diff --git a/analysis/analysis-test-framework/tests/org/jetbrains/kotlin/analysis/test/framework/project/structure/KtModuleFactory.kt b/analysis/analysis-test-framework/tests/org/jetbrains/kotlin/analysis/test/framework/project/structure/KtModuleFactory.kt
index cc7978e4536..025472c5541 100644
--- a/analysis/analysis-test-framework/tests/org/jetbrains/kotlin/analysis/test/framework/project/structure/KtModuleFactory.kt
+++ b/analysis/analysis-test-framework/tests/org/jetbrains/kotlin/analysis/test/framework/project/structure/KtModuleFactory.kt
@@ -25,6 +25,11 @@ private val TestServices.ktModuleFactory: KtModuleFactory by TestServices.testSe
  *
  * By default, the [KtModuleFactory] registered with these [TestServices] is returned. It may be overruled by the
  * [MODULE_KIND][org.jetbrains.kotlin.analysis.test.framework.AnalysisApiTestDirectives.MODULE_KIND] directive for a specific test module.
+ *
+ * [DependencyKindModuleStructureTransformer][org.jetbrains.kotlin.analysis.test.framework.services.DependencyKindModuleStructureTransformer]
+ * should be used to properly set up [DependencyKind][org.jetbrains.kotlin.test.model.DependencyKind] for module dependencies
+ *
+ * @see org.jetbrains.kotlin.analysis.test.framework.services.DependencyKindModuleStructureTransformer
  */
 fun TestServices.getKtModuleFactoryForTestModule(testModule: TestModule): KtModuleFactory = when (testModule.moduleKind) {
     TestModuleKind.Source -> KtSourceModuleFactory
diff --git a/analysis/analysis-test-framework/tests/org/jetbrains/kotlin/analysis/test/framework/services/DependencyKindModuleStructureTransformer.kt b/analysis/analysis-test-framework/tests/org/jetbrains/kotlin/analysis/test/framework/services/DependencyKindModuleStructureTransformer.kt
new file mode 100644
index 00000000000..4f0a13995b4
--- /dev/null
+++ b/analysis/analysis-test-framework/tests/org/jetbrains/kotlin/analysis/test/framework/services/DependencyKindModuleStructureTransformer.kt
@@ -0,0 +1,58 @@
+/*
+ * Copyright 2010-2023 JetBrains s.r.o. and Kotlin Programming Language contributors.
+ * Use of this source code is governed by the Apache 2.0 license that can be found in the license/LICENSE.txt file.
+ */
+
+package org.jetbrains.kotlin.analysis.test.framework.services
+
+import org.jetbrains.kotlin.analysis.test.framework.AnalysisApiTestDirectives
+import org.jetbrains.kotlin.analysis.test.framework.test.configurators.TestModuleKind
+import org.jetbrains.kotlin.analysis.test.framework.test.configurators.moduleKind
+import org.jetbrains.kotlin.test.TestInfrastructureInternals
+import org.jetbrains.kotlin.test.model.DependencyDescription
+import org.jetbrains.kotlin.test.model.DependencyKind
+import org.jetbrains.kotlin.test.model.TestModule
+import org.jetbrains.kotlin.test.services.DefaultsProvider
+import org.jetbrains.kotlin.test.services.ModuleStructureTransformer
+import org.jetbrains.kotlin.test.services.TestModuleStructure
+import org.jetbrains.kotlin.test.services.impl.TestModuleStructureImpl
+
+/**
+ * This transformer is required for correct work of [getKtModuleFactoryForTestModule][org.jetbrains.kotlin.analysis.test.framework.project.structure.getKtModuleFactoryForTestModule]
+ * to provide correct [DependencyKind] for dependencies
+ *
+ * @see org.jetbrains.kotlin.analysis.test.framework.project.structure.getKtModuleFactoryForTestModule
+ */
+@OptIn(TestInfrastructureInternals::class)
+object DependencyKindModuleStructureTransformer : ModuleStructureTransformer() {
+    override fun transformModuleStructure(moduleStructure: TestModuleStructure, defaultsProvider: DefaultsProvider): TestModuleStructure {
+        if (AnalysisApiTestDirectives.MODULE_KIND !in moduleStructure.allDirectives) return moduleStructure
+
+        val moduleMapping = moduleStructure.modules.associateBy(TestModule::name)
+        return TestModuleStructureImpl(
+            moduleStructure.modules.map { module ->
+                module.copy(
+                    allDependencies = module.allDependencies.map { dependency ->
+                        transformDependency(dependency, moduleMapping)
+                    }
+                )
+            },
+            moduleStructure.originalTestDataFiles,
+        )
+    }
+
+    private fun transformDependency(
+        dependency: DependencyDescription,
+        moduleMapping: Map<String, TestModule>,
+    ): DependencyDescription {
+        val dependencyModule = moduleMapping.getValue(dependency.moduleName)
+        val newKind = when (dependencyModule.moduleKind) {
+            TestModuleKind.Source, TestModuleKind.LibrarySource, TestModuleKind.ScriptSource -> DependencyKind.Source
+            TestModuleKind.LibraryBinary -> DependencyKind.Binary
+            // There is no explicit module kind, so the dependency already has the right kind
+            null -> return dependency
+        }
+
+        return dependency.copy(kind = newKind)
+    }
+}
diff --git a/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/test/configurators/AnalysisApiFirLibraryBinaryTestConfigurator.kt b/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/test/configurators/AnalysisApiFirLibraryBinaryTestConfigurator.kt
index b3092718a74..3e7db043686 100644
--- a/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/test/configurators/AnalysisApiFirLibraryBinaryTestConfigurator.kt
+++ b/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/test/configurators/AnalysisApiFirLibraryBinaryTestConfigurator.kt
@@ -30,6 +30,12 @@ object AnalysisApiFirLibraryBinaryTestConfigurator : AnalysisApiTestConfigurator
     override fun configureTest(builder: TestConfigurationBuilder, disposable: Disposable) {
         builder.apply {
             useAdditionalService<KtModuleFactory> { KtLibraryBinaryModuleFactory }
+            configureLibraryCompilationSupport(this)
+        }
+    }
+
+    fun configureLibraryCompilationSupport(builder: TestConfigurationBuilder) {
+        builder.apply {
             useAdditionalService<TestModuleCompiler> { DispatchingTestModuleCompiler() }
             useAdditionalService<TestModuleDecompiler> { TestModuleDecompilerJar() }
         }
diff --git a/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/test/configurators/AnalysisApiFirSourceTestConfigurator.kt b/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/test/configurators/AnalysisApiFirSourceTestConfigurator.kt
index 8be36951100..608303dfac5 100644
--- a/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/test/configurators/AnalysisApiFirSourceTestConfigurator.kt
+++ b/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/test/configurators/AnalysisApiFirSourceTestConfigurator.kt
@@ -1,13 +1,17 @@
 /*
- * Copyright 2010-2022 JetBrains s.r.o. and Kotlin Programming Language contributors.
+ * Copyright 2010-2023 JetBrains s.r.o. and Kotlin Programming Language contributors.
  * Use of this source code is governed by the Apache 2.0 license that can be found in the license/LICENSE.txt file.
  */
 
