diff --git a/compat/sass_test.rb b/compat/sass_test.rb
index ee6d4f41..1b9745cc 100644
--- a/compat/sass_test.rb
+++ b/compat/sass_test.rb
@@ -52,6 +52,16 @@ context "Sass" do
       body.should.equal "#sass {\n  background_color: #FFF; }\n"
     end
 
+    it "passes :sass option to the Sass engine" do
+      get '/' do
+        sass "#sass\n  :background-color #FFF\n  :color #000\n", :sass => {:style => :compact}
+      end
+
+      get_it '/'
+      should.be.ok
+      body.should.equal "#sass { background-color: #FFF; color: #000; }\n"
+    end
+
   end
 
 end
diff --git a/lib/sinatra/base.rb b/lib/sinatra/base.rb
index 44a6628f..07f2141a 100644
--- a/lib/sinatra/base.rb
+++ b/lib/sinatra/base.rb
@@ -232,53 +232,60 @@ module Sinatra
   #   :locals       A hash with local variables that should be available
   #                 in the template
   module Templates
-    def erb(template, options={})
+    def erb(template, options={}, locals={})
       require 'erb' unless defined? ::ERB
-      render :erb, template, options
+      render :erb, template, options, locals
     end
 
-    def haml(template, options={})
+    def haml(template, options={}, locals={})
       require 'haml' unless defined? ::Haml::Engine
-      opts = options[:haml_options] || options.delete(:options) || {}
-      opts = self.class.haml.merge(opts) if self.class.respond_to?(:haml)
-      options[:haml_options] = opts
-      render :haml, template, options
+      render :haml, template, options, locals
     end
 
-    def sass(template, options={}, &block)
+    def sass(template, options={}, locals={})
       require 'sass' unless defined? ::Sass::Engine
-      opts = options[:sass_options] || options.delete(:sass) || {}
-      opts = self.class.sass.merge(opts) if self.class.respond_to?(:sass)
-      options.merge! :layout => false, :sass_options => opts
-      render :sass, template, options
+      options[:layout] = false
+      render :sass, template, options, locals
     end
 
-    def builder(template=nil, options={}, &block)
+    def builder(template=nil, options={}, locals={}, &block)
       require 'builder' unless defined? ::Builder
       options, template = template, nil if template.is_a?(Hash)
       template = lambda { block } if template.nil?
-      render :builder, template, options
+      render :builder, template, options, locals
     end
 
   private
-    def render(engine, template, options={}) #:nodoc:
-      data   = lookup_template(engine, template, options)
-      output = __send__("render_#{engine}", template, data, options)
-      layout, data = lookup_layout(engine, options)
-      if layout
-        __send__("render_#{engine}", layout, data, options) { output }
+    def render(engine, template, options={}, locals={})
+      # merge app-level options
+      options = self.class.send(engine).merge(options) if self.class.respond_to?(engine)
+
+      # extract generic options
+      layout = options.delete(:layout)
+      layout = :layout if layout.nil? || layout == true
+      views = options.delete(:views) || self.class.views || "./views"
+      locals = options.delete(:locals) || locals || {}
+
+      # render template
+      data   = lookup_template(engine, template, views)
+      output = __send__("render_#{engine}", template, data, options, locals)
+
+      # render layout
+      if layout && data = lookup_layout(engine, layout, views)
+        __send__("render_#{engine}", layout, data, options, {}) { output }
       else
         output
       end
     end
 
-    def lookup_template(engine, template, options={})
+    def lookup_template(engine, template, views_dir)
       case template
       when Symbol
         if cached = self.class.templates[template]
-          lookup_template(engine, cached, options)
+          lookup_template(engine, cached, views_dir)
         else
-          ::File.read(template_path(engine, template, options))
+          path = ::File.join(views_dir, "#{template}.#{engine}")
+          ::File.read(path)
         end
       when Proc
         template.call
@@ -289,28 +296,17 @@ module Sinatra
       end
     end
 
-    def lookup_layout(engine, options)
-      return if options[:layout] == false
-      options.delete(:layout) if options[:layout] == true
-      template = options[:layout] || :layout
-      data     = lookup_template(engine, template, options)
-      [template, data]
+    def lookup_layout(engine, template, views_dir)
+      lookup_template(engine, template, views_dir)
     rescue Errno::ENOENT
       nil
     end
 
-    def template_path(engine, template, options={})
-      views_dir =
-        options[:views_directory] || self.options.views || "./views"
-      "#{views_dir}/#{template}.#{engine}"
-    end
-
-    def render_erb(template, data, options, &block)
+    def render_erb(template, data, options, locals, &block)
       original_out_buf = @_out_buf
       data = data.call if data.kind_of? Proc
 
       instance = ::ERB.new(data, nil, nil, '@_out_buf')
-      locals = options[:locals] || {}
       locals_assigns = locals.to_a.collect { |k,v| "#{k} = locals[:#{k}]" }
 
       src = "#{locals_assigns.join("\n")}\n#{instance.src}"
@@ -319,18 +315,17 @@ module Sinatra
       result
     end
 
-    def render_haml(template, data, options, &block)
-      engine = ::Haml::Engine.new(data, options[:haml_options] || {})
-      engine.render(self, options[:locals] || {}, &block)
+    def render_haml(template, data, options, locals, &block)
+      ::Haml::Engine.new(data, options).render(self, locals, &block)
     end
 
-    def render_sass(template, data, options, &block)
-      engine = ::Sass::Engine.new(data, options[:sass_options] || {})
-      engine.render
+    def render_sass(template, data, options, locals, &block)
+      ::Sass::Engine.new(data, options).render
     end
 
