diff --git a/Doc/library/compileall.rst b/Doc/library/compileall.rst
index 7b3963d..5151f3a 100644
--- a/Doc/library/compileall.rst
+++ b/Doc/library/compileall.rst
@@ -85,13 +85,16 @@
 
 .. cmdoption:: --invalidation-mode [timestamp|checked-hash|unchecked-hash]
 
-   Control how the generated pycs will be invalidated at runtime. The default
-   setting, ``timestamp``, means that ``.pyc`` files with the source timestamp
+   Control how the generated byte-code files are invalidated at runtime.
+   The ``timestamp`` value, means that ``.pyc`` files with the source timestamp
    and size embedded will be generated. The ``checked-hash`` and
    ``unchecked-hash`` values cause hash-based pycs to be generated. Hash-based
    pycs embed a hash of the source file contents rather than a timestamp. See
-   :ref:`pyc-invalidation` for more information on how Python validates bytecode
-   cache files at runtime.
+   :ref:`pyc-invalidation` for more information on how Python validates
+   bytecode cache files at runtime.
+   The default is ``timestamp`` if the :envvar:`SOURCE_DATE_EPOCH` environment
+   variable is not set, and ``checked-hash`` if the ``SOURCE_DATE_EPOCH``
+   environment variable is set.
 
 .. versionchanged:: 3.2
    Added the ``-i``, ``-b`` and ``-h`` options.
diff --git a/Doc/library/py_compile.rst b/Doc/library/py_compile.rst
index d720e01..8cb5a4d 100644
--- a/Doc/library/py_compile.rst
+++ b/Doc/library/py_compile.rst
@@ -54,10 +54,10 @@
    level of the current interpreter.
 
    *invalidation_mode* should be a member of the :class:`PycInvalidationMode`
-   enum and controls how the generated ``.pyc`` files are invalidated at
-   runtime. If the :envvar:`SOURCE_DATE_EPOCH` environment variable is set,
-   *invalidation_mode* will be forced to
-   :attr:`PycInvalidationMode.CHECKED_HASH`.
+   enum and controls how the generated bytecode cache is invalidated at
+   runtime.  The default is :attr:`PycInvalidationMode.CHECKED_HASH` if
+   the :envvar:`SOURCE_DATE_EPOCH` environment variable is set, otherwise
+   the default is :attr:`PycInvalidationMode.TIMESTAMP`.
 
    .. versionchanged:: 3.2
       Changed default value of *cfile* to be :PEP:`3147`-compliant.  Previous
@@ -77,6 +77,11 @@
       *invalidation_mode* will be forced to
       :attr:`PycInvalidationMode.CHECKED_HASH`.
 
+   .. versionchanged:: 3.7.2
+      The :envvar:`SOURCE_DATE_EPOCH` environment variable no longer
+      overrides the value of the *invalidation_mode* argument, and determines
+      its default value instead.
+
 
 .. class:: PycInvalidationMode
 
diff --git a/Lib/compileall.py b/Lib/compileall.py
index 40b148d..aa65c6b 100644
--- a/Lib/compileall.py
+++ b/Lib/compileall.py
@@ -49,7 +49,7 @@
 
 def compile_dir(dir, maxlevels=10, ddir=None, force=False, rx=None,
                 quiet=0, legacy=False, optimize=-1, workers=1,
-                invalidation_mode=py_compile.PycInvalidationMode.TIMESTAMP):
+                invalidation_mode=None):
     """Byte-compile all modules in the given directory tree.
 
     Arguments (only dir is required):
@@ -100,7 +100,7 @@
 
 def compile_file(fullname, ddir=None, force=False, rx=None, quiet=0,
                  legacy=False, optimize=-1,
-                 invalidation_mode=py_compile.PycInvalidationMode.TIMESTAMP):
+                 invalidation_mode=None):
     """Byte-compile one file.
 
     Arguments (only fullname is required):
@@ -186,7 +186,7 @@
 
 def compile_path(skip_curdir=1, maxlevels=0, force=False, quiet=0,
                  legacy=False, optimize=-1,
-                 invalidation_mode=py_compile.PycInvalidationMode.TIMESTAMP):
+                 invalidation_mode=None):
     """Byte-compile all module on sys.path.
 
