diff --git a/lib/rubygems/config_file.rb b/lib/rubygems/config_file.rb
index d61b8cb5ce..886bd66953 100644
--- a/lib/rubygems/config_file.rb
+++ b/lib/rubygems/config_file.rb
@@ -47,7 +47,7 @@ class Gem::ConfigFile
   DEFAULT_CONCURRENT_DOWNLOADS = 8
   DEFAULT_CERT_EXPIRATION_LENGTH_DAYS = 365
   DEFAULT_IPV4_FALLBACK_ENABLED = false
-  DEFAULT_INSTALL_EXTENSION_IN_LIB = false
+  DEFAULT_INSTALL_EXTENSION_IN_LIB = true
 
   ##
   # For Ruby packagers to set configuration defaults.  Set in
diff --git a/lib/rubygems/ext/cargo_builder.rb b/lib/rubygems/ext/cargo_builder.rb
index 3e5f398c2d..c4feb26798 100644
--- a/lib/rubygems/ext/cargo_builder.rb
+++ b/lib/rubygems/ext/cargo_builder.rb
@@ -47,7 +47,7 @@ class Gem::Ext::CargoBuilder < Gem::Ext::Builder
 
       nesting = extension_nesting(extension)
 
-      if !Gem.configuration.install_extension_in_lib && lib_dir
+      if Gem.configuration.install_extension_in_lib && lib_dir
         nested_lib_dir = File.join(lib_dir, nesting)
         FileUtils.mkdir_p nested_lib_dir
         FileUtils.cp_r dlext_path, nested_lib_dir, remove_destination: true
diff --git a/lib/rubygems/ext/ext_conf_builder.rb b/lib/rubygems/ext/ext_conf_builder.rb
index 0b75a010db..de487484df 100644
--- a/lib/rubygems/ext/ext_conf_builder.rb
+++ b/lib/rubygems/ext/ext_conf_builder.rb
@@ -43,7 +43,7 @@ class Gem::Ext::ExtConfBuilder < Gem::Ext::Builder
 
       full_tmp_dest = File.join(extension_dir, tmp_dest_relative)
 
-      if !Gem.configuration.install_extension_in_lib && lib_dir
+      if Gem.configuration.install_extension_in_lib && lib_dir
         FileUtils.mkdir_p lib_dir
         entries = Dir.entries(full_tmp_dest) - %w[. ..]
         entries = entries.map {|entry| File.join full_tmp_dest, entry }
diff --git a/test/rubygems/test_gem_ext_builder.rb b/test/rubygems/test_gem_ext_builder.rb
index 7c5556862b..d5812da2aa 100644
--- a/test/rubygems/test_gem_ext_builder.rb
+++ b/test/rubygems/test_gem_ext_builder.rb
@@ -162,7 +162,7 @@ install:
 
     extension_in_lib(false) do
       @orig_install_extension_in_lib = Gem.configuration.install_extension_in_lib
-      Gem.configuration.install_extension_in_lib = true
+      Gem.configuration.install_extension_in_lib = false
 
       @spec.extensions << "ext/extconf.rb"