output << "#{stream.chomp}\n"
+            output << prefix("--- #{name} ---\n")
+            stream.lines.each do |line|
+              output << prefix("#{line.chomp}\n")
+            end
           end
         end
 
@@ -237,7 +244,7 @@ def run!(command, options = {})
       end
 
       def bundle
-        run! "(gem list bundler | grep bundler) || gem install bundler", timeout: nil, retry: 2
+        run! "(gem list bundler | grep bundler) || gem install --no-ri --no-rdoc bundler", timeout: nil, retry: 2
         run! "bundle check || bundle update --retry=2", timeout: nil
       end
 
@@ -309,8 +316,8 @@ def generate
 
         install_spring
 
-        application.run! "bundle exec rails g scaffold post title:string"
-        application.run! "bundle exec rake db:migrate db:test:clone"
+        application.run! "bundle exec rails g scaffold post title:string", env: {'DISABLE_SPRING' => '1'}
+        application.run! "bundle exec rake db:migrate db:test:clone", env: {'DISABLE_SPRING' => '1'}
       end
 
       def generate_if_missing
@@ -321,7 +328,7 @@ def install_spring
         return if @installed
 
         system("gem build spring.gemspec 2>&1")
-        application.run! "gem install ../../../spring-#{Spring::VERSION}.gem", timeout: nil
+        application.run! "gem install --no-ri --no-rdoc ../../../spring-#{Spring::VERSION}.gem", timeout: nil
 
         application.bundle
 
diff --git a/test/helper.rb b/test/helper.rb
index d6e10c8f..ac0310d6 100644
--- a/test/helper.rb
+++ b/test/helper.rb
@@ -4,4 +4,7 @@
 require "active_support/test_case"
 require "minitest/autorun"
 
+require "celluloid/test"
+Celluloid.logger.level = Logger::WARN
+
 TEST_ROOT = File.expand_path('..', __FILE__)
diff --git a/test/unit/watcher_test.rb b/test/unit/watcher_test.rb
index 448041cd..1c4e9a1e 100644
--- a/test/unit/watcher_test.rb
+++ b/test/unit/watcher_test.rb
@@ -163,6 +163,12 @@ def test_add_non_existant_file
 class ListenWatcherTest < ActiveSupport::TestCase
   include WatcherTests
 
+  setup {
+    Celluloid.boot
+  }
+
+  teardown { Listen.stop }
+
   def watcher_class
     Spring::Watcher::Listen
   end
@@ -178,7 +184,8 @@ def watcher_class
       watcher.add other_dir_2
       watcher.add "#{dir}/foo"
 
-      assert_equal [dir, other_dir_1, other_dir_2].sort, watcher.base_directories.sort
+      dirs = [dir, other_dir_1, other_dir_2].sort.map { |path| Pathname.new(path) }
+      assert_equal dirs, watcher.base_directories.sort
     ensure
       FileUtils.rmdir other_dir_1
       FileUtils.rmdir other_dir_2
@@ -199,7 +206,8 @@ def watcher_class
       watcher.add "#{other_dir_1}/foo"
       watcher.add other_dir_2
 
-      assert_equal [dir, other_dir_1, other_dir_2].sort, watcher.base_directories.sort
+      dirs = [dir, other_dir_1, other_dir_2].sort.map { |path| Pathname.new(path) }
+      assert_equal dirs, watcher.base_directories.sort
     ensure
       FileUtils.rmdir other_dir_1
       FileUtils.rmdir other_dir_2