diff --git a/bin/release.sh b/bin/release.sh
index 29502bd3b..d512c59a2 100755
--- a/bin/release.sh
+++ b/bin/release.sh
@@ -1,19 +1,22 @@
 #!/usr/bin/env bash
-#
+
+SCRIPT_PATH="${BASH_SOURCE[0]}"
+SCRIPT_DIR=`dirname $SCRIPT_PATH`
+cd $SCRIPT_DIR/..
 
 git reset --hard
-git submodule sync
-git submodule update --init
-git status -s | grep "." && ( echo "Contains unknown files" ; exit 1 )
 
-if [ "$1" = "release" ] ; then
-    sed -i -e 's/FINAL=False/FINAL=True/g' packstack/version.py
-    SNAPTAG=""
-else
-    SNAPTAG=$(git log --oneline | wc -l)
-    sed -i -e "s/SNAPTAG=None/SNAPTAG=${SNAPTAG}/g" packstack/version.py
+if [ -n "$1" ] ; then
+    git tag -a -m $1 $1
 fi
 
-python setup.py setopt -o tag_build -s "$SNAPTAG" -c egg_info
+VERSION=`python setup.py --version`
+
+sed -i -e "s/RESERVE_STR = None/RESERVE_STR = '$VERSION'/g" packstack/version.py
 python setup.py sdist
+
+if [ -n "$1" ] ; then
+    echo "Packstack was released with tag '$1'. Please don't forget to push tag upstream (git push --tags)."
+fi
+
 git checkout packstack/version.py
diff --git a/packstack/version.py b/packstack/version.py
index d1a0130ca..f7ce34bb4 100644
--- a/packstack/version.py
+++ b/packstack/version.py
@@ -1,14 +1,81 @@
+# -*- coding: utf-8 -*-
+
+import os
+import pkg_resources
+
+from .installer.utils import execute
+
+
+VERSION = ['2014', '2']
+OS_RELEASE = 'Juno'
+RESERVE_STR = None
+
+
+def vr_from_git():
+    """Returns VR string calculated from GIT repo."""
+    proj_dir = os.path.dirname(os.path.dirname(__file__))
+    rc, tag = execute(
+        'git describe --exact-match',
+        workdir=proj_dir,
+        use_shell=True,
+        can_fail=False,
+        log=False
+    )
+    if not rc:
+        # we are on tagged commit, so let's use the tag as VR string
+        return tag.strip()
+
+    rc, description = execute(
+        'git describe --always',
+        workdir=proj_dir,
+        use_shell=True,
+        log=False
+    )
+    if '-' in description:
+        # last tag has been found
+        tag, snap_tag, git_hash = description.split('-')
+    else:
+        # no tag has been found
+        rc, git_hash = execute(
+            'git log -n1 --pretty=format:%h',
+            workdir=proj_dir,
+            use_shell=True,
+            log=False
+        )
+        git_hash = 'g{0}'.format(git_hash)
+        rc, snap_tag = execute(
+            'git log --oneline | wc -l',
+            workdir=proj_dir,
+            use_shell=True,
+            log=False
+        )
+    return '{0}.dev{1}.{2}'.format(
+        '.'.join(VERSION),
+        snap_tag.strip(),
+        git_hash.strip(),
+    )
+
+
+def vr_from_setuptools():
+    """Returns VR string fetched from setuptools."""
+    requirement = pkg_resources.Requirement.parse('packstack')
+    provider = pkg_resources.get_provider(requirement)
+    return provider.version
 
-VERSION = ['2014', '1', '1']
-FINAL=False
-RELEASE="Icehouse"
-SNAPTAG=None
 
 def release_string():
-    return RELEASE
+    return OS_RELEASE
+
 
 def version_string():
-    if FINAL:
-        return '.'.join(filter(None, VERSION))
-    else:
-        return '.'.join(filter(None, VERSION))+"dev{0}".format(SNAPTAG)
+    try:
+        version = vr_from_git()
+    except Exception:
+        # Not a git repo, so get version from setuptools
+        try:
+            version = vr_from_setuptools()
+        except Exception:
+            # In case of problem with setuptools, return version
+            # saved by release.sh or VERSION if nothing was saved
+            version = RESERVE_STR if RESERVE_STR else '.'.join(VERSION)
+    return version