diff --git a/libraries/tools/kotlin-gradle-plugin-idea/build.gradle.kts b/libraries/tools/kotlin-gradle-plugin-idea/build.gradle.kts
index a3ba1e14d3e..3f6d458d8c3 100644
--- a/libraries/tools/kotlin-gradle-plugin-idea/build.gradle.kts
+++ b/libraries/tools/kotlin-gradle-plugin-idea/build.gradle.kts
@@ -2,6 +2,10 @@ plugins {
     kotlin("jvm")
 }
 
+object BackwardsCompatibilityTestConfiguration {
+    const val minimalBackwardsCompatibleVersion = "1.7.0-dev-1868"
+}
+
 kotlin.sourceSets.configureEach {
     languageSettings.apiVersion = "1.4"
     languageSettings.languageVersion = "1.4"
@@ -19,15 +23,22 @@ dependencies {
 publish()
 
 tasks.test {
+    /* When -Psnapshot is set, then the test runs against a locally installed snapshot version (./gradlew install) */
+    val isSnapshotTest = project.providers.gradleProperty("snapshot").isPresent
+
     repositories {
         maven("https://maven.pkg.jetbrains.space/kotlin/p/kotlin/dev")
+        if (isSnapshotTest) mavenLocal()
     }
 
     /* Setup for backwards compatibility test */
-    val minimalBackwardsCompatibleVersion = "1.7.0-dev-1868"
+    val version = if (isSnapshotTest) properties["defaultSnapshotVersion"].toString()
+    else BackwardsCompatibilityTestConfiguration.minimalBackwardsCompatibleVersion
+
     val minimalBackwardsCompatibleVersionTestClasspath by configurations.creating
+
     dependencies {
-        minimalBackwardsCompatibleVersionTestClasspath("org.jetbrains.kotlin:kotlin-gradle-plugin-idea:$minimalBackwardsCompatibleVersion")
+        minimalBackwardsCompatibleVersionTestClasspath("org.jetbrains.kotlin:kotlin-gradle-plugin-idea:$version")
     }
 
     dependsOn(minimalBackwardsCompatibleVersionTestClasspath)