diff --git a/.flake8 b/.flake8
index d31ad36e..6180ee0a 100644
--- a/.flake8
+++ b/.flake8
@@ -1,9 +1,17 @@
 [flake8]
 ignore =
-  E501  # line too long, defer to black
-  W503  # allow line breaks before binary ops
-  W504  # allow line breaks after binary ops
-  E203  # allow whitespace before ':' (https://github.com/psf/black#slices) 
+  # line too long, defer to black
+  E501
+
+  # allow line breaks before binary ops
+  W503
+
+  # allow line breaks after binary ops
+  W504
+
+  # allow whitespace before ':' (https://github.com/psf/black#slices)
+  E203
+
 exclude =
   .bzr
   .git
@@ -15,3 +23,4 @@ exclude =
   venv*/
   target
   __pycache__
+  */build/lib/*
diff --git a/.isort.cfg b/.isort.cfg
new file mode 100644
index 00000000..31658510
--- /dev/null
+++ b/.isort.cfg
@@ -0,0 +1,18 @@
+[settings]
+include_trailing_comma=True
+force_grid_wrap=0
+use_parentheses=True
+line_length=79
+profile=black
+
+; 3 stands for Vertical Hanging Indent, e.g.
+; from third_party import (
+;     lib1,
+;     lib2,
+;     lib3,
+; )
+; docs: https://github.com/timothycrosley/isort#multi-line-output-modes
+multi_line_output=3
+skip=target
+skip_glob=**/gen/*,.venv*/*,venv*/*,**/proto/*,.tox/*
+known_third_party=opentelemetry,psutil,pytest,redis,redis_opentracing
diff --git a/CHANGELOG.md b/CHANGELOG.md
index 797a3fe9..461b1fdc 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -6,6 +6,8 @@
     ([#205](https://github.com/microsoft/ApplicationInsights-Python/pull/205))
 - Update CONTRIBUTING.md, support Py3.11
     ([#210](https://github.com/microsoft/ApplicationInsights-Python/pull/210))
+- Updated setup.py, directory structure
+    ([#214](https://github.com/microsoft/ApplicationInsights-Python/pull/214))
 
 ## [1.0.0b8](https://github.com/microsoft/ApplicationInsights-Python/releases/tag/v1.0.0b8) - 2022-09-26
 
diff --git a/azure-monitor-opentelemetry-distro/azure/__init__.py b/azure-monitor-opentelemetry-distro/azure/__init__.py
new file mode 100644
index 00000000..e69de29b
diff --git a/azure-monitor-opentelemetry-distro/azure/monitor/__init__.py b/azure-monitor-opentelemetry-distro/azure/monitor/__init__.py
new file mode 100644
index 00000000..e69de29b
diff --git a/azure-monitor-opentelemetry-distro/azure/monitor/opentelemetry/__init__.py b/azure-monitor-opentelemetry-distro/azure/monitor/opentelemetry/__init__.py
new file mode 100644
index 00000000..e69de29b
diff --git a/azure-monitor-opentelemetry-distro/azure/monitor/opentelemetry/distro/__init__.py b/azure-monitor-opentelemetry-distro/azure/monitor/opentelemetry/distro/__init__.py
new file mode 100644
index 00000000..e69de29b
diff --git a/azure-monitor-opentelemetry-distro/src/azure/monitor/opentelemetry/distro/version.py b/azure-monitor-opentelemetry-distro/azure/monitor/opentelemetry/distro/_version.py
similarity index 100%
rename from azure-monitor-opentelemetry-distro/src/azure/monitor/opentelemetry/distro/version.py
rename to azure-monitor-opentelemetry-distro/azure/monitor/opentelemetry/distro/_version.py
diff --git a/azure-monitor-opentelemetry-distro/src/azure/monitor/opentelemetry/distro/configurator.py b/azure-monitor-opentelemetry-distro/azure/monitor/opentelemetry/distro/configurator.py
similarity index 100%
rename from azure-monitor-opentelemetry-distro/src/azure/monitor/opentelemetry/distro/configurator.py
rename to azure-monitor-opentelemetry-distro/azure/monitor/opentelemetry/distro/configurator.py
diff --git a/azure-monitor-opentelemetry-distro/src/azure/monitor/opentelemetry/distro/distro.py b/azure-monitor-opentelemetry-distro/azure/monitor/opentelemetry/distro/distro.py
similarity index 75%
rename from azure-monitor-opentelemetry-distro/src/azure/monitor/opentelemetry/distro/distro.py
rename to azure-monitor-opentelemetry-distro/azure/monitor/opentelemetry/distro/distro.py
index dddc3518..e11c765e 100644
--- a/azure-monitor-opentelemetry-distro/src/azure/monitor/opentelemetry/distro/distro.py
+++ b/azure-monitor-opentelemetry-distro/azure/monitor/opentelemetry/distro/distro.py
@@ -6,8 +6,10 @@
 
 from os import environ
 
-from opentelemetry.environment_variables import (OTEL_METRICS_EXPORTER,
-                                                 OTEL_TRACES_EXPORTER)
+from opentelemetry.environment_variables import (
+    OTEL_METRICS_EXPORTER,
+    OTEL_TRACES_EXPORTER,
+)
 from opentelemetry.instrumentation.distro import BaseDistro
 