 package org.jetbrains.kotlin.analysis.low.level.api.fir.test.configurators
 
 import com.intellij.openapi.Disposable
+import org.jetbrains.kotlin.analysis.api.impl.base.test.configurators.AnalysisApiLibraryBaseTestServiceRegistrar
 import org.jetbrains.kotlin.analysis.test.framework.project.structure.KtModuleFactory
 import org.jetbrains.kotlin.analysis.test.framework.project.structure.KtSourceModuleFactory
+import org.jetbrains.kotlin.analysis.test.framework.services.DependencyKindModuleStructureTransformer
+import org.jetbrains.kotlin.analysis.test.framework.test.configurators.AnalysisApiTestServiceRegistrar
+import org.jetbrains.kotlin.test.TestInfrastructureInternals
 import org.jetbrains.kotlin.test.builders.TestConfigurationBuilder
 
 open class AnalysisApiFirSourceTestConfigurator(
@@ -18,6 +22,14 @@ open class AnalysisApiFirSourceTestConfigurator(
 
         builder.apply {
             useAdditionalService<KtModuleFactory> { KtSourceModuleFactory }
+
+            @OptIn(TestInfrastructureInternals::class)
+            useModuleStructureTransformers(DependencyKindModuleStructureTransformer)
         }
+
+        AnalysisApiFirLibraryBinaryTestConfigurator.configureLibraryCompilationSupport(builder)
     }
-}
\ No newline at end of file
+
+    override val serviceRegistrars: List<AnalysisApiTestServiceRegistrar>
+        get() = super.serviceRegistrars + AnalysisApiLibraryBaseTestServiceRegistrar
+}