diff --git a/Doc/faq/programming.rst b/Doc/faq/programming.rst
--- a/Doc/faq/programming.rst
+++ b/Doc/faq/programming.rst
@@ -1631,16 +1631,18 @@
 How do I create a .pyc file?
 ----------------------------
 
-When a module is imported for the first time (or when the source is more recent
-than the current compiled file) a ``.pyc`` file containing the compiled code
-should be created in the same directory as the ``.py`` file.
+When a module is imported for the first time (or when the source file has
+changed since the current compiled file was created) a ``.pyc`` file containing
+the compiled code should be created in the ``__pycache__`` directory, relative
+to the directory containing the ``.py`` file.
 
-One reason that a ``.pyc`` file may not be created is permissions problems with
-the directory. This can happen, for example, if you develop as one user but run
-as another, such as if you are testing with a web server.  Creation of a .pyc
-file is automatic if you're importing a module and Python has the ability
-(permissions, free space, etc...) to write the compiled module back to the
-directory.
+One reason that a ``.pyc`` file may not be created is a permissions problem
+with the directory containing the source file, meaning that the
+``__pycache__`` directory cannot be created. This can happen, for example, if
+you develop as one user but run as another, such as if you are testing with a
+web server. Creation of a .pyc file is automatic if you're importing a module
+and Python has the ability (permissions, free space, etc...) to create a
+``__pycache__`` directory and write the compiled module to that directory.
 
 Running Python on a top level script is not considered an import and no
 ``.pyc`` will be created.  For example, if you have a top-level module
@@ -1658,8 +1660,9 @@
    >>> import py_compile
    >>> py_compile.compile('foo.py')                 # doctest: +SKIP
 
-This will write the ``.pyc`` to the same location as ``foo.py`` (or you can
-override that with the optional parameter ``cfile``).
+This will write the ``.pyc`` to the ``__pycache__`` directory in the same
+location as ``foo.py`` (or you can override that with the optional parameter
+``cfile``).
 
 You can also automatically compile all files in a directory or directories using
 the :mod:`compileall` module.  You can do it from the shell prompt by running