diff --git a/hgext3rd/absorb.py b/hgext3rd/absorb/__init__.py
similarity index 100%
rename from hgext3rd/absorb.py
rename to hgext3rd/absorb/__init__.py
diff --git a/setup.py b/setup.py
index 3c4c540331..8d170f5b3c 100644
--- a/setup.py
+++ b/setup.py
@@ -135,12 +135,19 @@ else:
         }),
     ]
 
+# modules that are single files in hgext3rd
 hgext3rd = [
     p[:-3].replace('/', '.')
     for p in glob('hgext3rd/*.py')
     if p != 'hgext3rd/__init__.py'
 ]
 
+# modules that are directories in hgext3rd
+hgext3rd.extend(
+    p[:-12].replace('/', '.')
+    for p in glob('hgext3rd/*/__init__.py')
+)
+
 availablepymodules = dict([(x[9:], x) for x in hgext3rd])
 availablepymodules['statprof'] = 'statprof'
 
diff --git a/tests/test-absorb-edit-lines.t b/tests/test-absorb-edit-lines.t
index e4994c4347..be0cc30a36 100644
--- a/tests/test-absorb-edit-lines.t
+++ b/tests/test-absorb-edit-lines.t
@@ -4,7 +4,7 @@
   $ extpath=`dirname $TESTDIR`
   $ cat >> $HGRCPATH << EOF
   > [extensions]
-  > absorb=$extpath/hgext3rd/absorb.py
+  > absorb=$extpath/hgext3rd/absorb
   > EOF
 
   $ hg init repo1
diff --git a/tests/test-absorb-rename.t b/tests/test-absorb-rename.t
index 78c78afbd0..2285b41cf3 100644
--- a/tests/test-absorb-rename.t
+++ b/tests/test-absorb-rename.t
@@ -6,7 +6,7 @@
   > [diff]
   > git=1
   > [extensions]
-  > absorb=$extpath/hgext3rd/absorb.py
+  > absorb=$extpath/hgext3rd/absorb
   > EOF
 
   $ sedi() { # workaround check-code
diff --git a/tests/test-absorb.t b/tests/test-absorb.t
index e687315fc4..8ae3eed327 100644
--- a/tests/test-absorb.t
+++ b/tests/test-absorb.t
@@ -4,7 +4,7 @@
   $ extpath=`dirname $TESTDIR`
   $ cat >> $HGRCPATH << EOF
   > [extensions]
-  > absorb=$extpath/hgext3rd/absorb.py
+  > absorb=$extpath/hgext3rd/absorb
   > EOF
 
   $ sedi() { # workaround check-code