diff --git a/compiler/daemon/src/org/jetbrains/kotlin/daemon/CompileServiceImpl.kt b/compiler/daemon/src/org/jetbrains/kotlin/daemon/CompileServiceImpl.kt
index b195caeb7bd..55af8980c0f 100644
--- a/compiler/daemon/src/org/jetbrains/kotlin/daemon/CompileServiceImpl.kt
+++ b/compiler/daemon/src/org/jetbrains/kotlin/daemon/CompileServiceImpl.kt
@@ -63,6 +63,7 @@ import java.util.concurrent.atomic.AtomicInteger
 import java.util.concurrent.locks.ReentrantReadWriteLock
 import java.util.logging.Level
 import java.util.logging.Logger
+import kotlin.collections.HashSet
 import kotlin.comparisons.compareByDescending
 import kotlin.concurrent.read
 import kotlin.concurrent.schedule
@@ -423,10 +424,13 @@ class CompileServiceImpl(
             }
             parsedModule
         }
-        val javaSourceRoots = parsedModule.modules.flatMapTo(HashSet()) { it.getJavaSourceRoots().map { File(it.path) } }
-        val allKotlinFiles = parsedModule.modules.flatMap { it.getSourceFiles().map(::File) }
-        k2jvmArgs.friendPaths = parsedModule.modules.flatMap(Module::getFriendPaths).toTypedArray()
 
+        assert(parsedModule.modules.size == 1) { "More than one module description in ${k2jvmArgs.module}" }
+        val module = parsedModule.modules.first()
+        val javaSourceRoots = module.getJavaSourceRoots().mapTo(HashSet()) { File(it.path) }
+        val allKotlinFiles = module.getSourceFiles().map(::File)
+        k2jvmArgs.friendPaths = module.getFriendPaths().toTypedArray()
+        k2jvmArgs.destination = module.getOutputDirectory()
         val changedFiles = if (incrementalCompilationOptions.areFileChangesKnown) {
             ChangedFiles.Known(incrementalCompilationOptions.modifiedFiles!!, incrementalCompilationOptions.deletedFiles!!)
         }
diff --git a/compiler/incremental-compilation-impl/src/org/jetbrains/kotlin/incremental/IncrementalJvmCompilerRunner.kt b/compiler/incremental-compilation-impl/src/org/jetbrains/kotlin/incremental/IncrementalJvmCompilerRunner.kt
index 494b601ff0e..94ad585da1a 100644
--- a/compiler/incremental-compilation-impl/src/org/jetbrains/kotlin/incremental/IncrementalJvmCompilerRunner.kt
+++ b/compiler/incremental-compilation-impl/src/org/jetbrains/kotlin/incremental/IncrementalJvmCompilerRunner.kt
@@ -425,6 +425,7 @@ class IncrementalJvmCompilerRunner(
                 javaSourceRoots = javaSourceRoots,
                 classpath = classpath,
                 friendDirs = listOf())
+        args.destination = null
         args.module = moduleFile.absolutePath
         val outputItemCollector = OutputItemsCollectorImpl()
         @Suppress("NAME_SHADOWING")
diff --git a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/ExecutionStrategyIT.kt b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/ExecutionStrategyIT.kt
index ee948eb9568..52fc2e15cbf 100644
--- a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/ExecutionStrategyIT.kt
+++ b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/ExecutionStrategyIT.kt
@@ -4,6 +4,8 @@ import org.jetbrains.kotlin.gradle.util.getFileByName
 import org.jetbrains.kotlin.gradle.util.modify
 import org.junit.Test
 
+val DIR_AND_MODULE_ERROR_MESSAGE = "'-d' option with a directory destination is ignored because '-module' is specified"
+
 class ExecutionStrategyJsIT : ExecutionStrategyIT() {
     override fun setupProject(project: Project) {
         project.setupWorkingDir()
@@ -48,6 +50,7 @@ open class ExecutionStrategyIT : BaseGradleIT() {
             assertSuccessful()
             assertContains(finishMessage)
             checkOutput()
+            assertNotContains(DIR_AND_MODULE_ERROR_MESSAGE)
         }
 
         val fKt = project.projectDir.getFileByName("f.kt")
diff --git a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/KotlinGradlePluginIT.kt b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/KotlinGradlePluginIT.kt
index 48741e22ef3..74d64972d7f 100644
--- a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/KotlinGradlePluginIT.kt
+++ b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/KotlinGradlePluginIT.kt
@@ -191,6 +191,7 @@ class KotlinGradleIT: BaseGradleIT() {
             assertReportExists("projB")
             assertContains(":projB:compileKotlin")
             assertNotContains("projB:compileKotlin UP-TO-DATE")
+            assertNotContains(DIR_AND_MODULE_ERROR_MESSAGE)
         }
     }
 
diff --git a/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/compilerRunner/GradleKotlinCompilerRunner.kt b/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/compilerRunner/GradleKotlinCompilerRunner.kt
index ede383449df..42fc93f4288 100644
--- a/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/compilerRunner/GradleKotlinCompilerRunner.kt
+++ b/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/compilerRunner/GradleKotlinCompilerRunner.kt
@@ -58,17 +58,16 @@ internal class GradleCompilerRunner(private val project: Project) : KotlinCompil
             args: K2JVMCompilerArguments,
             environment: GradleCompilerEnvironment
     ): ExitCode {
-        val outputDir = args.destinationAsFile
-
         val moduleFile = makeModuleFile(
                 args.moduleName,
                 isTest = false,
-                outputDir = outputDir,
+                outputDir = args.destinationAsFile,
                 sourcesToCompile = sourcesToCompile,
                 javaSourceRoots = javaSourceRoots,
                 classpath = args.classpathAsList,
                 friendDirs = args.friendPaths?.map(::File) ?: emptyList())
         args.module = moduleFile.absolutePath
+        args.destination = null
 
         try {
             return runCompiler(K2JVM_COMPILER, args, environment)