Pass -Goutput_dir=. to the make generator.

build/gyp_v8

 #!/usr/bin/env python
 #
 # Copyright 2012 the V8 project authors. All rights reserved.
 # Redistribution and use in source and binary forms, with or without
 # modification, are permitted provided that the following conditions are
 # met:
 #
 #     * Redistributions of source code must retain the above copyright
 #       notice, this list of conditions and the following disclaimer.
 #     * Redistributions in binary form must reproduce the above
@@ skipping 149 matching lines @@
   syntax_check = os.environ.get('V8_GYP_SYNTAX_CHECK')
   if syntax_check and int(syntax_check):
     args.append('--check')
 
   print 'Updating projects from gyp files...'
   sys.stdout.flush()
 
   # Generate for the architectures supported on the given platform.
   gyp_args = list(args)
   if platform.system() == 'Linux':
+    # --generator-output defines where the Makefile goes.
     gyp_args.append('--generator-output=out')
+    # -Goutput_dir defines where the build output goes, relative to the
+    # Makefile. Set it to . so that the build output doesn't end up in out/out.
+    gyp_args.append('-Goutput_dir=.')
   run_gyp(gyp_args)