 
@@ -18,4 +20,6 @@ def _configure(self, **kwargs):
         environ.setdefault(
             OTEL_METRICS_EXPORTER, "azure_monitor_opentelemetry_exporter"
         )
-        environ.setdefault(OTEL_TRACES_EXPORTER, "azure_monitor_opentelemetry_exporter")
+        environ.setdefault(
+            OTEL_TRACES_EXPORTER, "azure_monitor_opentelemetry_exporter"
+        )
diff --git a/azure-monitor-opentelemetry-distro/samples/simple.py b/azure-monitor-opentelemetry-distro/samples/simple.py
new file mode 100644
index 00000000..9853862d
--- /dev/null
+++ b/azure-monitor-opentelemetry-distro/samples/simple.py
@@ -0,0 +1,10 @@
+# -------------------------------------------------------------------------
+# Copyright (c) Microsoft Corporation. All rights reserved.
+# Licensed under the MIT License. See License in the project root for
+# license information.
+# --------------------------------------------------------------------------
+
+from azure.monitor.opentelemetry.distro.distro import AzureMonitorDistro
+
+distro = AzureMonitorDistro()
+distro.configure()
diff --git a/azure-monitor-opentelemetry-distro/setup.cfg b/azure-monitor-opentelemetry-distro/setup.cfg
index b2f391f9..3c6e79cf 100644
--- a/azure-monitor-opentelemetry-distro/setup.cfg
+++ b/azure-monitor-opentelemetry-distro/setup.cfg
@@ -1,49 +1,2 @@
-# -------------------------------------------------------------------------
-# Copyright (c) Microsoft Corporation. All rights reserved.
-# Licensed under the MIT License. See License in the project root for
-# license information.
-# --------------------------------------------------------------------------
-[metadata]
-name = azure-monitor-opentelemetry-distro
-description = Azure Monitor Distro for OpenTelemetry Python
-long_description = file: README.md
-long_description_content_type = text/markdown
-author = Microsoft Corporation
-url = https://github.com/microsoft/ApplicationInsights-Python
-platforms = any
-license = MIT License
-classifiers =
-    Development Status :: 4 - Beta
-    Programming Language :: Python
-    Programming Language :: Python :: 3
-    Programming Language :: Python :: 3.7
-    Programming Language :: Python :: 3.8
-    Programming Language :: Python :: 3.9
-    Programming Language :: Python :: 3.10
-    Programming Language :: Python :: 3.11
-    License :: OSI Approved :: MIT License
-    Typing :: Typed
-
-[options]
-python_requires = >=3.7
-package_dir=
-    =src
-packages=find_namespace:
-zip_safe = False
-include_package_data = True
-install_requires =
-    azure-monitor-opentelemetry-exporter == 1.0.0b8
-    opentelemetry-instrumentation ~= 0.35b0
-    opentelemetry-instrumentation-django ~= 0.35b0
-    opentelemetry-instrumentation-requests ~= 0.35b0
-    opentelemetry-instrumentation-flask ~= 0.35b0
-    opentelemetry-instrumentation-psycopg2 ~= 0.35b0
-
-[options.packages.find]
-where = src
-
-[options.entry_points]
-opentelemetry_distro =
-    azure_monitor_opentelemetry_distro = azure.monitor.opentelemetry.distro.distro:AzureMonitorDistro
-opentelemetry_configurator =
-    azure_monitor_opentelemetry_configurator = azure.monitor.opentelemetry.distro.configurator:AzureMonitorConfigurator
+[bdist_wheel]
+universal=1
diff --git a/azure-monitor-opentelemetry-distro/setup.py b/azure-monitor-opentelemetry-distro/setup.py
index f730dd77..7ef63ee5 100644
--- a/azure-monitor-opentelemetry-distro/setup.py
+++ b/azure-monitor-opentelemetry-distro/setup.py
@@ -1,21 +1,103 @@
+#!/usr/bin/env python
+
 # -------------------------------------------------------------------------
 # Copyright (c) Microsoft Corporation. All rights reserved.
-# Licensed under the MIT License. See License in the project root for
+# Licensed under the MIT License. See License.txt in the project root for
 # license information.
 # --------------------------------------------------------------------------
 
