diff --git a/src/index.ts b/src/index.ts
index 6df6c6e..196f7e6 100644
--- a/src/index.ts
+++ b/src/index.ts
@@ -6,6 +6,7 @@ import {
   Cache,
   CommandContext,
   Configuration,
+  Hooks,
   Plugin,
   Project,
   Report,
@@ -18,7 +19,7 @@ import binTmpl from "./bin-wrapper.sh.in";
 import defaultExprTmpl from "./default.nix.in";
 import projectExprTmpl from "./yarn-project.nix.in";
 
-// Actual body of NixifyCommand.
+// Generator function that runs after `yarn install`.
 const generate = async (project: Project, report: Report) => {
   const { configuration, cwd } = project;
   const yarnPathAbs = configuration.get(`yarnPath`);
@@ -27,33 +28,20 @@ const generate = async (project: Project, report: Report) => {
   // TODO: Should try to remove this. Our binary wrappers currently do
   // `node -r .pnp.js <bin>`, but not even sure if that's supported.
   if (configuration.get(`nodeLinker`) !== `pnp`) {
-    report.reportError(
+    report.reportWarning(
       0,
-      `Only 'pnp' is currently supported for the 'nodeLinker' setting.`
+      `Currently, yarn-plugin-nixify only supports 'pnp' for the 'nodeLinker' setting.`
     );
     return;
   }
 
-  const yarnPath = ppath.relative(cwd, yarnPathAbs);
-  if (yarnPath.startsWith(".")) {
-    report.reportError(
+  let yarnPath = ppath.relative(cwd, yarnPathAbs);
+  if (yarnPath.startsWith(`../`)) {
+    yarnPath = yarnPathAbs;
+    report.reportWarning(
       0,
       `The Yarn path ${yarnPathAbs} is outside the project directory - it cannot be reached by the Nix build`
     );
-    return;
-  }
-
-  // Simple check to see if the project has been setup, so we know the Yarn
-  // cache is populated. TODO: Can we also see if it is up-to-date?
-  if (
-    !xfs.existsSync(ppath.join(cwd, lockfileFilename)) ||
-    !xfs.existsSync(getPnpPath(project).main)
-  ) {
-    report.reportError(
-      0,
-      `The project in ${cwd}/package.json doesn't seem to have been installed - running an install there might help`
-    );
-    return;
   }
 
   // List files the derivation will depend on.
@@ -82,11 +70,13 @@ const generate = async (project: Project, report: Report) => {
     // just user global configuration files, but the warnings can help highlight
     // dependencies on private registries.)
     const relativePath = ppath.relative(cwd, inputPath);
-    if (relativePath.startsWith(`..`)) {
-      report.reportWarning(
-        0,
-        `The path ${inputPath} was ignored, because it cannot be reached by the Nix build`
-      );
+    if (relativePath.startsWith(`../`)) {
+      if (inputPath !== yarnPath) {
+        report.reportWarning(
+          0,
+          `The path ${inputPath} is outside the project directory and was ignored - it may not be reachable in the Nix build`
+        );
+      }
       continue;
     }
     // Add the file itself.
@@ -102,16 +92,28 @@ const generate = async (project: Project, report: Report) => {
   // Build the Nix output-hash by hashing the Yarn cache folder. The
   // derivation should build the exact same.
   const cacheFolder = configuration.get(`cacheFolder`);
-  const hasherResult = await execUtils.execvp(
-    `nix-hash`,
-    [`--type`, `sha256`, `--base32`, cacheFolder],
-    { cwd, encoding: `utf8`, strict: true }
-  );
-  const cacheHash = hasherResult.stdout.trim();
+  let cacheHash = ``;
+  try {
+    const hasherResult = await execUtils.execvp(
+      `nix-hash`,
+      [`--type`, `sha256`, `--base32`, cacheFolder],
+      { cwd, encoding: `utf8`, strict: true }
+    );
+    cacheHash = hasherResult.stdout.trim();
+  } catch (err) {
+    if (err.code === `ENOENT`) {
+      report.reportWarning(
+        0,
+        `No Nix installation found - yarn-project.nix will not be updated`
+      );
+    } else {
+      throw err;
+    }
+  }
 
