diff --git a/lib/index.js b/lib/index.js
index d049a227..ccf61bb5 100644
--- a/lib/index.js
+++ b/lib/index.js
@@ -488,10 +488,10 @@ Base.prototype.run = function run(cb) {
  * @return {this}
  *
  * @example <caption>Using a peerDependency generator</caption>
- * this.composeWith('bootstrap', { options: { sass: true } });
+ * this.composeWith('bootstrap', { sass: true });
  *
  * @example <caption>Using a direct dependency generator</caption>
- * this.composeWith('bootstrap', { options: { sass: true } }, {
+ * this.composeWith('bootstrap', { sass: true }, {
  *   local: require.resolve('generator-bootstrap/app/main.js')
  * });
  */
@@ -503,21 +503,19 @@ Base.prototype.composeWith = function composeWith(namespace, options, settings)
 
   // Pass down the default options so they're correclty mirrored down the chain.
   options = _.extend({
-    options: _.extend({
-      skipInstall: this.options.skipInstall,
-      'skip-install': this.options.skipInstall,
-      skipCache: this.options.skipCache,
-      'skip-cache': this.options.skipCache
-    }, options.options)
+    skipInstall: this.options.skipInstall,
+    'skip-install': this.options.skipInstall,
+    skipCache: this.options.skipCache,
+    'skip-cache': this.options.skipCache
   }, options);
 
   if (settings.local) {
     var Generator = require(settings.local);
     Generator.resolved = require.resolve(settings.local);
     Generator.namespace = namespace;
-    generator = this.env.instantiate(Generator, options);
+    generator = this.env.instantiate(Generator, {options: options});
   } else {
-    generator = this.env.create(namespace, options);
+    generator = this.env.create(namespace, {options: options});
   }
 
   if (this._running) {
diff --git a/test/base.js b/test/base.js
index ff36ab3a..c00807d1 100644
--- a/test/base.js
+++ b/test/base.js
@@ -779,13 +779,12 @@ describe('Base', function () {
 
     it('pass options and arguments to the composed generators', function (done) {
       this.dummy.composeWith('composed:gen', {
-        options: { foo: 'bar', 'skip-install': true },
-        arguments: ['foo']
+        foo: 'bar',
+        'skip-install': true
       });
 
       this.dummy.run(function () {
         assert.equal(this.spy.firstCall.thisValue.options.foo, 'bar');
-        assert.deepEqual(this.spy.firstCall.thisValue.args, ['foo']);
         done();
       }.bind(this));
     });
@@ -807,14 +806,14 @@ describe('Base', function () {
       });
 
       it('pass options and arguments to the composed generators', function (done) {
-        this.dummy.composeWith('dumb', {
-          options: { foo: 'bar', 'skip-install': true },
-          arguments: ['foo']
-        }, { local: this.stubPath });
+        this.dummy.composeWith(
+          'dumb',
+          { foo: 'bar', 'skip-install': true },
+          { local: this.stubPath }
+        );
 
         this.dummy.run(function () {
           assert.equal(this.spy.firstCall.thisValue.options.foo, 'bar');
-          assert.deepEqual(this.spy.firstCall.thisValue.args, ['foo']);
           done();
         }.bind(this));
       });