+
 import os
+import re
 
-import setuptools
+from setuptools import find_packages, setup
 
-BASE_DIR = os.path.dirname(__file__)
-VERSION_FILENAME = os.path.join(
-    BASE_DIR, "src", "azure", "monitor", "opentelemetry", "distro", "version.py"
-)
-PACKAGE_INFO = {}
-with open(VERSION_FILENAME, encoding="utf-8") as f:
-    exec(f.read(), PACKAGE_INFO)
+# Change the PACKAGE_NAME only to change folder and different name
+PACKAGE_NAME = "azure-monitor-opentelemetry-distro"
+PACKAGE_PPRINT_NAME = "Azure Monitor Opentelemetry Distro"
+
+# a-b-c => a/b/c
+package_folder_path = PACKAGE_NAME.replace("-", "/")
+
+
+# azure v0.x is not compatible with this package
+# azure v0.x used to have a __version__ attribute (newer versions don't)
+try:
+    import azure
+
+    try:
+        ver = azure.__version__
+        raise Exception(
+            "This package is incompatible with azure=={}. ".format(ver)
+            + 'Uninstall it with "pip uninstall azure".'
+        )
+    except AttributeError:
+        pass
+except ImportError:
+    pass
+
+# Version extraction inspired from 'requests'
+with open(os.path.join(package_folder_path, "_version.py"), "r") as fd:
+    version = re.search(
+        r'^VERSION\s*=\s*[\'"]([^\'"]*)[\'"]', fd.read(), re.MULTILINE
+    ).group(1)
+
+if not version:
+    raise RuntimeError("Cannot find version information")
 
-setuptools.setup(
-    version=PACKAGE_INFO["VERSION"],
+setup(
+    name=PACKAGE_NAME,
+    version=version,
+    description="Microsoft {} Client Library for Python".format(
+        PACKAGE_PPRINT_NAME
+    ),
+    long_description=open("README.md", "r").read(),
+    long_description_content_type="text/markdown",
+    license="MIT License",
+    author="Microsoft Corporation",
+    author_email="ascl@microsoft.com",
+    url="https://github.com/microsoft/ApplicationInsights-Python/tree/main/azure-monitor-opentelemetry-distro",
+    classifiers=[
+        "Development Status :: 4 - Beta",
+        "Programming Language :: Python",
+        "Programming Language :: Python :: 3",
+        "Programming Language :: Python :: 3.7",
+        "Programming Language :: Python :: 3.8",
+        "Programming Language :: Python :: 3.9",
+        "Programming Language :: Python :: 3.10",
+        "Programming Language :: Python :: 3.11",
+        "License :: OSI Approved :: MIT License",
+    ],
+    zip_safe=False,
+    packages=find_packages(
+        exclude=[
+            "tests",
+            "samples",
+            # Exclude packages that will be covered by PEP420 or nspkg
+            "azure",
+            "azure.monitor",
+            "azure.monitor.opentelemetry",
+        ]
+    ),
+    include_package_data=True,
+    package_data={
+        "pytyped": ["py.typed"],
+    },
+    python_requires=">=3.7",
+    install_requires=[
+        "azure-monitor-opentelemetry-exporter>=1.0.0b11",
+        "opentelemetry-instrumentation~=0.35b0",
+        "opentelemetry-instrumentation-django~=0.35b0",
+        "opentelemetry-instrumentation-requests~=0.35b0",
+        "opentelemetry-instrumentation-flask~=0.35b0",
+        "opentelemetry-instrumentation-psycopg2~=0.35b0",
+    ],
+    entry_points={
+        "opentelemetry_distro": [
+            "azure_monitor_opentelemetry_distro = azure.monitor.opentelemetry.distro.distro:AzureMonitorDistro"
+        ],
+        "opentelemetry_configurator": [
+            "azure_monitor_opentelemetry_configurator = azure.monitor.opentelemetry.distro.configurator:AzureMonitorConfigurator"
+        ],
+    },
 )
diff --git a/tests/test_exporter.py b/azure-monitor-opentelemetry-distro/tests/exporter/test_exporter.py
similarity index 84%
rename from tests/test_exporter.py
rename to azure-monitor-opentelemetry-distro/tests/exporter/test_exporter.py
index f2963a07..21561ac5 100644
--- a/tests/test_exporter.py
+++ b/azure-monitor-opentelemetry-distro/tests/exporter/test_exporter.py
@@ -14,9 +14,11 @@
 
 import unittest
 
-from azure.monitor.opentelemetry.exporter import (AzureMonitorLogExporter,
-                                                  AzureMonitorMetricExporter,
-                                                  AzureMonitorTraceExporter)
+from azure.monitor.opentelemetry.exporter import (
+    AzureMonitorLogExporter,
+    AzureMonitorMetricExporter,
+    AzureMonitorTraceExporter,
+)
 
