diff --git a/bin/internal/engine.version b/bin/internal/engine.version
index 7bed77daf9..0785b88cba 100644
--- a/bin/internal/engine.version
+++ b/bin/internal/engine.version
@@ -1 +1 @@
-335daf19304ffbbf96c1e1ff840e546f17ce50d6
+0a7b177c330367904597a6129b3eb653d29dfca0
diff --git a/packages/flutter_tools/lib/src/dart/dependencies.dart b/packages/flutter_tools/lib/src/dart/dependencies.dart
index 6d55526598..3c0f10d091 100644
--- a/packages/flutter_tools/lib/src/dart/dependencies.dart
+++ b/packages/flutter_tools/lib/src/dart/dependencies.dart
@@ -5,7 +5,6 @@
 import 'dart:convert';
 
 import '../artifacts.dart';
-import '../base/file_system.dart';
 import '../base/process.dart';
 
 class DartDependencySetBuilder {
@@ -30,16 +29,6 @@ class DartDependencySetBuilder {
 
     String output = runSyncAndThrowStdErrOnError(args);
 
-    final List<String> lines = LineSplitter.split(output).toList();
-    final Set<String> minimalDependencies = new Set<String>();
-    for (String line in lines) {
-      if (!line.startsWith('package:')) {
-        // We convert the uris so that they are relative to the project
-        // root.
-        line = fs.path.relative(line, from: projectRootPath);
-      }
-      minimalDependencies.add(line);
-    }
-    return minimalDependencies;
+    return new Set<String>.from(LineSplitter.split(output));
   }
 }
diff --git a/packages/flutter_tools/lib/src/dependency_checker.dart b/packages/flutter_tools/lib/src/dependency_checker.dart
index fa9d73c1a7..d9efa5e390 100644
--- a/packages/flutter_tools/lib/src/dependency_checker.dart
+++ b/packages/flutter_tools/lib/src/dependency_checker.dart
@@ -5,7 +5,6 @@
 import 'asset.dart';
 import 'base/file_system.dart';
 import 'dart/dependencies.dart';
-import 'dart/package_map.dart';
 import 'globals.dart';
 
 class DependencyChecker {
@@ -18,10 +17,7 @@ class DependencyChecker {
   /// if it cannot be determined.
   bool check(DateTime threshold) {
     _dependencies.clear();
-    PackageMap packageMap;
-    // Parse the package map.
     try {
-      packageMap = new PackageMap(builder.packagesFilePath)..load();
       _dependencies.add(builder.packagesFilePath);
     } catch (e, st) {
       printTrace('DependencyChecker: could not parse .packages file:\n$e\n$st');
@@ -29,16 +25,7 @@ class DependencyChecker {
     }
     // Build the set of Dart dependencies.
     try {
-      Set<String> dependencies = builder.build();
-      for (String path in dependencies) {
-        // Ensure all paths are absolute.
-        if (path.startsWith('package:')) {
-          path = packageMap.pathForPackage(Uri.parse(path));
-        } else {
-          path = fs.path.join(builder.projectRootPath, path);
-        }
-        _dependencies.add(path);
-      }
+      _dependencies.addAll(builder.build());
     } catch (e, st) {
       printTrace('DependencyChecker: error determining .dart dependencies:\n$e\n$st');
       return true;
diff --git a/packages/flutter_tools/lib/src/devfs.dart b/packages/flutter_tools/lib/src/devfs.dart
index 6f18a7d269..c82bd74660 100644
--- a/packages/flutter_tools/lib/src/devfs.dart
+++ b/packages/flutter_tools/lib/src/devfs.dart
@@ -461,10 +461,10 @@ class DevFS {
   }
 
   bool _shouldIgnore(String devicePath) {
-    List<String> ignoredPrefixes = <String>['android/',
+    List<String> ignoredPrefixes = <String>['android' + fs.path.separator,
                                             getBuildDirectory(),
-                                            'ios/',
-                                            '.pub/'];
+                                            'ios' + fs.path.separator,
+                                            '.pub' + fs.path.separator];
     for (String ignoredPrefix in ignoredPrefixes) {
       if (devicePath.startsWith(ignoredPrefix))
         return true;
@@ -473,16 +473,14 @@ class DevFS {
   }
 