   // Render the Nix expression.
   const ident = project.topLevelWorkspace.manifest.name;
-  const projectName = ident ? structUtils.stringifyIdent(ident) : "workspace";
+  const projectName = ident ? structUtils.stringifyIdent(ident) : `workspace`;
   const projectExpr = projectExprTmpl
     .replace(`@@PROJECT_NAME@@`, JSON.stringify(projectName))
     .replace(`@@OFFLINE_CACHE_HASH@@`, JSON.stringify(cacheHash))
@@ -126,37 +128,18 @@ const generate = async (project: Project, report: Report) => {
     );
   const projectExprPath = ppath.join(cwd, `yarn-project.nix` as Filename);
   xfs.writeFileSync(projectExprPath, projectExpr);
-  report.reportInfo(0, `Wrote: ${projectExprPath}`);
 
   // Create a wrapper if it does not exist yet.
   const defaultExprPath = ppath.join(cwd, `default.nix` as Filename);
   if (!xfs.existsSync(defaultExprPath)) {
     xfs.writeFileSync(defaultExprPath, defaultExprTmpl);
-    report.reportInfo(0, `Wrote: ${defaultExprPath}`);
+    report.reportInfo(
+      0,
+      `A minimal default.nix was created. You may want to customize it.`
+    );
   }
 };
 
-// Command that generates Nix expressions to setup the project.
-// TODO: Automate by running on every install instead? There's a hook in Yarn,
-// but it doesn't tell us if the persist flag is set.
-class NixifyCommand extends Command<CommandContext> {
-  @Command.Path(`nixify`)
-  async execute() {
-    const configuration = await Configuration.find(
-      this.context.cwd,
-      this.context.plugins
-    );
-    const { project } = await Project.find(configuration, this.context.cwd);
-
-    const report = await StreamReport.start(
-      { configuration, stdout: this.context.stdout },
-      async (report) => generate(project, report)
-    );
-
-    return report.exitCode();
-  }
-}
-
 // Internal command that does just the fetch part of `yarn install`.
 // Used inside the Nix offline-cache derivation to build the cache.
 class BuildCacheCommand extends Command<CommandContext> {
@@ -234,8 +217,15 @@ class InstallBinCommand extends Command<CommandContext> {
   }
 }
 
-const plugin: Plugin = {
-  commands: [NixifyCommand, BuildCacheCommand, InstallBinCommand],
+const plugin: Plugin<Hooks> = {
+  commands: [BuildCacheCommand, FetchLocatorCommand, InstallBinCommand],
+  hooks: {
+    afterAllInstalled: async (project, opts) => {
+      if (opts.persistProject !== false) {
+        await generate(project, opts.report);
+      }
+    },
+  },
 };
 
 export default plugin;
diff --git a/src/yarn-project.nix.in b/src/yarn-project.nix.in
index f388b30..cca2bcc 100644
--- a/src/yarn-project.nix.in
+++ b/src/yarn-project.nix.in
@@ -1,7 +1,7 @@
 # This file is generated by running "yarn install" inside your project.
 # Manual changes might be lost - proceed with caution!
 
-{ lib, bash, nodejs, perl, stdenv, writeText }:
+{ lib, bash, coreutils, nodejs, perl, stdenv, writeText }:
 
 with lib;
 
@@ -43,7 +43,7 @@ let
       export HOME="$TEMP"
 
       # Setup to environment so we can run Yarn.
-      export NIX_YARN_PATH="$PWD/${yarn-path}"
+      export NIX_YARN_PATH="$(readlink -f '${yarn-path}')"
       ${yarn-alias}
 
       # Invoke a plugin internal command to build the cache.
@@ -64,7 +64,7 @@ in stdenv.mkDerivation {
   npm_config_build_from_source = "true";
 
   # Make sure the build uses the right Node.js version everywhere.
-  buildInputs = [ nodejs ];
+  buildInputs = [ coreutils nodejs ];
 
   # Define the Yarn alias in the build environment.
   postHook = yarn-alias;
@@ -80,7 +80,7 @@ in stdenv.mkDerivation {
     cd "$out/libexec/$sourceRoot"
 
     # Store the absolute path to Yarn for the 'yarn' alias.
-    export NIX_YARN_PATH="$PWD/${yarn-path}"
+    export NIX_YARN_PATH="$(readlink -f ${yarn-path})"
 
     # Point Yarn to the offline cache built separately.
     yarn config set cacheFolder '${offline-cache}'