 
 class TestAzureMonitorExporters(unittest.TestCase):
diff --git a/azure-monitor-opentelemetry-distro/tests/test_flask.py b/azure-monitor-opentelemetry-distro/tests/instrumentation/test_flask.py
similarity index 63%
rename from azure-monitor-opentelemetry-distro/tests/test_flask.py
rename to azure-monitor-opentelemetry-distro/tests/instrumentation/test_flask.py
index 27601c76..4663c98e 100644
--- a/azure-monitor-opentelemetry-distro/tests/test_flask.py
+++ b/azure-monitor-opentelemetry-distro/tests/instrumentation/test_flask.py
@@ -1,3 +1,9 @@
+# -------------------------------------------------------------------------
+# Copyright (c) Microsoft Corporation. All rights reserved.
+# Licensed under the MIT License. See License in the project root for
+# license information.
+# --------------------------------------------------------------------------
+
 import unittest
 
 from opentelemetry.instrumentation.flask import FlaskInstrumentor
@@ -13,4 +19,3 @@ def test_instrument(self):
             self.fail(
                 f"Unexpected exception raised when instrumenting {FlaskInstrumentor.__name__}"
             )
-
diff --git a/azure-monitor-opentelemetry-distro/tests/test_psycopg2.py b/azure-monitor-opentelemetry-distro/tests/instrumentation/test_psycopg2.py
similarity index 60%
rename from azure-monitor-opentelemetry-distro/tests/test_psycopg2.py
rename to azure-monitor-opentelemetry-distro/tests/instrumentation/test_psycopg2.py
index 794be58c..63bcd7dc 100644
--- a/azure-monitor-opentelemetry-distro/tests/test_psycopg2.py
+++ b/azure-monitor-opentelemetry-distro/tests/instrumentation/test_psycopg2.py
@@ -1,3 +1,9 @@
+# -------------------------------------------------------------------------
+# Copyright (c) Microsoft Corporation. All rights reserved.
+# Licensed under the MIT License. See License in the project root for
+# license information.
+# --------------------------------------------------------------------------
+
 import unittest
 
 from opentelemetry.instrumentation.psycopg2 import Psycopg2Instrumentor
@@ -12,4 +18,3 @@ def test_instrument(self):
             self.fail(
                 f"Unexpected exception raised when instrumenting {Psycopg2Instrumentor.__name__}"
             )
-
diff --git a/azure-monitor-opentelemetry-distro/tests/test_requests.py b/azure-monitor-opentelemetry-distro/tests/instrumentation/test_requests.py
similarity index 60%
rename from azure-monitor-opentelemetry-distro/tests/test_requests.py
rename to azure-monitor-opentelemetry-distro/tests/instrumentation/test_requests.py
index 1328bf4b..3c9697d8 100644
--- a/azure-monitor-opentelemetry-distro/tests/test_requests.py
+++ b/azure-monitor-opentelemetry-distro/tests/instrumentation/test_requests.py
@@ -1,3 +1,9 @@
+# -------------------------------------------------------------------------
+# Copyright (c) Microsoft Corporation. All rights reserved.
+# Licensed under the MIT License. See License in the project root for
+# license information.
+# --------------------------------------------------------------------------
+
 import unittest
 
 from opentelemetry.instrumentation.requests import RequestsInstrumentor
@@ -12,4 +18,3 @@ def test_instrument(self):
             self.fail(
                 f"Unexpected exception raised when instrumenting {RequestsInstrumentor.__name__}"
             )
-
diff --git a/pyproject.toml b/pyproject.toml
new file mode 100644
index 00000000..7034b902
--- /dev/null
+++ b/pyproject.toml
@@ -0,0 +1,14 @@
+[tool.black]
+line-length = 79
+exclude = '''
+(
+  /(  # generated files
+    .github|
+    .tox|
+    .vscode|
+    venv|
+    .*/build/lib/.*|
+    scripts
+  )/
+)
+'''
diff --git a/tox.ini b/tox.ini
index 44223021..8e2f8937 100644
--- a/tox.ini
+++ b/tox.ini
@@ -25,8 +25,8 @@ commands_pre =
   python -m pip install -e {toxinidir}/azure-monitor-opentelemetry-distro
 
 commands =
-  black {toxinidir}
-  isort --recursive {toxinidir}
+  black --config pyproject.toml {toxinidir} --diff --check
+  isort --settings-path .isort.cfg {toxinidir} --diff --check-only
+  flake8 --config .flake8 {toxinidir}
   ; TODO
   ; pylint {toxinidir}
-  flake8 {toxinidir}