diff --git a/HACKING.md b/HACKING.md
index f10f4ae7bbe..6174ff8b405 100644
--- a/HACKING.md
+++ b/HACKING.md
@@ -95,7 +95,7 @@ To update the blackbox compiler tests set TeamCity build number in `gradle.prope
         ./gradlew -Ptest_verbose :backend.native:tests:mpp_optional_expectation
         
 * **-Ptest_two_stage** enables two-stage compilation of tests. If two-stage compilation is enabled, test sources are compiled into a klibrary
-and then a final native binary is produced from this klibrary using the -Xsource-library compiler flag.
+and then a final native binary is produced from this klibrary using the -Xinclude compiler flag.
 
         ./gradlew -Ptest_two_stage backend.native:tests:array0
        
diff --git a/backend.native/cli.bc/src/org/jetbrains/kotlin/cli/bc/K2NativeCompilerArguments.kt b/backend.native/cli.bc/src/org/jetbrains/kotlin/cli/bc/K2NativeCompilerArguments.kt
index 05c6d026578..818fe628276 100644
--- a/backend.native/cli.bc/src/org/jetbrains/kotlin/cli/bc/K2NativeCompilerArguments.kt
+++ b/backend.native/cli.bc/src/org/jetbrains/kotlin/cli/bc/K2NativeCompilerArguments.kt
@@ -160,8 +160,7 @@ class K2NativeCompilerArguments : CommonCompilerArguments() {
     @Argument(
         value = SOURCE_LIBRARY_ARG,
         valueDescription = "<path>",
-        description = "A library to be processed in the same manner as source files.\n" +
-                "Must be one of libraries passed with '-library'"
+        description = "A path to an intermediate library that should be processed in the same manner as source files.\n"
     )
     var sourceLibraries: Array<String>? = null
 
@@ -217,4 +216,4 @@ class K2NativeCompilerArguments : CommonCompilerArguments() {
 const val EMBED_BITCODE_FLAG = "-Xembed-bitcode"
 const val EMBED_BITCODE_MARKER_FLAG = "-Xembed-bitcode-marker"
 const val STATIC_FRAMEWORK_FLAG = "-Xstatic-framework"
-const val SOURCE_LIBRARY_ARG = "-Xsource-library"
+const val SOURCE_LIBRARY_ARG = "-Xinclude"
diff --git a/backend.native/compiler/ir/backend.native/src/org/jetbrains/kotlin/backend/konan/FeaturedLibraries.kt b/backend.native/compiler/ir/backend.native/src/org/jetbrains/kotlin/backend/konan/FeaturedLibraries.kt
index c6d1d914454..f8435696181 100644
--- a/backend.native/compiler/ir/backend.native/src/org/jetbrains/kotlin/backend/konan/FeaturedLibraries.kt
+++ b/backend.native/compiler/ir/backend.native/src/org/jetbrains/kotlin/backend/konan/FeaturedLibraries.kt
@@ -114,7 +114,7 @@ private sealed class FeaturedLibrariesReporter {
             "$kind library $libraryName can't be used as a source library"
 
         override fun notIncludedLibraryMessageTitle(): String =
-            "Following libraries are declared as source libraries with -Xsource-library, but not included to the build:"
+            "Following libraries are declared as source libraries with -Xinclude, but not included to the build:"
     }
 
     private class CoveredLibraryReporter(configuration: CompilerConfiguration): BaseReporter(configuration) {
diff --git a/build-tools/src/main/groovy/org/jetbrains/kotlin/KonanTest.groovy b/build-tools/src/main/groovy/org/jetbrains/kotlin/KonanTest.groovy
index 3d888227d54..79e8c8e75d8 100644
--- a/build-tools/src/main/groovy/org/jetbrains/kotlin/KonanTest.groovy
+++ b/build-tools/src/main/groovy/org/jetbrains/kotlin/KonanTest.groovy
@@ -622,7 +622,7 @@ fun runTest() {
                     // Two-stage compilation.
                     def klibPath = "${exePath}.klib"
                     runCompiler(compileList, klibPath, flags + ["-p", "library"])
-                    runCompiler([], exePath, flags + ["-l", klibPath, "-Xsource-library=$klibPath"])
+                    runCompiler([], exePath, flags + ["-l", klibPath, "-Xinclude=$klibPath"])
                 } else {
                     // Regular compilation.
                     runCompiler(compileList, exePath, flags)
diff --git a/tools/kotlin-native-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/konan/tasks/KonanCompileTask.kt b/tools/kotlin-native-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/konan/tasks/KonanCompileTask.kt
index 3ebfde67199..d371ce77572 100644
--- a/tools/kotlin-native-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/konan/tasks/KonanCompileTask.kt
+++ b/tools/kotlin-native-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/konan/tasks/KonanCompileTask.kt
@@ -184,7 +184,7 @@ abstract class KonanCompileTask: KonanBuildingTask(), KonanCompileSpec {
         addAll(secondStageExtraOpts())
 
         addArg("-l", klibPath)
-        add("-Xsource-library=${klibPath}")
+        add("-Xinclude=${klibPath}")
     }
 
     /** Args passed to the compiler at both stages of the two-stage compilation and during the singe-stage compilation. */