     Arguments (all optional):
@@ -259,9 +259,12 @@
                         type=int, help='Run compileall concurrently')
     invalidation_modes = [mode.name.lower().replace('_', '-')
                           for mode in py_compile.PycInvalidationMode]
-    parser.add_argument('--invalidation-mode', default='timestamp',
+    parser.add_argument('--invalidation-mode',
                         choices=sorted(invalidation_modes),
-                        help='How the pycs will be invalidated at runtime')
+                        help=('set .pyc invalidation mode; defaults to '
+                              '"checked-hash" if the SOURCE_DATE_EPOCH '
+                              'environment variable is set, and '
+                              '"timestamp" otherwise.'))
 
     args = parser.parse_args()
     compile_dests = args.compile_dest
@@ -290,8 +293,11 @@
     if args.workers is not None:
         args.workers = args.workers or None
 
-    ivl_mode = args.invalidation_mode.replace('-', '_').upper()
-    invalidation_mode = py_compile.PycInvalidationMode[ivl_mode]
+    if args.invalidation_mode:
+        ivl_mode = args.invalidation_mode.replace('-', '_').upper()
+        invalidation_mode = py_compile.PycInvalidationMode[ivl_mode]
+    else:
+        invalidation_mode = None
 
     success = True
     try:
diff --git a/Lib/py_compile.py b/Lib/py_compile.py
index 16dc0a0..8e9dd57 100644
--- a/Lib/py_compile.py
+++ b/Lib/py_compile.py
@@ -69,8 +69,15 @@
     UNCHECKED_HASH = 3
 
 
+def _get_default_invalidation_mode():
+    if os.environ.get('SOURCE_DATE_EPOCH'):
+        return PycInvalidationMode.CHECKED_HASH
+    else:
+        return PycInvalidationMode.TIMESTAMP
+
+
 def compile(file, cfile=None, dfile=None, doraise=False, optimize=-1,
-            invalidation_mode=PycInvalidationMode.TIMESTAMP):
+            invalidation_mode=None):
     """Byte-compile one Python source file to Python bytecode.
 
     :param file: The source file name.
@@ -112,8 +119,8 @@
     the resulting file would be regular and thus not the same type of file as
     it was previously.
     """
-    if os.environ.get('SOURCE_DATE_EPOCH'):
-        invalidation_mode = PycInvalidationMode.CHECKED_HASH
+    if invalidation_mode is None:
+        invalidation_mode = _get_default_invalidation_mode()
     if cfile is None:
         if optimize >= 0:
             optimization = optimize if optimize >= 1 else ''
diff --git a/Lib/test/test_compileall.py b/Lib/test/test_compileall.py
index 2995e08..2e25523 100644
--- a/Lib/test/test_compileall.py
+++ b/Lib/test/test_compileall.py
@@ -22,7 +22,11 @@
 from test import support
 from test.support import script_helper
 
-class CompileallTests(unittest.TestCase):
+from .test_py_compile import without_source_date_epoch
+from .test_py_compile import SourceDateEpochTestMeta
+
+
+class CompileallTestsBase:
 
     def setUp(self):
         self.directory = tempfile.mkdtemp()
@@ -46,7 +50,7 @@
         with open(self.bad_source_path, 'w') as file:
             file.write('x (\n')
 
-    def data(self):
+    def timestamp_metadata(self):
         with open(self.bc_path, 'rb') as file:
             data = file.read(12)
         mtime = int(os.stat(self.source_path).st_mtime)
@@ -57,16 +61,18 @@
     def recreation_check(self, metadata):
         """Check that compileall recreates bytecode when the new metadata is
         used."""
+        if os.environ.get('SOURCE_DATE_EPOCH'):
+            raise unittest.SkipTest('SOURCE_DATE_EPOCH is set')
         py_compile.compile(self.source_path)
-        self.assertEqual(*self.data())
+        self.assertEqual(*self.timestamp_metadata())
         with open(self.bc_path, 'rb') as file:
             bc = file.read()[len(metadata):]
         with open(self.bc_path, 'wb') as file:
             file.write(metadata)
             file.write(bc)
-        self.assertNotEqual(*self.data())
+        self.assertNotEqual(*self.timestamp_metadata())
         compileall.compile_dir(self.directory, force=False, quiet=True)
-        self.assertTrue(*self.data())
+        self.assertTrue(*self.timestamp_metadata())
 
     def test_mtime(self):
         # Test a change in mtime leads to a new .pyc.
@@ -189,6 +195,21 @@
         compileall.compile_dir(self.directory, quiet=True, workers=5)
         self.assertTrue(compile_file_mock.called)
 
