diff --git a/README.md b/README.md
index 43bfcb923..79910ec01 100644
--- a/README.md
+++ b/README.md
@@ -191,10 +191,10 @@ and anything in the `build` directory:
   }
 }
 ```
-> Note: Since version 8.0 if you add a "exclude" array the `node_modules`
-folder is not automatically excluded, you will need to explicitly add it to your exclude array
+> Note: Since version 9.0 files under `node_modules/` are excluded by default.
+  add the exclude rule `!**/node_modules/` to stop this.
 
-> Note: exclude defaults to `['test', 'test{,-*}.js', '**/*.test.js', '**/__tests__/**']`,
+> Note: exclude defaults to `['test', 'test{,-*}.js', '**/*.test.js', '**/__tests__/**', '**/node_modules/**']`,
 which would exclude `test`/`__tests__` directories as well as `test.js`, `*.test.js`,
 and `test-*.js` files. Specifying your own exclude property overrides these defaults.
 
diff --git a/package.json b/package.json
index f3387e0ec..486c2e5d5 100644
--- a/package.json
+++ b/package.json
@@ -83,9 +83,9 @@
     "glob": "^7.0.6",
     "istanbul-lib-coverage": "^1.0.0",
     "istanbul-lib-hook": "^1.0.0-alpha.4",
-    "istanbul-lib-instrument": "^1.2.0",
+    "istanbul-lib-instrument": "^1.3.0",
     "istanbul-lib-report": "^1.0.0-alpha.3",
-    "istanbul-lib-source-maps": "^1.0.2",
+    "istanbul-lib-source-maps": "^1.1.0",
     "istanbul-reports": "^1.0.0",
     "md5-hex": "^1.2.0",
     "merge-source-map": "^1.0.2",
@@ -95,7 +95,7 @@
     "rimraf": "^2.5.4",
     "signal-exit": "^3.0.1",
     "spawn-wrap": "^1.2.4",
-    "test-exclude": "^2.1.3",
+    "test-exclude": "^3.0.0",
     "yargs": "^6.0.0",
     "yargs-parser": "^4.0.2"
   },
@@ -157,4 +157,4 @@
       "find-up"
     ]
   }
-}
\ No newline at end of file
+}
diff --git a/test/src/nyc-test.js b/test/src/nyc-test.js
index 184e83945..7dd142301 100644
--- a/test/src/nyc-test.js
+++ b/test/src/nyc-test.js
@@ -66,7 +66,7 @@ describe('nyc', function () {
   describe('config', function () {
     it("loads 'exclude' patterns from package.json#nyc", function () {
       var nyc = new NYC(configUtil.loadConfig([], path.resolve(__dirname, '../fixtures')))
-      nyc.exclude.exclude.length.should.eql(4)
+      nyc.exclude.exclude.length.should.eql(5)
     })
 
     it("loads 'extension' patterns from package.json#nyc", function () {
@@ -97,14 +97,14 @@ describe('nyc', function () {
     it("allows for empty 'exclude'", function () {
       var nyc2 = new NYC({exclude: []})
 
-      nyc2.exclude.exclude.length.should.eql(0)
+      // an empty exclude still has !**/node_modules/** added.
+      nyc2.exclude.exclude.length.should.eql(1)
     })
   })
 
   describe('shouldInstrumentFile', function () {
     it('should exclude appropriately with defaults', function () {
       var nyc = new NYC(configUtil.loadConfig([
-        '--exclude=**/node_modules/**',
         '--exclude=test/**',
         '--exclude=test{,-*}.js',
         '--exclude=**/*.test.js',