diff --git a/icu4c/source/data/Makefile.in b/icu4c/source/data/Makefile.in
index d89ade911e5..1b5820ca1e7 100644
--- a/icu4c/source/data/Makefile.in
+++ b/icu4c/source/data/Makefile.in
@@ -497,6 +497,23 @@ $(BUILDDIR)/%.res: $(LOCSRCDIR)/%.txt $(BINDIR)/genrb$(EXEEXT) $(DAT_FILES)
 $(BUILDDIR)/%.res: $(MISCSRCDIR)/%.txt $(BINDIR)/genrb$(EXEEXT)
 	$(INVOKE) $(BINDIR)/genrb $(GENRBOPTS) -q -i $(BUILDDIR) -s $(MISCSRCDIR) -d $(BUILDDIR) $(<F)
 
+# if the 'in' directory contains a new tzdata*.tar.gz file, use it for zoneinfo.txt
+TZDATA = $(firstword $(wildcard $(srcdir)/in/tzdata*.tar.gz))
+ifneq ($(TZDATA),)
+$(MISCSRCDIR)/zoneinfo.txt: $(TZDATA)
+	@echo "******* Updating zoneinfo.txt from $(TZDATA) ..."
+	cd $(top_builddir) \
+	&& CONFIG_FILES=tools/tzcode/Makefile CONFIG_HEADERS= $(SHELL) ./config.status
+	cp $(TZDATA) $(top_builddir)/tools/tzcode
+	gunzip -d < $(TZDATA) | ( cd $(top_builddir)/tools/tzcode ; tar xf - )
+	$(MAKE) -C $(top_builddir)/tools/tzcode  icu_data
+	mv $(top_builddir)/tools/tzcode/zoneinfo.txt $@
+	$(MAKE) -C $(top_builddir)/tools/tzcode  dataclean
+	$(RMV) $(top_builddir)/tools/tzcode/tzdata*.tar.gz
+	@echo "******* Done building $@ from $< **********"
+endif
+
+
 $(OUTTMPDIR)/$(INDEX_NAME).txt: $(SRCLISTDEPS)
 	@echo "generating $@ (list of installed locales)"; \
 	$(RMV) $@; \
diff --git a/icu4c/source/tools/tzcode/Makefile.in b/icu4c/source/tools/tzcode/Makefile.in
index 5d62f57a8db..6dff8fe1017 100644
--- a/icu4c/source/tools/tzcode/Makefile.in
+++ b/icu4c/source/tools/tzcode/Makefile.in
@@ -8,9 +8,10 @@ top_builddir = ../..
 
 include ../../icudefs.mk
 
+
+
 TZCOBJS= zic.o localtime.o asctime.o scheck.o ialloc.o
 
-CFLAGS+=-D_POSIX_C_SOURCE
 
 PRIMARY_YDATA=	africa antarctica asia australasia \
 		europe northamerica southamerica
@@ -18,20 +19,28 @@ YDATA=		$(PRIMARY_YDATA) pacificnew etcetera factory backward
 NDATA=		systemv
 SDATA=		solar87 solar88 solar89
 TDATA=		$(YDATA) $(NDATA) $(SDATA)
+YEARISTYPE=     ./yearistype
+
+ZIC = ./zic
+TZDIR=zoneinfo
+
+CFLAGS+=-D_POSIX_C_SOURCE
+CPPFLAGS+= -DTZDIR=\"$(TZDIR)\"
 
 # more data
 XDATA=zone.tab yearistype.sh leapseconds iso3166.tab
 ICUDATA=ZoneMetaData.java icu_zone.txt tz2icu zoneinfo.txt
 
