diff --git a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/KotlinGradlePluginMultiVersionIT.kt b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/KotlinGradlePluginMultiVersionIT.kt
index 58c979886d3..a295962ca08 100644
--- a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/KotlinGradlePluginMultiVersionIT.kt
+++ b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/KotlinGradlePluginMultiVersionIT.kt
@@ -59,4 +59,13 @@ class KotlinGradlePluginMultiVersionIT : BaseMultiGradleVersionIT() {
             assertNotContains("None of the classes needs to be compiled!")
         }
     }
+
+    @Test fun testApplyPluginFromBuildSrc() {
+        val project = Project("kotlinProjectWithBuildSrc", gradleVersion)
+        project.setupWorkingDir()
+        File(project.projectDir, "buildSrc/build.gradle").modify { it.replace("\$kotlin_version", KOTLIN_VERSION) }
+        project.build("build") {
+            assertSuccessful()
+        }
+    }
 }
\ No newline at end of file
diff --git a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/kotlinProjectWithBuildSrc/build.gradle b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/kotlinProjectWithBuildSrc/build.gradle
new file mode 100644
index 00000000000..770686d110a
--- /dev/null
+++ b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/kotlinProjectWithBuildSrc/build.gradle
@@ -0,0 +1 @@
+apply plugin: 'kotlin'
\ No newline at end of file
diff --git a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/kotlinProjectWithBuildSrc/buildSrc/build.gradle b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/kotlinProjectWithBuildSrc/buildSrc/build.gradle
new file mode 100644
index 00000000000..9cca5f841bc
--- /dev/null
+++ b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/kotlinProjectWithBuildSrc/buildSrc/build.gradle
@@ -0,0 +1,9 @@
+repositories {
+    mavenLocal()
+}
+
+apply plugin: 'java'
+
+dependencies {
+    runtime "org.jetbrains.kotlin:kotlin-gradle-plugin:$kotlin_version"
+}
\ No newline at end of file
diff --git a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/kotlinProjectWithBuildSrc/src/main/kotlin/Hello.kt b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/kotlinProjectWithBuildSrc/src/main/kotlin/Hello.kt
new file mode 100644
index 00000000000..65490fbf75f
--- /dev/null
+++ b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/kotlinProjectWithBuildSrc/src/main/kotlin/Hello.kt
@@ -0,0 +1 @@
+fun hello() = "Hello"
\ No newline at end of file
diff --git a/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/KotlinPluginWrapper.kt b/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/KotlinPluginWrapper.kt
index 779ec8241dc..e04b3cbe97e 100644
--- a/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/KotlinPluginWrapper.kt
+++ b/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/plugin/KotlinPluginWrapper.kt
@@ -33,7 +33,7 @@ import javax.inject.Inject
 
 abstract class KotlinBasePluginWrapper(protected val fileResolver: FileResolver): Plugin<Project> {
     private val log = Logging.getLogger(this.javaClass)
-    protected val kotlinPluginVersion = loadKotlinVersionFromResource(log)
+    val kotlinPluginVersion = loadKotlinVersionFromResource(log)
 
     override fun apply(project: Project) {
         // TODO: consider only set if if daemon or parallel compilation are enabled, though this way it should be safe too
diff --git a/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/tasks/jarSearchingUtil.kt b/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/tasks/jarSearchingUtil.kt
index 0bcb8ea23b0..0b1f102cfb0 100644
--- a/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/tasks/jarSearchingUtil.kt
+++ b/libraries/tools/kotlin-gradle-plugin/src/main/kotlin/org/jetbrains/kotlin/gradle/tasks/jarSearchingUtil.kt
@@ -20,7 +20,10 @@ import org.gradle.api.Project
 import org.gradle.api.artifacts.Configuration
 import org.gradle.api.artifacts.ResolvedDependency
 import org.gradle.api.initialization.dsl.ScriptHandler
+import org.jetbrains.kotlin.gradle.plugin.KotlinBasePluginWrapper
+import org.jetbrains.kotlin.gradle.plugin.KotlinPlugin
 import java.io.File
+import java.net.URLClassLoader
 import java.net.URLDecoder
 import java.nio.charset.Charset
 import java.util.zip.ZipFile
@@ -55,9 +58,23 @@ private fun findJarByClass(klass: Class<*>): File? {
 }
 
 private fun findKotlinCompilerJar(project: Project, compilerClassName: String): File? {
-    val filesToCheck = findPotentialCompilerJars(project)
+    val pluginVersion = pluginVersionFromAppliedPlugin(project)
+
+    val filesToCheck = sequenceOf(pluginVersion?.let(::getCompilerFromClassLoader)) +
+                       Sequence { findPotentialCompilerJars(project).iterator() } //call the body only when queried
     val entryToFind = compilerClassName.replace(".", "/") + ".class"
-    return filesToCheck.firstOrNull { it.hasEntry(entryToFind) }
+    return filesToCheck.filterNotNull().firstOrNull { it.hasEntry(entryToFind) }
+}
+
+private fun pluginVersionFromAppliedPlugin(project: Project): String? =
+        project.plugins.filterIsInstance<KotlinBasePluginWrapper>().firstOrNull()?.kotlinPluginVersion
+
+private fun getCompilerFromClassLoader(pluginVersion: String): File? {
+    val urlClassLoader = KotlinPlugin::class.java.classLoader as? URLClassLoader ?: return null
+    return urlClassLoader.urLs
+            .firstOrNull { it.toString().endsWith("kotlin-compiler-embeddable-$pluginVersion.jar") }
+            ?.let { File(it.toURI()) }
+            ?.takeIf(File::exists)
 }
 
 private fun findPotentialCompilerJars(project: Project): Iterable<File> {