   Future<bool> _scanDirectory(Directory directory,
-                              {String directoryName,
+                              {String directoryNameOnDevice,
                                bool recursive: false,
                                bool ignoreDotFiles: true,
-                               String packagesDirectoryName,
                                Set<String> fileFilter}) async {
-    String prefix = directoryName;
-    if (prefix == null) {
-      prefix = fs.path.relative(directory.path, from: rootDirectory.path);
-      if (prefix == '.')
-        prefix = '';
+    if (directoryNameOnDevice == null) {
+      directoryNameOnDevice = fs.path.relative(directory.path, from: rootDirectory.path);
+      if (directoryNameOnDevice == '.')
+        directoryNameOnDevice = '';
     }
     try {
       Stream<FileSystemEntity> files =
@@ -508,24 +506,8 @@ class DevFS {
         }
         final String relativePath =
             fs.path.relative(file.path, from: directory.path);
-        final String devicePath = fs.path.join(prefix, relativePath);
-        bool filtered = false;
-        if ((fileFilter != null) &&
-            !fileFilter.contains(devicePath)) {
-          if (packagesDirectoryName != null) {
-            // Double check the filter for packages/packagename/
-            final String packagesDevicePath =
-                fs.path.join(packagesDirectoryName, relativePath);
-            if (!fileFilter.contains(packagesDevicePath)) {
-              // File was not in the filter set.
-              filtered = true;
-            }
-          } else {
-            // File was not in the filter set.
-            filtered = true;
-          }
-        }
-        if (filtered) {
+        final String devicePath = fs.path.join(directoryNameOnDevice, relativePath);
+        if ((fileFilter != null) && !fileFilter.contains(file.absolute.path)) {
           // Skip files that are not included in the filter.
           continue;
         }
@@ -548,27 +530,26 @@ class DevFS {
     PackageMap packageMap = new PackageMap(_packagesFilePath);
 
     for (String packageName in packageMap.map.keys) {
-      Uri uri = packageMap.map[packageName];
-      // This project's own package.
-      final bool isProjectPackage = uri.toString() == 'lib/';
-      final String directoryName =
-          isProjectPackage ? 'lib' : fs.path.join('packages', packageName);
-      // If this is the project's package, we need to pass both
-      // package:<package_name> and lib/ as paths to be checked against
-      // the filter because we must support both package: imports and relative
-      // path imports within the project's own code.
-      final String packagesDirectoryName =
-          isProjectPackage ? fs.path.join('packages', packageName) : null;
-      Directory directory = fs.directory(uri);
-      bool packageExists =
-          await _scanDirectory(directory,
-                               directoryName: directoryName,
-                               recursive: true,
-                               packagesDirectoryName: packagesDirectoryName,
-                               fileFilter: fileFilter);
+      Uri packageUri = packageMap.map[packageName];
+      String packagePath = fs.path.fromUri(packageUri);
+      Directory packageDirectory = fs.directory(packageUri);
+      String directoryNameOnDevice = fs.path.join('packages', packageName);
+      bool packageExists;
+
+      if (fs.path.isWithin(rootDirectory.path, packagePath)) {
+        // We already scanned everything under the root directory.
+        packageExists = packageDirectory.existsSync();
+        directoryNameOnDevice = fs.path.relative(packagePath, from: rootDirectory.path);
+      } else {
+        packageExists =
+            await _scanDirectory(packageDirectory,
+                                 directoryNameOnDevice: directoryNameOnDevice,
+                                 recursive: true,
+                                 fileFilter: fileFilter);
+      }
       if (packageExists) {
         sb ??= new StringBuffer();
-        sb.writeln('$packageName:$directoryName');
+        sb.writeln('$packageName:$directoryNameOnDevice');
       }
     }
     if (sb != null) {
diff --git a/packages/flutter_tools/lib/src/run_hot.dart b/packages/flutter_tools/lib/src/run_hot.dart
index 93c6cb7d98..ed2e263038 100644
--- a/packages/flutter_tools/lib/src/run_hot.dart
+++ b/packages/flutter_tools/lib/src/run_hot.dart
@@ -98,18 +98,7 @@ class HotRunner extends ResidentRunner {
         new DartDependencySetBuilder(
               mainPath, projectRootPath, packagesFilePath);
     try {
-      Set<String> dependencies = dartDependencySetBuilder.build();
-      _dartDependencies = new Set<String>();
-      for (String path in dependencies) {
-        // We need to tweak package: uris so that they reflect their devFS
-        // location.
-        if (path.startsWith('package:')) {
-          // Swap out package: for packages/ because we place all package
-          // sources under packages/.
-          path = path.replaceFirst('package:', 'packages/');
-        }
-        _dartDependencies.add(path);
-      }
+      _dartDependencies = new Set<String>.from(dartDependencySetBuilder.build());
     } catch (error) {
       printStatus('Error detected in application source code:', emphasis: true);
       printError('$error');
diff --git a/packages/flutter_tools/test/dart_dependencies_test.dart b/packages/flutter_tools/test/dart_dependencies_test.dart
index bdb47ba33a..0bb6d1f333 100644
--- a/packages/flutter_tools/test/dart_dependencies_test.dart
+++ b/packages/flutter_tools/test/dart_dependencies_test.dart
@@ -21,8 +21,8 @@ void main()  {
       DartDependencySetBuilder builder =
           new DartDependencySetBuilder(mainPath, testPath, packagesPath);
       Set<String> dependencies = builder.build();
-      expect(dependencies.contains('main.dart'), isTrue);
-      expect(dependencies.contains('foo.dart'), isTrue);
+      expect(dependencies.contains(mainPath), isTrue);
+      expect(dependencies.contains(fs.path.join(testPath, 'foo.dart')), isTrue);
     });
     testUsingContext('syntax_error', () {
       final String testPath = fs.path.join(dataPath, 'syntax_error');