diff --git a/jupyterhub/app.py b/jupyterhub/app.py
index bf321f23..0138d6ff 100644
--- a/jupyterhub/app.py
+++ b/jupyterhub/app.py
@@ -50,7 +50,7 @@ from ._data import DATA_FILES_PATH
 from .log import CoroutineLogFormatter, log_request
 from .traitlets import URLPrefix, Command
 from .utils import (
-    url_path_join,
+    url_path_join, localhost,
     ISO8601_ms, ISO8601_s,
 )
 # classes for config
@@ -260,7 +260,7 @@ class JupyterHub(Application):
             token = orm.new_token()
         return token
     
-    proxy_api_ip = Unicode('localhost', config=True,
+    proxy_api_ip = Unicode(localhost(), config=True,
         help="The ip for the proxy API handlers"
     )
     proxy_api_port = Integer(config=True,
@@ -272,7 +272,7 @@ class JupyterHub(Application):
     hub_port = Integer(8081, config=True,
         help="The port for this process"
     )
-    hub_ip = Unicode('localhost', config=True,
+    hub_ip = Unicode(localhost(), config=True,
         help="The ip for this process"
     )
     
diff --git a/jupyterhub/orm.py b/jupyterhub/orm.py
index ca11e1da..fb7e656c 100644
--- a/jupyterhub/orm.py
+++ b/jupyterhub/orm.py
@@ -26,7 +26,7 @@ from sqlalchemy import create_engine
 
 from .utils import (
     random_port, url_path_join, wait_for_server, wait_for_http_server,
-    new_token, hash_token, compare_token,
+    new_token, hash_token, compare_token, localhost,
 )
 
 
@@ -78,7 +78,7 @@ class Server(Base):
         ip = self.ip
         if ip in {'', '0.0.0.0'}:
             # when listening on all interfaces, connect to localhost
-            ip = 'localhost'
+            ip = localhost()
         return "{proto}://{ip}:{port}".format(
             proto=self.proto,
             ip=ip,
@@ -109,12 +109,12 @@ class Server(Base):
         if http:
             yield wait_for_http_server(self.url, timeout=timeout)
         else:
-            yield wait_for_server(self.ip or 'localhost', self.port, timeout=timeout)
+            yield wait_for_server(self.ip or localhost(), self.port, timeout=timeout)
     
     def is_up(self):
         """Is the server accepting connections?"""
         try:
-            socket.create_connection((self.ip or 'localhost', self.port))
+            socket.create_connection((self.ip or localhost(), self.port))
         except socket.error as e:
             if e.errno == errno.ENETUNREACH:
                 try:
diff --git a/jupyterhub/spawner.py b/jupyterhub/spawner.py
index f5c7e2b1..a481eb83 100644
--- a/jupyterhub/spawner.py
+++ b/jupyterhub/spawner.py
@@ -22,7 +22,7 @@ from traitlets import (
 )
 
 from .traitlets import Command
-from .utils import random_port
+from .utils import random_port, localhost
 
 class Spawner(LoggingConfigurable):
     """Base class for spawning single-user notebook servers.
@@ -41,7 +41,7 @@ class Spawner(LoggingConfigurable):
     hub = Any()
     authenticator = Any()
     api_token = Unicode()
-    ip = Unicode('localhost', config=True,
+    ip = Unicode(localhost(), config=True,
         help="The IP address (or hostname) the single-user server should listen on"
     )
     start_timeout = Integer(60, config=True,
diff --git a/jupyterhub/tests/mocking.py b/jupyterhub/tests/mocking.py
index 9491e1f9..e1b49b43 100644
--- a/jupyterhub/tests/mocking.py
+++ b/jupyterhub/tests/mocking.py
@@ -17,6 +17,7 @@ from ..spawner import LocalProcessSpawner
 from ..app import JupyterHub
 from ..auth import PAMAuthenticator
 from .. import orm
+from ..utils import localhost
 
 from pamela import PAMError
 
@@ -108,7 +109,7 @@ class MockHub(JupyterHub):
     db_file = None
     
     def _ip_default(self):
-        return 'localhost'
+        return localhost()
     
     def _authenticator_class_default(self):
         return MockPAMAuthenticator
diff --git a/jupyterhub/utils.py b/jupyterhub/utils.py
index e9f8223d..dcf01335 100644
--- a/jupyterhub/utils.py
+++ b/jupyterhub/utils.py
@@ -6,10 +6,12 @@
 from binascii import b2a_hex
 import errno
 import hashlib
+from hmac import compare_digest
 import os
 import socket
+from threading import Thread
 import uuid
-from hmac import compare_digest
+import warnings
 
 from tornado import web, gen, ioloop
 from tornado.httpclient import AsyncHTTPClient, HTTPError
@@ -192,3 +194,36 @@ def url_path_join(*pieces):
         result = '/'
 
     return result
+
+def localhost():
+    """Return localhost or 127.0.0.1"""
+    if hasattr(localhost, '_localhost'):
+        return localhost._localhost
+    binder = connector = None
+    try:
+        binder = socket.socket()
+        binder.bind(('localhost', 0))
+        binder.listen(1)
+        port = binder.getsockname()[1]
+        def accept():
+            try:
+                conn, addr = binder.accept()
+            except ConnectionAbortedError:
+                pass
+            else:
+                conn.close()
+        t = Thread(target=accept)
+        t.start()
+        connector = socket.create_connection(('localhost', port), timeout=10)
+        t.join(timeout=10)
+    except (socket.error, socket.gaierror) as e:
+        warnings.warn("localhost doesn't appear to work, using 127.0.0.1\n%s" % e, RuntimeWarning)
+        localhost._localhost = '127.0.0.1'
+    else:
+        localhost._localhost = 'localhost'
+    finally:
+        if binder:
+            binder.close()
+        if connector:
+            connector.close()
+    return localhost._localhost