-all:	tz2icu zic
-	@echo use $(MAKE) icu_data to build icu data
+all:
+	@echo This code is intended to be run by the icu/source/data makefile only.
+	false
 
 
 zic:		$(TZCOBJS) yearistype tz2icu.h
 		$(CC) $(CFLAGS) $(LFLAGS) $(TZCOBJS) $(LDLIBS) -o $@
 
 tz2icu:		tz2icu.cpp tz2icu.h
-		$(CPP) -W -Wall -pedantic tz2icu.cpp -o $@
+		$(CXX) -W -Wall -pedantic tz2icu.cpp -o $@
 
 yearistype:	yearistype.sh
 		cp yearistype.sh yearistype
@@ -42,13 +51,13 @@ posix_only:	zic $(TDATA)
 
 
 icu_data:	tz2icu posix_only
-		./tz2icu zoneinfo zone.tab `ls tzdata*.tar.gz | sed -e "s/^tzdata//;s/\.tar\.gz$$//"`
+		./tz2icu $(TZDIR) zone.tab `ls tzdata*.tar.gz | sed -e "s/^tzdata//;s/\.tar\.gz$$//"`
 
 clean:
-		-rm -f core *.o *.out tzselect zdump zic yearistype date
+		-rm -f core *.o *.out zdump zic yearistype date
 		@echo ICU specific cleanup:
 		-rm -f $(ICUDATA) 
-		-rm -rf zoneinfo
+		-rm -rf $(TZDIR)
 
 dataclean: clean
 	-rm -f $(TDATA) $(XDATA)
diff --git a/icu4c/source/tools/tzcode/readme.txt b/icu4c/source/tools/tzcode/readme.txt
index 6f4cf7b1cd2..c6b09e09e57 100644
--- a/icu4c/source/tools/tzcode/readme.txt
+++ b/icu4c/source/tools/tzcode/readme.txt
@@ -9,7 +9,6 @@
 
 Note:  this directory currently contains tzcode as of tzcode2006h.tar.gz
 
-
 ----------------------------------------------------------------------
 OVERVIEW
 
@@ -59,47 +58,29 @@ several parts.  E.g.:
   tzcode2003a.tar.gz      98 KB        3/24/2003     2:32:00 PM
   tzdata2003a.tar.gz      132 KB       3/24/2003     2:32:00 PM
 
-ICU only uses the tzcodeYYYYV.tar.gz and tzdataYYYYV.tar.gz files,
+ICU only uses the tzdataYYYYV.tar.gz files,
 where YYYY is the year and V is the version letter ('a'...'z').
 
+This directory has partial contents of tzcode checked into ICU
+
 ----------------------------------------------------------------------
 HOWTO
 
-0. Generate Makefile
-
-        ( cd ../.. ; CONFIG_FILES=tools/tzcode/Makefile CONFIG_HEADERS= sh config.status )
+0. Note, these instructions will only work on POSIX type systems.
 
 1. Obtain the current versions of tzdataYYYYV.tar.gz (aka `tzdata') from the FTP site given
    above.  Either manually download or use wget:
 
    $ cd {path_to}/icu/source/tools/tzcode
-   $ wget "ftp://elsie.nci.nih.gov/pub/tz*.tar.gz"
+   $ wget "ftp://elsie.nci.nih.gov/pub/tzdata*.tar.gz"
 
-2. Unpack tzdata directly into the directory tzcode:
-
-   $ tar xzvf tzdata*.tar.gz
+2. copy only one tzdata*.tar.gz file into the icu/source/data/in/ directory (you may have to create this directory)
 
    *** Make sure you only have ONE FILE named tzdata*.tar.gz in the
        directory.
-   *** Do NOT delete the tzdata*.tar.gz file.
 
-   The Makefile looks in the current directory to determine the
-   version of Olson data it is building by looking for tzdata*.tar.gz.
+3. Build ICU normally. You will see a notice "updating zoneinfo.txt..."
 
-3. Build:
-
-   $ make icu_data
-
-4. Copy the data files to the correct location in the ICU4C/ICU4J
-   source trees:
-
-   $ cp zoneinfo.txt ../../data/misc/
-   $ cp ZoneMetaData.java {path_to}/icu4j/src/com/ibm/icu/impl
-
-5. Rebuild ICU:
-
-   $ cd ../..
-   $ {*make}
-
-6. Don't forget to check in the new zoneinfo.txt (from its location at
+4. For ICU maintainers, don't forget to check in the new
+    zoneinfo.txt (from its location at
    {path_to}/icu/source/data/misc/zoneinfo.txt) into CVS.