diff --git a/libraries/tools/kotlin-gradle-plugin-api/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/HasKotlinDependencies.kt b/libraries/tools/kotlin-gradle-plugin-api/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/HasKotlinDependencies.kt
index e4a301e8f59..9248d885ca1 100644
--- a/libraries/tools/kotlin-gradle-plugin-api/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/HasKotlinDependencies.kt
+++ b/libraries/tools/kotlin-gradle-plugin-api/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/HasKotlinDependencies.kt
@@ -10,6 +10,7 @@ import org.gradle.api.artifacts.Dependency
 import org.gradle.api.artifacts.ExternalModuleDependency
 import org.gradle.api.artifacts.ProjectDependency
 import org.gradle.util.ConfigureUtil
+import java.io.File
 
 interface KotlinDependencyHandler {
     fun api(dependencyNotation: Any): Dependency?
@@ -46,6 +47,8 @@ interface KotlinDependencyHandler {
 
     fun npm(name: String, version: String = "*"): Dependency
 
+    fun npm(name: String, directory: File): Dependency
+
     @Deprecated(
         message = "Use npm(name, version) instead. Name like in package.json"
     )
diff --git a/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/mpp/DefaultKotlinDependencyHandler.kt b/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/mpp/DefaultKotlinDependencyHandler.kt
index 851521df502..1f651a6a2b2 100644
--- a/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/mpp/DefaultKotlinDependencyHandler.kt
+++ b/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/mpp/DefaultKotlinDependencyHandler.kt
@@ -7,6 +7,7 @@ import org.gradle.api.artifacts.ProjectDependency
 import org.jetbrains.kotlin.gradle.plugin.HasKotlinDependencies
 import org.jetbrains.kotlin.gradle.plugin.KotlinDependencyHandler
 import org.jetbrains.kotlin.gradle.targets.js.npm.NpmDependency
+import java.io.File
 
 class DefaultKotlinDependencyHandler(
     val parent: HasKotlinDependencies,
@@ -80,7 +81,18 @@ class DefaultKotlinDependencyHandler(
         }
 
     override fun npm(name: String, version: String): NpmDependency =
-        NpmDependency(project, name, version)
+        NpmDependency(
+            project = project,
+            name = name,
+            version = version
+        )
+
+    override fun npm(name: String, directory: File): NpmDependency =
+        NpmDependency(
+            project = project,
+            name = name,
+            directory = directory
+        )
 
     override fun npm(org: String?, packageName: String, version: String) =
         npm("${if (org != null) "@$org/" else ""}$packageName", version)
diff --git a/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/targets/js/npm/NpmDependency.kt b/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/targets/js/npm/NpmDependency.kt
index 4f0dce64ca3..2eae5abe1c2 100644
--- a/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/targets/js/npm/NpmDependency.kt
+++ b/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/targets/js/npm/NpmDependency.kt
@@ -17,6 +17,7 @@ import org.gradle.api.tasks.TaskDependency
 import org.gradle.internal.component.local.model.DefaultLibraryBinaryIdentifier
 import org.jetbrains.kotlin.gradle.targets.js.nodejs.NodeJsRootPlugin
 import org.jetbrains.kotlin.gradle.targets.js.npm.resolved.KotlinCompilationNpmResolution
+import org.jetbrains.kotlin.gradle.utils.relativeToRoot
 import java.io.File
 
 data class NpmDependency(
@@ -29,6 +30,16 @@ data class NpmDependency(
     ResolvableDependency,
     FileCollectionDependency {
 
+    constructor(
+        project: Project,
+        name: String,
+        directory: File
+    ) : this(
+        project,
+        name,
+        "file:${directory.relativeToRoot(project)}"
+    )
+
     enum class Scope {
         NORMAL,
         DEV,
diff --git a/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/targets/js/npm/NpmDependencyExtension.kt b/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/targets/js/npm/NpmDependencyExtension.kt
index 8ca34463116..64fa920e547 100644
--- a/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/targets/js/npm/NpmDependencyExtension.kt
+++ b/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/targets/js/npm/NpmDependencyExtension.kt
@@ -9,43 +9,65 @@ import groovy.lang.Closure
 import org.gradle.api.Project
 import org.gradle.api.plugins.ExtensionAware
 import org.gradle.api.reflect.TypeOf
+import java.io.File
 
 interface NpmDependencyExtension {
     operator fun invoke(name: String, version: String = "*"): NpmDependency
+
+    operator fun invoke(name: String, directory: File): NpmDependency
 }
 
 fun Project.addNpmDependencyExtension() {
     val dependencies = this.dependencies as ExtensionAware
 
     val npmDependencyExtension: NpmDependencyExtension = object : NpmDependencyExtension, Closure<NpmDependency>(dependencies) {
-        override operator fun invoke(name: String, version: String): NpmDependency {
-            return NpmDependency(this@addNpmDependencyExtension, name, version)
-        }
+        override operator fun invoke(name: String, version: String): NpmDependency =
+            NpmDependency(
+                project = this@addNpmDependencyExtension,
+                name = name,
+                version = version
+            )
+
+        override operator fun invoke(name: String, directory: File): NpmDependency =
+            NpmDependency(
+                project = this@addNpmDependencyExtension,
+                name = name,
+                directory = directory
+            )
 
         override fun call(vararg args: Any?): NpmDependency {
             val size = args.size
-            if (size > 2) throw IllegalArgumentException(
-                """
-                    Unable to add NPM dependency by $args
-                    - npm('name') -> name:*
-                    - npm('name', 'version') -> name:version
-                    """.trimIndent()
-            )
+            if (size > 2) throw npmDeclarationException(args)
 
             val name = args[0] as String
-            val version = if (size > 1) args[1] as String else null
+            val arg = if (size > 1) args[1] else null
 
-            return if (version != null) {
-                invoke(
-                    name = name,
-                    version = version
-                )
-            } else {
-                invoke(
+            return when (arg) {
+                null -> invoke(
                     name = name
                 )
+                is String -> invoke(
+                    name = name,
+                    version = arg
+                )
+                is File -> invoke(
+                    name = name,
+                    directory = arg
+                )
+                else -> throw npmDeclarationException(args)
             }
         }
+
+        private fun npmDeclarationException(args: Array<out Any?>): IllegalArgumentException {
+            return IllegalArgumentException(
+                """
+                            Unable to add NPM dependency by $args
+                            - npm('name') -> name:*
+                            - npm('name', 'version') -> name:version
+                            - npm('name', File) -> name:File
+                            """.trimIndent()
+            )
+        }
     }
 
     dependencies