diff --git a/docs/changelog.rst b/docs/changelog.rst
index 9e1e5fec..b750be67 100644
--- a/docs/changelog.rst
+++ b/docs/changelog.rst
@@ -29,6 +29,12 @@ Bug fix release.
   :confval:`core/data_dir`, like the Debian and Arch packages. (Fixes:
   :issue:`1259`)
 
+- M3U: Changed default for the :confval:`m3u/playlists_dir` from
+  ``$XDG_DATA_DIR/mopidy/m3u`` to unset, which now means the extension's data
+  dir. This does not change the defaults for desktop users, only system
+  services installed from packages that properly set :confval:`core/data_dir`,
+  like the Debian and Arch pakages. (Fixes: :issue:`1259`)
+
 - Stream: If "file" is present in the :confval:`stream/protocols` config value
   and the :ref:`ext-file` extension is enabled, we exited with an error because
   two extensions claimed the same URI scheme. We now log a warning recommending
diff --git a/docs/ext/m3u.rst b/docs/ext/m3u.rst
index d05f88f1..2b86b73a 100644
--- a/docs/ext/m3u.rst
+++ b/docs/ext/m3u.rst
@@ -52,4 +52,5 @@ See :ref:`config` for general help on configuring Mopidy.
 
 .. confval:: m3u/playlists_dir
 
-    Path to directory with M3U files.
+    Path to directory with M3U files. Unset by default, in which case the
+    extension's data dir is used to store playlists.
diff --git a/mopidy/m3u/__init__.py b/mopidy/m3u/__init__.py
index e0fcf305..06825932 100644
--- a/mopidy/m3u/__init__.py
+++ b/mopidy/m3u/__init__.py
@@ -21,7 +21,7 @@ class Extension(ext.Extension):
 
     def get_config_schema(self):
         schema = super(Extension, self).get_config_schema()
-        schema['playlists_dir'] = config.Path()
+        schema['playlists_dir'] = config.Path(optional=True)
         return schema
 
     def setup(self, registry):
diff --git a/mopidy/m3u/actor.py b/mopidy/m3u/actor.py
index fe959d86..fc4734a2 100644
--- a/mopidy/m3u/actor.py
+++ b/mopidy/m3u/actor.py
@@ -4,7 +4,7 @@ import logging
 
 import pykka
 
-from mopidy import backend
+from mopidy import backend, m3u
 from mopidy.internal import encoding, path
 from mopidy.m3u.library import M3ULibraryProvider
 from mopidy.m3u.playlists import M3UPlaylistsProvider
@@ -21,12 +21,16 @@ class M3UBackend(pykka.ThreadingActor, backend.Backend):
 
         self._config = config
 
-        try:
-            path.get_or_create_dir(config['m3u']['playlists_dir'])
-        except EnvironmentError as error:
-            logger.warning(
-                'Could not create M3U playlists dir: %s',
-                encoding.locale_decode(error))
+        if config['m3u']['playlists_dir'] is not None:
+            self._playlists_dir = config['m3u']['playlists_dir']
+            try:
+                path.get_or_create_dir(self._playlists_dir)
+            except EnvironmentError as error:
+                logger.warning(
+                    'Could not create M3U playlists dir: %s',
+                    encoding.locale_decode(error))
+        else:
+            self._playlists_dir = m3u.Extension().get_data_dir(config)
 
         self.playlists = M3UPlaylistsProvider(backend=self)
         self.library = M3ULibraryProvider(backend=self)
diff --git a/mopidy/m3u/ext.conf b/mopidy/m3u/ext.conf
index 0e828b1b..adc0d00a 100644
--- a/mopidy/m3u/ext.conf
+++ b/mopidy/m3u/ext.conf
@@ -1,3 +1,3 @@
 [m3u]
 enabled = true
-playlists_dir = $XDG_DATA_DIR/mopidy/m3u
+playlists_dir =
diff --git a/mopidy/m3u/playlists.py b/mopidy/m3u/playlists.py
index af92e062..3567f8aa 100644
--- a/mopidy/m3u/playlists.py
+++ b/mopidy/m3u/playlists.py
@@ -23,7 +23,7 @@ class M3UPlaylistsProvider(backend.PlaylistsProvider):
     def __init__(self, *args, **kwargs):
         super(M3UPlaylistsProvider, self).__init__(*args, **kwargs)
 
-        self._playlists_dir = self.backend._config['m3u']['playlists_dir']
+        self._playlists_dir = self.backend._playlists_dir
         self._playlists = {}
         self.refresh()