diff --git a/pkg/pkg.go b/pkg/pkg.go
index f5680a48..13757962 100644
--- a/pkg/pkg.go
+++ b/pkg/pkg.go
@@ -6,6 +6,7 @@ import (
 	"errors"
 	"fmt"
 	"io/fs"
+	"io/ioutil"
 	"os"
 	"path"
 	"path/filepath"
@@ -61,10 +62,18 @@ func Vendor(ctx context.Context, p string) error {
 		return err
 	}
 
-	// generate `.gitignore`
+	// remove 0.1-style .gitignore files
+	gitignorePath := path.Join(cuePkgDir, ".gitignore")
+	if contents, err := ioutil.ReadFile(gitignorePath); err == nil {
+		if strings.HasPrefix(string(contents), "# generated by dagger") {
+			os.Remove(gitignorePath)
+		}
+	}
+
+	// generate `.gitattributes` file
 	if err := os.WriteFile(
-		path.Join(cuePkgDir, ".gitignore"),
-		[]byte(fmt.Sprintf("# generated by dagger\ndagger.lock\n%s", strings.Join(modules, "\n"))),
+		path.Join(cuePkgDir, ".gitattributes"),
+		[]byte("# generated by dagger\n** linguist-generated\n"),
 		0600,
 	); err != nil {
 		return err
diff --git a/tests/project.bats b/tests/project.bats
index 4b8b409a..111c073e 100644
--- a/tests/project.bats
+++ b/tests/project.bats
@@ -2,13 +2,13 @@ setup() {
 	load 'helpers'
 
 	common_setup
+	
+	TEMPDIR=$(mktemp -d)
 }
 
 @test "project init and update" {
-	TEMPDIR=$(mktemp -d)
-	echo "TEMPDIR=$TEMPDIR"
-	cd "$TEMPDIR"
-	
+	cd "$TEMPDIR" || exit
+
 	"$DAGGER" project init ./ --name "github.com/foo/bar"
 	test -d ./cue.mod/pkg
 	test -d ./cue.mod/usr
@@ -16,7 +16,15 @@ setup() {
 	contents=$(cat ./cue.mod/module.cue)
 	[ "$contents" == 'module: "github.com/foo/bar"' ]
 
-	dagger project update
+	#  ensure old 0.1 style .gitignore is removed
+ 	printf "# generated by dagger\ndagger.lock" > .gitignore
+
+	"$DAGGER" project update
 	test -d ./cue.mod/pkg/dagger.io
 	test -d ./cue.mod/pkg/universe.dagger.io
+	test -f ./cue.mod/pkg/.gitattributes
+	run cat ./cue.mod/pkg/.gitattributes
+	assert_output --partial "generated by dagger"
+ 
+	test ! -f ./cue.mod/pkg/.gitignore
 }