diff --git a/.gitignore b/.gitignore
index f644bb9182..4e9cf81029 100644
--- a/.gitignore
+++ b/.gitignore
@@ -1,3 +1,6 @@
+# See also nibabel/.gitignore for test data rules that
+# are meant to make you think before you `git add --force`
+
 # Editor temporary/working/backup files #
 #########################################
 .#*
@@ -36,23 +39,6 @@
 *.py[oc]
 *.so
 
-# Packages #
-############
-# it's better to unpack these files and commit the raw source
-# git has its own built in compression methods
-*.7z
-*.bz2
-*.bzip2
-*.dmg
-*.gz
-*.iso
-*.jar
-*.rar
-*.tar
-*.tbz2
-*.tgz
-*.zip
-
 # Python files #
 ################
 build/
@@ -65,12 +51,14 @@ dist/
 .coverage
 .ropeproject/
 htmlcov/
+.*_cache/
 
 # Logs and databases #
 ######################
 *.log
 *.sql
 *.sqlite
+*.sqlite3
 
 # OS generated files #
 ######################
diff --git a/nibabel/.gitignore b/nibabel/.gitignore
new file mode 100644
index 0000000000..a89322fea3
--- /dev/null
+++ b/nibabel/.gitignore
@@ -0,0 +1,16 @@
+# Packages #
+############
+# it's better to unpack these files and commit the raw source
+# git has its own built in compression methods
+*.7z
+*.bz2
+*.bzip2
+*.dmg
+*.gz
+*.iso
+*.jar
+*.rar
+*.tar
+*.tbz2
+*.tgz
+*.zip
diff --git a/nibabel/nicom/tests/test_dicomwrappers.py b/nibabel/nicom/tests/test_dicomwrappers.py
index 3efa7f3aab..62076c042a 100755
--- a/nibabel/nicom/tests/test_dicomwrappers.py
+++ b/nibabel/nicom/tests/test_dicomwrappers.py
@@ -622,12 +622,14 @@ def test_image_position(self):
         assert MFW(fake_mf).image_position.dtype == float
 
     @dicom_test
+    @pytest.mark.xfail(reason='Not packaged in install', raises=FileNotFoundError)
     def test_affine(self):
         # Make sure we find orientation/position/spacing info
         dw = didw.wrapper_from_file(DATA_FILE_4D)
         aff = dw.affine
 
     @dicom_test
+    @pytest.mark.xfail(reason='Not packaged in install', raises=FileNotFoundError)
     def test_data_real(self):
         # The data in this file is (initially) a 1D gradient so it compresses
         # well.  This just tests that the data ordering produces a consistent
diff --git a/pyproject.toml b/pyproject.toml
index 934dedec95..c5b6c35899 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -1,6 +1,6 @@
 [build-system]
-requires = ["setuptools", "setuptools_scm[toml]>=6.2"]
-build-backend = "setuptools.build_meta"
+requires = ["hatchling", "hatch-vcs"]
+build-backend = "hatchling.build"
 
 [project]
 name = "nibabel"
@@ -70,13 +70,22 @@ test = [
 ]
 zstd = ["pyzstd >= 0.14.3"]
 
-[tool.setuptools]
-platforms = ["OS Independent"]
-provides = ["nibabel", "nisext"]
-zip-safe = false
+[tool.hatch.build.targets.sdist]
+exclude = [".git_archival.txt"]
 
-[tool.setuptools.packages.find]
-include = ["nibabel*", "nisext*"]
+[tool.hatch.build.targets.wheel]
+packages = ["nibabel", "nisext"]
+exclude = [
+  # 56MB test file does not need to be installed everywhere
+  "nibabel/nicom/tests/data/4d_multiframe_test.dcm",
+]
+
+[tool.hatch.version]
+source = "vcs"
+raw-options = { version_scheme = "release-branch-semver" }
+
+[tool.hatch.build.hooks.vcs]
+version-file = "nibabel/_version.py"
 
 [tool.blue]
 line_length = 99
@@ -93,6 +102,3 @@ force-exclude = """
 profile = "black"
 line_length = 99
 extend_skip = ["_version.py", "externals"]
-
-[tool.setuptools_scm]
-write_to = "nibabel/_version.py"