diff --git a/compiler/util/src/org/jetbrains/jet/utils/PathUtil.java b/compiler/util/src/org/jetbrains/jet/utils/PathUtil.java
index 1c84d6781e5..107e9fa6fdd 100644
--- a/compiler/util/src/org/jetbrains/jet/utils/PathUtil.java
+++ b/compiler/util/src/org/jetbrains/jet/utils/PathUtil.java
@@ -67,6 +67,20 @@ public class PathUtil {
         return null;
     }
 
+    public static File getCompilerPathForJpsPlugin() {
+        File plugin_jar_path = new File(getJarPathForClass(PathUtil.class));
+
+        if (!plugin_jar_path.exists()) return null;
+
+        if (plugin_jar_path.getName().equals("kotlin-jps-plugin.jar")) {
+            File pluginHome = plugin_jar_path.getParentFile().getParentFile().getParentFile();
+            File answer = new File(pluginHome, "kotlinc");
+            return answer.exists() ? answer : null;
+        }
+
+        return null;
+    }
+
     @Nullable
     public static File getDefaultRuntimePath() {
         return getFilePackedIntoLib("kotlin-runtime.jar");
diff --git a/ide-compiler-runner/src/org/jetbrains/jet/compiler/runner/CompilerEnvironment.java b/ide-compiler-runner/src/org/jetbrains/jet/compiler/runner/CompilerEnvironment.java
index 5e345f4fbc3..dcd947e95da 100644
--- a/ide-compiler-runner/src/org/jetbrains/jet/compiler/runner/CompilerEnvironment.java
+++ b/ide-compiler-runner/src/org/jetbrains/jet/compiler/runner/CompilerEnvironment.java
@@ -32,13 +32,17 @@ import static org.jetbrains.jet.cli.common.messages.CompilerMessageSeverity.ERRO
 public final class CompilerEnvironment {
 
     @NotNull
-    public static CompilerEnvironment getEnvironmentFor(boolean tests, File mainOutput, File outputDirectoryForTests) {
+    public static CompilerEnvironment getEnvironmentFor(boolean tests, @Nullable File mainOutput, @Nullable File outputDirectoryForTests) {
         final File outputDir = tests ? outputDirectoryForTests : mainOutput;
         return getEnvironmentFor(outputDir);
     }
 
-    public static CompilerEnvironment getEnvironmentFor(File outputDir) {
+    public static CompilerEnvironment getEnvironmentFor(@Nullable File outputDir) {
         File kotlinHome = PathUtil.getDefaultCompilerPath();
+        return getEnvironmentFor(kotlinHome, outputDir);
+    }
+
+    public static CompilerEnvironment getEnvironmentFor(@Nullable File kotlinHome, @Nullable File outputDir) {
         return new CompilerEnvironment(kotlinHome, outputDir);
     }
 
diff --git a/jps-plugin/jps-plugin.iml b/jps-plugin/jps-plugin.iml
index e58e9906a3c..21f152906eb 100644
--- a/jps-plugin/jps-plugin.iml
+++ b/jps-plugin/jps-plugin.iml
@@ -10,6 +10,7 @@
     <orderEntry type="library" name="idea-full" level="project" />
     <orderEntry type="module" module-name="ide-compiler-runner" />
     <orderEntry type="module" module-name="cli-common" />
+    <orderEntry type="module" module-name="util" />
   </component>
 </module>
 
diff --git a/jps-plugin/src/org/jetbrains/jet/jps/build/KotlinBuilder.java b/jps-plugin/src/org/jetbrains/jet/jps/build/KotlinBuilder.java
index fde3fcdbcdc..9573d07f877 100644
--- a/jps-plugin/src/org/jetbrains/jet/jps/build/KotlinBuilder.java
+++ b/jps-plugin/src/org/jetbrains/jet/jps/build/KotlinBuilder.java
@@ -22,6 +22,7 @@ import org.jetbrains.jet.cli.common.messages.CompilerMessageLocation;
 import org.jetbrains.jet.cli.common.messages.CompilerMessageSeverity;
 import org.jetbrains.jet.cli.common.messages.MessageCollector;
 import org.jetbrains.jet.compiler.runner.*;
+import org.jetbrains.jet.utils.PathUtil;
 import org.jetbrains.jps.ModuleChunk;
 import org.jetbrains.jps.builders.ChunkBuildOutputConsumer;
 import org.jetbrains.jps.builders.DirtyFilesHolder;
@@ -83,7 +84,7 @@ public class KotlinBuilder extends ModuleLevelBuilder {
 
         File outputDir = representativeTarget.getOutputDir();
 
-        CompilerEnvironment environment = CompilerEnvironment.getEnvironmentFor(outputDir);
+        CompilerEnvironment environment = CompilerEnvironment.getEnvironmentFor(PathUtil.getCompilerPathForJpsPlugin(), outputDir);
         if (!environment.success()) {
             environment.reportErrorsTo(messageCollector);
             return ExitCode.ABORT;