+
+class CompileallTestsWithSourceEpoch(CompileallTestsBase,
+                                     unittest.TestCase,
+                                     metaclass=SourceDateEpochTestMeta,
+                                     source_date_epoch=True):
+    pass
+
+
+class CompileallTestsWithoutSourceEpoch(CompileallTestsBase,
+                                        unittest.TestCase,
+                                        metaclass=SourceDateEpochTestMeta,
+                                        source_date_epoch=False):
+    pass
+
+
 class EncodingTest(unittest.TestCase):
     """Issue 6716: compileall should escape source code when printing errors
     to stdout."""
@@ -212,7 +233,7 @@
             sys.stdout = orig_stdout
 
 
-class CommandLineTests(unittest.TestCase):
+class CommandLineTestsBase:
     """Test compileall's CLI."""
 
     @classmethod
@@ -285,6 +306,7 @@
         self.assertNotCompiled(self.initfn)
         self.assertNotCompiled(self.barfn)
 
+    @without_source_date_epoch  # timestamp invalidation test
     def test_no_args_respects_force_flag(self):
         self._skip_if_sys_path_not_writable()
         bazfn = script_helper.make_script(self.directory, 'baz', '')
@@ -353,6 +375,7 @@
         self.assertTrue(os.path.exists(self.pkgdir_cachedir))
         self.assertFalse(os.path.exists(cachecachedir))
 
+    @without_source_date_epoch  # timestamp invalidation test
     def test_force(self):
         self.assertRunOK('-q', self.pkgdir)
         pycpath = importlib.util.cache_from_source(self.barfn)
@@ -556,5 +579,20 @@
             self.assertEqual(compile_dir.call_args[-1]['workers'], None)
 
 
+class CommmandLineTestsWithSourceEpoch(CommandLineTestsBase,
+                                       unittest.TestCase,
+                                       metaclass=SourceDateEpochTestMeta,
+                                       source_date_epoch=True):
+    pass
+
+
+class CommmandLineTestsNoSourceEpoch(CommandLineTestsBase,
+                                     unittest.TestCase,
+                                     metaclass=SourceDateEpochTestMeta,
+                                     source_date_epoch=False):
+    pass
+
+
+
 if __name__ == "__main__":
     unittest.main()
diff --git a/Lib/test/test_importlib/source/test_file_loader.py b/Lib/test/test_importlib/source/test_file_loader.py
index cc80f26..c916d7c 100644
--- a/Lib/test/test_importlib/source/test_file_loader.py
+++ b/Lib/test/test_importlib/source/test_file_loader.py
@@ -19,6 +19,9 @@
 
 from test.support import make_legacy_pyc, unload
 
+from test.test_py_compile import without_source_date_epoch
+from test.test_py_compile import SourceDateEpochTestMeta
+
 
 class SimpleTest(abc.LoaderTests):
 
@@ -359,6 +362,17 @@
                     abc=importlib_abc, util=importlib_util)
 
 
+class SourceDateEpochTestMeta(SourceDateEpochTestMeta,
+                              type(Source_SimpleTest)):
+    pass
+
+
+class SourceDateEpoch_SimpleTest(Source_SimpleTest,
+                                 metaclass=SourceDateEpochTestMeta,
+                                 source_date_epoch=True):
+    pass
+
+
 class BadBytecodeTest:
 
     def import_(self, file, module_name):
@@ -617,6 +631,7 @@
 
     # [bad timestamp]
     @util.writes_bytecode_files
+    @without_source_date_epoch
     def test_old_timestamp(self):
         # When the timestamp is older than the source, bytecode should be
         # regenerated.
diff --git a/Lib/test/test_py_compile.py b/Lib/test/test_py_compile.py
index 8fc0b33..f86abe2 100644
--- a/Lib/test/test_py_compile.py
+++ b/Lib/test/test_py_compile.py
@@ -1,3 +1,4 @@
+import functools
 import importlib.util
 import os
 import py_compile
@@ -10,7 +11,44 @@
 from test import support
 
