diff --git a/MANIFEST.in b/MANIFEST.in
index 8d537e152..d8417390b 100644
--- a/MANIFEST.in
+++ b/MANIFEST.in
@@ -1,2 +1 @@
-include xblock/VERSION.txt
 recursive-include xblock *.mo *.po
diff --git a/README.rst b/README.rst
index 1d9b136c6..18ca223f2 100644
--- a/README.rst
+++ b/README.rst
@@ -90,7 +90,7 @@ To package a new release:
 
 #. Describe the release in CHANGELOG.rst
 
-#. Update the version number in xblock/VERSION.txt.
+#. Update the ``__version__`` number in `xblock/__init__.py`_
 
 #. Use the github release mechanism to release a new version.  This will tag and publish the package.