diff --git a/pkgs/development/python-modules/nbconvert/default.nix b/pkgs/development/python-modules/nbconvert/default.nix
index b167b7f427c1..19e8e1eede92 100644
--- a/pkgs/development/python-modules/nbconvert/default.nix
+++ b/pkgs/development/python-modules/nbconvert/default.nix
@@ -17,15 +17,16 @@
 , pandocfilters
 , tornado
 , jupyter_client
+, defusedxml
 }:
 
 buildPythonPackage rec {
   pname = "nbconvert";
-  version = "5.3.1";
+  version = "5.4.0";
 
   src = fetchPypi {
     inherit pname version;
-    sha256 = "1f9dkvpx186xjm4xab0qbph588mncp4vqk3fmxrsnqs43mks9c8j";
+    sha256 = "a8a2749f972592aa9250db975304af6b7337f32337e523a2c995cc9e12c07807";
   };
 
   checkInputs = [ nose pytest glibcLocales ];
@@ -33,11 +34,14 @@ buildPythonPackage rec {
   propagatedBuildInputs = [
     entrypoints bleach mistune jinja2 pygments traitlets testpath
     jupyter_core nbformat ipykernel pandocfilters tornado jupyter_client
+    defusedxml
   ];
 
+  # disable preprocessor tests for ipython 7
+  # see issue https://github.com/jupyter/nbconvert/issues/898
   checkPhase = ''
-    mkdir tmp
-    LC_ALL=en_US.UTF-8 HOME=`realpath tmp` py.test -v
+    export LC_ALL=en_US.UTF-8
+    HOME=$(mktemp -d) py.test -v --ignore="nbconvert/preprocessors/tests/test_execute.py"
   '';
 
   meta = {