 
-class PyCompileTests(unittest.TestCase):
+def without_source_date_epoch(fxn):
+    """Runs function with SOURCE_DATE_EPOCH unset."""
+    @functools.wraps(fxn)
+    def wrapper(*args, **kwargs):
+        with support.EnvironmentVarGuard() as env:
+            env.unset('SOURCE_DATE_EPOCH')
+            return fxn(*args, **kwargs)
+    return wrapper
+
+
+def with_source_date_epoch(fxn):
+    """Runs function with SOURCE_DATE_EPOCH set."""
+    @functools.wraps(fxn)
+    def wrapper(*args, **kwargs):
+        with support.EnvironmentVarGuard() as env:
+            env['SOURCE_DATE_EPOCH'] = '123456789'
+            return fxn(*args, **kwargs)
+    return wrapper
+
+
+# Run tests with SOURCE_DATE_EPOCH set or unset explicitly.
+class SourceDateEpochTestMeta(type(unittest.TestCase)):
+    def __new__(mcls, name, bases, dct, *, source_date_epoch):
+        cls = super().__new__(mcls, name, bases, dct)
+
+        for attr in dir(cls):
+            if attr.startswith('test_'):
+                meth = getattr(cls, attr)
+                if source_date_epoch:
+                    wrapper = with_source_date_epoch(meth)
+                else:
+                    wrapper = without_source_date_epoch(meth)
+                setattr(cls, attr, wrapper)
+
+        return cls
+
+
+class PyCompileTestsBase:
 
     def setUp(self):
         self.directory = tempfile.mkdtemp()
@@ -99,16 +137,18 @@
             importlib.util.cache_from_source(bad_coding)))
 
     def test_source_date_epoch(self):
-        testtime = 123456789
-        with support.EnvironmentVarGuard() as env:
-            env["SOURCE_DATE_EPOCH"] = str(testtime)
-            py_compile.compile(self.source_path, self.pyc_path)
+        py_compile.compile(self.source_path, self.pyc_path)
         self.assertTrue(os.path.exists(self.pyc_path))
         self.assertFalse(os.path.exists(self.cache_path))
         with open(self.pyc_path, 'rb') as fp:
             flags = importlib._bootstrap_external._classify_pyc(
                 fp.read(), 'test', {})
-        self.assertEqual(flags, 0b11)
+        if os.environ.get('SOURCE_DATE_EPOCH'):
+            expected_flags = 0b11
+        else:
+            expected_flags = 0b00
+
+        self.assertEqual(flags, expected_flags)
 
     @unittest.skipIf(sys.flags.optimize > 0, 'test does not work with -O')
     def test_double_dot_no_clobber(self):
@@ -153,5 +193,19 @@
         self.assertEqual(flags, 0b1)
 
 
+class PyCompileTestsWithSourceEpoch(PyCompileTestsBase,
+                                    unittest.TestCase,
+                                    metaclass=SourceDateEpochTestMeta,
+                                    source_date_epoch=True):
+    pass
+
+
+class PyCompileTestsWithoutSourceEpoch(PyCompileTestsBase,
+                                       unittest.TestCase,
+                                       metaclass=SourceDateEpochTestMeta,
+                                       source_date_epoch=False):
+    pass
+
+
 if __name__ == "__main__":
     unittest.main()
diff --git a/Misc/NEWS.d/next/Library/2018-09-27-13-14-15.bpo-34022.E2cl0r.rst b/Misc/NEWS.d/next/Library/2018-09-27-13-14-15.bpo-34022.E2cl0r.rst
new file mode 100644
index 0000000..efebb84
--- /dev/null
+++ b/Misc/NEWS.d/next/Library/2018-09-27-13-14-15.bpo-34022.E2cl0r.rst
@@ -0,0 +1,3 @@
+The :envvar:`SOURCE_DATE_EPOCH` environment variable no longer overrides the
+value of the *invalidation_mode* argument to :func:`py_compile.compile`, and
+determines its default value instead.