diff --git a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/npm-dependencies/build.gradle.kts b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/npm-dependencies/build.gradle.kts
index 8baea33e4f5..a0e45e16689 100644
--- a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/npm-dependencies/build.gradle.kts
+++ b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/npm-dependencies/build.gradle.kts
@@ -18,6 +18,7 @@ kotlin.sourceSets {
             implementation(npm("@yworks/optimizer", "1.0.6"))
             implementation(npm("file-dependency", projectDir.resolve("file-dependency")))
             implementation(npm(projectDir.resolve("file-dependency-2")))
+            implementation(npm(projectDir.resolve("file-dependency-3")))
         }
     }
 
diff --git a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/npm-dependencies/file-dependency-3/index.js b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/npm-dependencies/file-dependency-3/index.js
new file mode 100644
index 00000000000..c6dab39e545
--- /dev/null
+++ b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/resources/testProject/npm-dependencies/file-dependency-3/index.js
@@ -0,0 +1,5 @@
+/*
+ * Copyright 2010-2020 JetBrains s.r.o. and Kotlin Programming Language contributors.
+ * Use of this source code is governed by the Apache 2.0 license that can be found in the license/LICENSE.txt file.
+ */
+
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 a00f8f35c8f..b76fa04b070 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
@@ -89,11 +89,15 @@ class DefaultKotlinDependencyHandler(
             version = version
         )
 
-    override fun npm(name: String, directory: File): NpmDependency =
-        npm(
+    override fun npm(name: String, directory: File): NpmDependency {
+        check(directory.isDirectory) {
+            "Dependency on local path should point on directory but $directory found"
+        }
+        return npm(
             name = name,
             version = fileVersion(directory)
         )
+    }
 
     override fun npm(directory: File): NpmDependency =
         npm(
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 e78af5e0c91..81964901841 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
@@ -133,11 +133,11 @@ internal fun fileVersion(directory: File): String =
 internal fun moduleName(directory: File): String {
     val packageJson = directory.resolve(PACKAGE_JSON)
 
-    check(packageJson.isFile) {
-        "There is no NPM module in $directory. Declare valid $PACKAGE_JSON in it."
+    if (packageJson.isFile) {
+        return fromSrcPackageJson(packageJson)!!.name
     }
 
-    return fromSrcPackageJson(packageJson)!!.name
+    return directory.name
 }
 
 const val FILE_VERSION_PREFIX = "file:"
\ No newline at end of file
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 54214dc40b0..1f4e7caf902 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
@@ -30,11 +30,15 @@ fun Project.addNpmDependencyExtension() {
                 version = version
             )
 
-        override operator fun invoke(name: String, directory: File): NpmDependency =
-            invoke(
+        override operator fun invoke(name: String, directory: File): NpmDependency {
+            check(directory.isDirectory) {
+                "Dependency on local path should point on directory but $directory found"
+            }
+            return invoke(
                 name = name,
                 version = fileVersion(directory)
             )
+        }
 
         override operator fun invoke(directory: File): NpmDependency =
             invoke(