-    def render_builder(template, data, options, &block)
-      xml = ::Builder::XmlMarkup.new(:indent => 2)
+    def render_builder(template, data, options, locals, &block)
+      options = { :indent => 2 }.merge(options)
+      xml = ::Builder::XmlMarkup.new(options)
       if data.respond_to?(:to_str)
         eval data.to_str, binding, '<BUILDER>', 1
       elsif data.kind_of?(Proc)
diff --git a/lib/sinatra/compat.rb b/lib/sinatra/compat.rb
index 6961996a..b0ebd38f 100644
--- a/lib/sinatra/compat.rb
+++ b/lib/sinatra/compat.rb
@@ -115,6 +115,22 @@ module Sinatra
       halt data
     end
 
+    # The :views_directory, :options, :haml, and :sass options are deprecated.
+    def render(engine, template, options={}, locals={}, &bk)
+      if options.key?(:views_directory)
+        sinatra_warn "The :views_directory option is deprecated; use :views instead."
+        options[:views] = options.delete(:views_directory)
+      end
+      [:options, engine.to_sym].each do |key|
+        if options.key?(key)
+          sinatra_warn "Passing :#{key} => {} to #{engine} is deprecated; " +
+                       "merge options directly into hash instead."
+          options.merge! options.delete(key)
+        end
+      end
+      super(engine, template, options, locals, &bk)
+    end
+
     # Throwing halt with a Symbol and the to_result convention are
     # deprecated. Override the invoke method to detect those types of return
     # values.
diff --git a/test/haml_test.rb b/test/haml_test.rb
index 1251af8b..d5eff528 100644
--- a/test/haml_test.rb
+++ b/test/haml_test.rb
@@ -49,18 +49,12 @@ describe "HAML Templates" do
   it "passes HAML options to the Haml engine" do
     mock_app {
       get '/' do
-        haml "!!!\n%h1 Hello World", :haml_options => {:format => :html5}
-      end
-      get '/backwards_compatible' do
-        haml "!!!\n%h1 Hello World", :options => {:format => :html4}
+        haml "!!!\n%h1 Hello World", :format => :html5
       end
     }
     get '/'
     assert ok?
     assert_equal "<!DOCTYPE html>\n<h1>Hello World</h1>\n", body
-    get '/backwards_compatible'
-    assert ok?
-    assert_match(/^<!DOCTYPE html PUBLIC (.*) HTML 4.01/, body)
   end
 
   it "passes default HAML options to the Haml engine" do
@@ -82,7 +76,7 @@ describe "HAML Templates" do
         haml "!!!\n%h1{:class => :header} Hello World"
       end
       get '/html4' do
-        haml "!!!\n%h1{:class => 'header'} Hello World", :haml_options => {:format => :html4}
+        haml "!!!\n%h1{:class => 'header'} Hello World", :format => :html4
       end
     }
     get '/'
diff --git a/test/sass_test.rb b/test/sass_test.rb
index 6c46c3ac..25875e3e 100644
--- a/test/sass_test.rb
+++ b/test/sass_test.rb
@@ -36,15 +36,7 @@ describe "Sass Templates" do
 
   it "passes SASS options to the Sass engine" do
     sass_app {
-      sass "#sass\n  :background-color #FFF\n  :color #000\n", :sass_options => {:style => :compact}
-    }
-    assert ok?
-    assert_equal "#sass { background-color: #FFF; color: #000; }\n", body
-  end
-
-  it "passes backwards compatible SASS options to the Sass engine" do
-    sass_app {
-      sass "#sass\n  :background-color #FFF\n  :color #000\n", :sass => {:style => :compact}
+      sass "#sass\n  :background-color #FFF\n  :color #000\n", :style => :compact
     }
     assert ok?
     assert_equal "#sass { background-color: #FFF; color: #000; }\n", body
@@ -52,7 +44,7 @@ describe "Sass Templates" do
 
   it "passes default SASS options to the Sass engine" do
     mock_app {
-      set :sass, {:style => :compact } # default Sass style is :nested
+      set :sass, {:style => :compact} # default Sass style is :nested
       get '/' do
         sass "#sass\n  :background-color #FFF\n  :color #000\n"
       end
@@ -69,10 +61,10 @@ describe "Sass Templates" do
         sass "#sass\n  background-color: #FFF\n  color: #000\n"
       end
       get '/raised' do
-        sass "#sass\n  :background-color #FFF\n  :color #000\n", :sass_options => {:style => :expanded } # retains global attribute_syntax settings
+        sass "#sass\n  :background-color #FFF\n  :color #000\n", :style => :expanded # retains global attribute_syntax settings
       end
       get '/expanded_normal' do
-        sass "#sass\n  :background-color #FFF\n  :color #000\n", :sass_options => {:style => :expanded, :attribute_syntax => :normal }
+        sass "#sass\n  :background-color #FFF\n  :color #000\n", :style => :expanded, :attribute_syntax => :normal
       end
     }
     get '/'
@@ -82,6 +74,5 @@ describe "Sass Templates" do
     get '/expanded_normal'
     assert ok?
     assert_equal "#sass {\n  background-color: #FFF;\n  color: #000;\n}\n", body
-
   end
 end
diff --git a/test/templates_test.rb b/test/templates_test.rb
index 92443448..5ef9a1cb 100644
--- a/test/templates_test.rb
+++ b/test/templates_test.rb
@@ -3,7 +3,7 @@ require File.dirname(__FILE__) + '/helper'
 describe 'Templating' do
   def render_app(&block)
     mock_app {
-      def render_test(template, data, options, &block)
+      def render_test(template, data, options, locals, &block)
         inner = block ? block.call : ''
         data + inner
       end