diff --git a/Cabal/Distribution/Backpack/ComponentsGraph.hs b/Cabal/Distribution/Backpack/ComponentsGraph.hs
index b086f68d79b..02d7aa911a5 100644
--- a/Cabal/Distribution/Backpack/ComponentsGraph.hs
+++ b/Cabal/Distribution/Backpack/ComponentsGraph.hs
@@ -64,12 +64,25 @@ mkComponentsGraph enabled pkg_descr =
     componentDeps component =
       (CExeName <$> getAllInternalToolDependencies pkg_descr bi)
 
-      ++ [ if pkgname == packageName pkg_descr
-           then CLibName LMainLibName
-           else CLibName (LSubLibName toolname)
-         | Dependency pkgname _ _ <- targetBuildDepends bi
-         , let toolname = packageNameToUnqualComponentName pkgname
-         , toolname `elem` internalPkgDeps ]
+      ++ do
+          Dependency pkgname _ lns <- targetBuildDepends bi
+          let uqn = packageNameToUnqualComponentName pkgname
+          guard (uqn `elem` internalPkgDeps)
+          ln <- toList lns
+
+          -- given package "pkg" with "sublib" library:
+          case ln of
+              LMainLibName
+                  -- build-depends: pkg
+                  | pkgname == packageName pkg_descr -> return (CLibName LMainLibName)
+                  -- build-depends: sublib
+                  | otherwise                        -> return (CLibName (LSubLibName uqn))
+              LSubLibName uqn'
+                  -- build-depends: pkg:sublib
+                  | pkgname == packageName pkg_descr
+                  , uqn' `elem` internalPkgDeps      -> return (CLibName (LSubLibName uqn'))
+                  -- build-depends: sublib:something else
+                  | otherwise                        -> []
       where
         bi = componentBuildInfo component
         internalPkgDeps = map (conv . libName) (allLibraries pkg_descr)
diff --git a/cabal-testsuite/PackageTests/MultipleLibraries/T6894/cabal.out b/cabal-testsuite/PackageTests/MultipleLibraries/T6894/cabal.out
index 274d492cb51..b3e8aed99bd 100644
--- a/cabal-testsuite/PackageTests/MultipleLibraries/T6894/cabal.out
+++ b/cabal-testsuite/PackageTests/MultipleLibraries/T6894/cabal.out
@@ -1,5 +1,15 @@
 # cabal v2-build
 Resolving dependencies...
-Error:
-    Dependency cycle between the following components: library
-    In the inplace package 'issue-6894'
+Build profile: -w ghc-<GHCVER> -O1
+In order, the following will be built:
+ - issue-6894 (lib:sublib) (first run)
+ - issue-6894 (lib) (first run)
+Warning: issue.cabal:7:30: colon specifier is experimental feature (issue #5660)
+Configuring library 'sublib' for issue-6894..
+Preprocessing library 'sublib' for issue-6894..
+Building library 'sublib' for issue-6894..
+Warning: issue.cabal:7:30: colon specifier is experimental feature (issue #5660)
+Configuring library for issue-6894..
+Warning: The package has an extraneous version range for a dependency on an internal library: issue:{sublib} >=0 && ==6894. This version range includes the current package but isn't needed as the current package's library will always be used.
+Preprocessing library for issue-6894..
+Building library for issue-6894..
diff --git a/cabal-testsuite/PackageTests/MultipleLibraries/T6894/cabal.test.hs b/cabal-testsuite/PackageTests/MultipleLibraries/T6894/cabal.test.hs
index 2fac6fcfc10..2d840c018aa 100644
--- a/cabal-testsuite/PackageTests/MultipleLibraries/T6894/cabal.test.hs
+++ b/cabal-testsuite/PackageTests/MultipleLibraries/T6894/cabal.test.hs
@@ -1,3 +1,3 @@
 import Test.Cabal.Prelude
 main = cabalTest $
-    fails $ cabal "v2-build" ["issue"]
+    cabal "v2-build" ["issue"]
diff --git a/cabal-testsuite/PackageTests/MultipleLibraries/T6894/setup.cabal.out b/cabal-testsuite/PackageTests/MultipleLibraries/T6894/setup.cabal.out
index c2f87fcf4e6..a919ff7a59e 100644
--- a/cabal-testsuite/PackageTests/MultipleLibraries/T6894/setup.cabal.out
+++ b/cabal-testsuite/PackageTests/MultipleLibraries/T6894/setup.cabal.out
@@ -1,7 +1,8 @@
 # Setup configure
 Warning: issue.cabal:7:30: colon specifier is experimental feature (issue #5660)
 Configuring issue-6894...
-Error:
-    Components in the package issue-6894 depend on each other in a cyclic way:
-    'library' depends on 'library'
 # Setup build
+Preprocessing library 'sublib' for issue-6894..
+Building library 'sublib' for issue-6894..
+Preprocessing library for issue-6894..
+Building library for issue-6894..
diff --git a/cabal-testsuite/PackageTests/MultipleLibraries/T6894/setup.out b/cabal-testsuite/PackageTests/MultipleLibraries/T6894/setup.out
index c2f87fcf4e6..a919ff7a59e 100644
--- a/cabal-testsuite/PackageTests/MultipleLibraries/T6894/setup.out
+++ b/cabal-testsuite/PackageTests/MultipleLibraries/T6894/setup.out
@@ -1,7 +1,8 @@
 # Setup configure
 Warning: issue.cabal:7:30: colon specifier is experimental feature (issue #5660)
 Configuring issue-6894...
-Error:
-    Components in the package issue-6894 depend on each other in a cyclic way:
-    'library' depends on 'library'
 # Setup build
+Preprocessing library 'sublib' for issue-6894..
+Building library 'sublib' for issue-6894..
+Preprocessing library for issue-6894..
+Building library for issue-6894..
diff --git a/cabal-testsuite/PackageTests/MultipleLibraries/T6894/setup.test.hs b/cabal-testsuite/PackageTests/MultipleLibraries/T6894/setup.test.hs
index d92ad6d8d45..5172e8fd0f9 100644
--- a/cabal-testsuite/PackageTests/MultipleLibraries/T6894/setup.test.hs
+++ b/cabal-testsuite/PackageTests/MultipleLibraries/T6894/setup.test.hs
@@ -1,3 +1,3 @@
 import Test.Cabal.Prelude
 main = setupAndCabalTest $ do
-    fails $ setup_build []
+    setup_build []