diff --git a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/GeneralClasspathSnapshotIT.kt b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/GeneralClasspathSnapshotIT.kt
index 01e543e433a..24f591f7c1c 100644
--- a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/GeneralClasspathSnapshotIT.kt
+++ b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/GeneralClasspathSnapshotIT.kt
@@ -6,6 +6,7 @@
 package org.jetbrains.kotlin.gradle
 
 import org.gradle.util.GradleVersion
+import org.jetbrains.kotlin.gradle.plugin.diagnostics.KotlinToolingDiagnostics
 import org.jetbrains.kotlin.gradle.testbase.*
 import org.junit.jupiter.api.DisplayName
 
@@ -26,7 +27,9 @@ class GeneralClasspathSnapshotIT : KGPBaseTest() {
                 }
                 """.trimIndent()
             )
-            build("compileKotlin")
+            build("compileKotlin") {
+                assertHasDiagnostic(KotlinToolingDiagnostics.DependencyDoesNotPhysicallyExist)
+            }
         }
     }
 }
\ No newline at end of file
diff --git a/libraries/tools/kotlin-gradle-plugin/src/common/kotlin/org/jetbrains/kotlin/gradle/internal/transforms/BuildToolsApiClasspathEntrySnapshotTransform.kt b/libraries/tools/kotlin-gradle-plugin/src/common/kotlin/org/jetbrains/kotlin/gradle/internal/transforms/BuildToolsApiClasspathEntrySnapshotTransform.kt
index 42fe3117259..97c58116d18 100644
--- a/libraries/tools/kotlin-gradle-plugin/src/common/kotlin/org/jetbrains/kotlin/gradle/internal/transforms/BuildToolsApiClasspathEntrySnapshotTransform.kt
+++ b/libraries/tools/kotlin-gradle-plugin/src/common/kotlin/org/jetbrains/kotlin/gradle/internal/transforms/BuildToolsApiClasspathEntrySnapshotTransform.kt
@@ -71,7 +71,10 @@ abstract class BuildToolsApiClasspathEntrySnapshotTransform : TransformAction<Bu
             checkVersionConsistency()
         }
         val classpathEntryInputDirOrJar = inputArtifact.get().asFile
-        if (!classpathEntryInputDirOrJar.exists()) return
+        if (!classpathEntryInputDirOrJar.exists()) {
+            reportDiagnostic(KotlinToolingDiagnostics.DependencyDoesNotPhysicallyExist(classpathEntryInputDirOrJar))
+            return
+        }
 
         val snapshotOutputFile = outputs.file(classpathEntryInputDirOrJar.name.replace('.', '_') + "-snapshot.bin")
 
diff --git a/libraries/tools/kotlin-gradle-plugin/src/common/kotlin/org/jetbrains/kotlin/gradle/plugin/diagnostics/KotlinToolingDiagnostics.kt b/libraries/tools/kotlin-gradle-plugin/src/common/kotlin/org/jetbrains/kotlin/gradle/plugin/diagnostics/KotlinToolingDiagnostics.kt
index c1e148e206c..2ca7873bc09 100644
--- a/libraries/tools/kotlin-gradle-plugin/src/common/kotlin/org/jetbrains/kotlin/gradle/plugin/diagnostics/KotlinToolingDiagnostics.kt
+++ b/libraries/tools/kotlin-gradle-plugin/src/common/kotlin/org/jetbrains/kotlin/gradle/plugin/diagnostics/KotlinToolingDiagnostics.kt
@@ -21,6 +21,7 @@ import org.jetbrains.kotlin.gradle.plugin.PropertiesProvider.PropertyNames.KOTLI
 import org.jetbrains.kotlin.gradle.plugin.diagnostics.ToolingDiagnostic.Severity.*
 import org.jetbrains.kotlin.gradle.plugin.sources.android.multiplatformAndroidSourceSetLayoutV1
 import org.jetbrains.kotlin.gradle.plugin.sources.android.multiplatformAndroidSourceSetLayoutV2
+import java.io.File
 
 @InternalKotlinGradlePluginApi // used in integration tests
 object KotlinToolingDiagnostics {
@@ -702,6 +703,15 @@ object KotlinToolingDiagnostics {
             """.trimIndent()
         )
     }
+
+    object DependencyDoesNotPhysicallyExist : ToolingDiagnosticFactory(WARNING) {
+        operator fun invoke(dependency: File) = build(
+            """
+               Unable to find the dependency at the location '${dependency.absolutePath}'.
+               Please make sure that the dependency exists at the specified location or ensure that dependency declarations are correct in your project.
+            """.trimIndent()
+        )
+    }
 }
 
 private fun String.indentLines(nSpaces: Int = 4, skipFirstLine: Boolean = true): String {