diff --git a/CHANGELOG.md b/CHANGELOG.md
index 18da27fd..10ffe166 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -10,9 +10,17 @@ and this project adheres to
 ## [Unreleased]
 
 <!--
-## [v0.106.0] - 2021-04-26
+## [v0.106.0] - 2021-05-01
 -->
 
+### Changed
+
+- New, more correct versioning scheme ([#2412]).
+
+[#2412]: https://github.com/AdguardTeam/AdGuardHome/issues/2412
+
+
+
 ## [v0.105.2] - 2021-03-10
 
 ### Fixed
diff --git a/scripts/README.md b/scripts/README.md
index 020a8444..4c23493c 100644
--- a/scripts/README.md
+++ b/scripts/README.md
@@ -123,7 +123,7 @@ directly, or use the commands through `make` (for example, `make go-lint`).
 Optional environment:
  *  `GO`: set an alternarive name for the Go compiler.
 
- ###  `version.sh`: Print The Current Version
+ ###  `version.sh`: Generate And Print The Current Version
 
 Required environment:
  *  `CHANNEL`: release channel, see above.
diff --git a/scripts/make/version.sh b/scripts/make/version.sh
index 9822ec2e..65bebd73 100644
--- a/scripts/make/version.sh
+++ b/scripts/make/version.sh
@@ -1,47 +1,110 @@
 #!/bin/sh
 
+# AdGuard Home Version Generation Script
+#
+# This script generates versions based on the current git tree state.
+# The valid output formats are:
+#
+#  *  For release versions, "v0.123.4".  This version should be the one
+#     in the current tag, and the script merely checks, that the current
+#     commit is properly tagged.
+#
+#  *  For prerelease beta versions, "v0.123.4-b.5".  This version should
+#     be the one in the current tag, and the script merely checks, that
+#     the current commit is properly tagged.
+#
+#  *  For prerelease alpha versions (aka snapshots),
+#     "v0.123.4-a.6+a1b2c3d4".
+#
+# BUG(a.garipov): The script currently can't differentiate between beta
+# tags and release tags if they are on the same commit, so the beta tag
+# **must** be pushed and built **before** the release tag is pushed.
+#
+# TODO(a.garipov): The script currently doesn't handle release branches,
+# so it must be modified once we have those.
+
 readonly verbose="${VERBOSE:-0}"
-if [ "$verbose" -gt '1' ]
+if [ "$verbose" -gt '0' ]
 then
 	set -x
 fi
 
 set -e -f -u
 
-readonly awk_program='/^v[0-9]+\.[0-9]+\.[0-9]+.*$/ {
-	if (!$4) {
-		# The last tag is a full release version, so bump the
-		# minor release number and zero the patch release number
-		# to get the next release.
-		$2++;
-		$3 = 0;
-	}
-
-	print($1 "." $2 "." $3);
+# bump_minor is an awk program that reads a minor release version,
+# increments the minor part of it, and prints the next version.
+readonly bump_minor='/^v[0-9]+\.[0-9]+\.0$/ {
+	print($1 "." $2 + 1 ".0");
 
 	next;
 }
 
 {
-	printf("invalid version: \"%s\"\n", $0);
+	printf("invalid release version: \"%s\"\n", $0);
 
 	exit 1;
 }'
 
-readonly last_tag="$(git describe --abbrev=0)"
-readonly current_desc="$(git describe)"
+# get_last_minor_zero returns the last new minor release.
+get_last_minor_zero() {
+	# List all tags.  Then, select those that fit the pattern of
+	# a new minor release: a semver version with the patch part set
+	# to zero.
+	#
+	# Then, sort them first by the first field ("1"), starting with
+	# the second character to skip the "v" prefix (".2"), and only
+	# spanning the first field (",1").  The sort is numeric and
+	# reverse ("nr").
+	#
+	# Then, sort them by the second field ("2"), and only spanning
+	# the second field (",2").  The sort is also numeric and reverse
+	# ("nr").
+	#
+	# Finally, get the top (that is, most recent) version.
+	git tag\
+		| grep -e 'v[0-9]\+\.[0-9]\+\.0$'\
+		| sort -k 1.2,1nr -k 2,2nr -t '.'\
+		| head -n 1
+}
 
 readonly channel="$CHANNEL"
+
 case "$channel"
 in
 ('development')
-	echo 'v0.0.0'
+	# Use the dummy version for development builds.
+	version='v0.0.0'
 	;;
 ('edge')
-	next=$(echo $last_tag | awk -F '[.+-]' "$awk_program")
-	echo "${next}-SNAPSHOT-$(git rev-parse --short HEAD)"
+	# last_minor_zero is the last new minor release.
+	readonly last_minor_zero="$(get_last_minor_zero)"
+
+	# num_commits_since_minor is the number of commits since the
+	# last new minor release.  If the current commit is the new
+	# minor release, num_commits_since_minor is zero.
+	readonly num_commits_since_minor="$(git rev-list "${last_minor_zero}..HEAD" | wc -l)"
+
+	# next_minor is the next minor release version.
+	readonly next_minor="$(echo "$last_minor_zero" | awk -F '.' "$bump_minor")"
+
+	# Make this commit a prerelease version for the next minor
+	# release.  For example, if the last minor release was v0.123.0,
+	# and the current commit is the fifth since then, the version
+	# will look something like:
+	#
+	#   v0.124.0-a.5+a1b2c3d4
+	#
+	version="${next_minor}-a.${num_commits_since_minor}+$(git rev-parse --short HEAD)"
 	;;
 ('beta'|'release')
+	# current_desc is the description of the current git commit.  If
+	# the current commit is tagged, git describe will show the tag.
+	readonly current_desc="$(git describe)"
+
+	# last_tag is the most recent git tag.
+	readonly last_tag="$(git describe --abbrev=0)"
+
+	# Require an actual tag for the beta and final releases.
 	if [ "$current_desc" != "$last_tag" ]
 	then
 		echo 'need a tag' 1>&2
@@ -49,7 +112,7 @@ in
 		exit 1
 	fi
 
-	echo "$last_tag"
+	version="$last_tag"
 	;;
 (*)
 	echo "invalid channel '$channel', supported values are\
@@ -57,3 +120,13 @@ in
 	exit 1
 	;;
 esac
+
+# Finally, make sure that we don't output invalid versions.
+if ! echo "$version" | grep -E -e '^v[0-9]+\.[0-9]+\.[0-9]+(-[ab]\.[0-9]+)?(\+[[:xdigit:]]+)?' -q
+then
+	echo "generated an invalid version '$version'" 1>&2
+
+	exit 1
+fi
+
+echo "$version"