diff --git a/src/build_system.ml b/src/build_system.ml
index 515707e3..35e03d5c 100644
--- a/src/build_system.ml
+++ b/src/build_system.ml
@@ -1397,36 +1397,35 @@ let build_rules ?recursive t ~request =
 let set_package t file package =
   Hashtbl.add t.packages file package
 
-let package_deps t files =
+let package_deps t pkg files =
   let rules_seen = ref Id_set.empty in
   let packages = ref Package.Name.Set.empty in
   let rec loop fn =
     match Hashtbl.find t.packages fn with
-    | Some p ->
+    | Some p when p <> pkg ->
       packages := Package.Name.Set.add !packages p
-    | None ->
-      let dir = Path.parent fn in
-      if Path.is_in_build_dir dir then load_dir t ~dir;
-      match Hashtbl.find t.files fn with
-      | None -> ()
-      | Some (File_spec.T { rule = ir; _ }) ->
-        if not (Id_set.mem !rules_seen ir.id) then begin
-          rules_seen := Id_set.add !rules_seen ir.id;
-          let _, dyn_deps =
-            match ir.exec with
-            | Running { rule_evaluation; _ }
-            | Evaluating_rule { rule_evaluation; _ } ->
-              Option.value_exn (Fiber.Future.peek rule_evaluation)
-            | Not_started _ -> assert false
-          in
-          Pset.iter (Pset.union ir.static_deps dyn_deps) ~f:loop
-        end
+    | _ -> loop_deps fn
+  and loop_deps fn =
+    match Hashtbl.find t.files fn with
+    | None -> ()
+    | Some (File_spec.T { rule = ir; _ }) ->
+      if not (Id_set.mem !rules_seen ir.id) then begin
+        rules_seen := Id_set.add !rules_seen ir.id;
+        let _, dyn_deps =
+          match ir.exec with
+          | Running { rule_evaluation; _ }
+          | Evaluating_rule { rule_evaluation; _ } ->
+            Option.value_exn (Fiber.Future.peek rule_evaluation)
+          | Not_started _ -> assert false
+        in
+        Pset.iter (Pset.union ir.static_deps dyn_deps) ~f:loop
+      end
   in
   let open Build.O in
   Build.paths_for_rule files >>^ fun () ->
-  (* This is a bit ugly, we know that at this point of execution, all
-     the relevant ivars have been filled *)
-  Pset.iter files ~f:loop;
+  (* We know that at this point of execution, all the relevant ivars
+     have been filled *)
+  Pset.iter files ~f:loop_deps;
   !packages
 
 (* +-----------------------------------------------------------------+
diff --git a/src/build_system.mli b/src/build_system.mli
index 61b66247..82f99435 100644
--- a/src/build_system.mli
+++ b/src/build_system.mli
@@ -80,11 +80,12 @@ val stamp_file_for_files_of : t -> dir:Path.t -> ext:string -> Path.t
 (** Sets the package this file is part of *)
 val set_package : t -> Path.t -> Package.Name.t -> unit
 
-(** Scan the transitive dependencies of the following files and return
-    set of packages these files are part of. Do not scan packages
-    recursively. *)
+(** Assuming [files] is the list of files in [_build/install] that
+    belong to package [pkg], [package_deps t pkg files] is the set of
+    direct package dependencies of [package]. *)
 val package_deps
   :  t
+  -> Package.Name.t
   -> Path.Set.t
   -> (unit, Package.Name.Set.t) Build.t
 
diff --git a/src/install_rules.ml b/src/install_rules.ml
index 448f22af..fed05398 100644
--- a/src/install_rules.ml
+++ b/src/install_rules.ml
@@ -244,10 +244,9 @@ module Gen(P : Install_params) = struct
       (Alias.package_install ~context:ctx ~pkg:package)
       files
       ~dyn_deps:
-        (Build_system.package_deps (SC.build_system sctx) files
+        (Build_system.package_deps (SC.build_system sctx) package files
          >>^ fun packages ->
-         Package.Name.Set.remove packages package
-         |> Package.Name.Set.to_list
+         Package.Name.Set.to_list packages
          |> List.map ~f:(fun pkg ->
            Build_system.Alias.package_install
              ~context:(SC.context sctx) ~pkg
diff --git a/test/blackbox-tests/test-cases/package-dep/jbuild b/test/blackbox-tests/test-cases/package-dep/jbuild
index 30d1761f..a311c774 100644
--- a/test/blackbox-tests/test-cases/package-dep/jbuild
+++ b/test/blackbox-tests/test-cases/package-dep/jbuild
@@ -24,7 +24,7 @@
   (echo "let () = Printf.printf \"%d %s\" Foo.x Bar.x")))
 
 (rule
- ((deps    ((package bar)))
+ ((deps    (test.ml (package bar)))
   (targets (test.exe))
   (action  (run ocamlfind ocamlc -linkpkg -package bar -o test.exe test.ml))))
 
diff --git a/test/blackbox-tests/test-cases/package-dep/run.t b/test/blackbox-tests/test-cases/package-dep/run.t
index a3fa2bd7..1a4e219c 100644
--- a/test/blackbox-tests/test-cases/package-dep/run.t
+++ b/test/blackbox-tests/test-cases/package-dep/run.t
@@ -8,7 +8,9 @@
       ocamlopt .bar.objs/bar.{cmx,o}
       ocamlopt bar.{a,cmxa}
       ocamlopt bar.cmxs
-     ocamlfind test.exe (exit 2)
-  (cd _build/default && /Users/rgrinberg/.opam/4.05.0/bin/ocamlfind ocamlc -linkpkg -package bar -o test.exe test.ml)
-  ocamlfind: Package `foo' not found - required by `bar'
-  [1]
+      ocamlopt foo.{a,cmxa}
+      ocamlopt foo.cmxs
+        ocamlc foo.cma
+     ocamlfind test.exe
+          test alias runtest
+  42 42