diff --git a/doc/dune-files.rst b/doc/dune-files.rst
index 3482d659148..e4a6aa861e1 100644
--- a/doc/dune-files.rst
+++ b/doc/dune-files.rst
@@ -887,6 +887,30 @@ instead of this stanza. For example:
 
   (dirs :standard \ <sub-dir1> <sub-dir2> ...)
 
+.. _dune-vendored_dirs:
+
+vendored_dirs (since 1.11)
+-------------------------
+
+Dune supports vendoring of other dune-based projects natively since simply
+copying a project into a subdirectory of your own project will work. Simply
+doing that has a few limitations though. You can workaround those by explicitly
+marking such directories as containing vendored code.
+
+Example:
+
+.. code:: scheme
+
+   (vendored_dirs vendor)
+
+
+Dune will not resolve aliases in vendored directories meaning by default it will
+not build all installable targets, run the test, format or lint the code located
+in such a directory while still building the parts your project depend upon.
+Libraries and executable in vendored directories will also be built with a ``-w
+-a`` flag to suppress all warnings and prevent pollution of your build output.
+
+
 .. _include_subdirs:
 
 include_subdirs
diff --git a/src/bootstrap.boot.ml b/src/bootstrap.boot.ml
index dbed532f7ca..eafcb1fc283 100644
--- a/src/bootstrap.boot.ml
+++ b/src/bootstrap.boot.ml
@@ -1,5 +1,7 @@
 open Stdune
 
+let bootstrapping = true
+
 let data_only_path p =
   match Path.Source.to_string p with
   | "test" | "example" -> true
diff --git a/src/bootstrap.ml b/src/bootstrap.ml
index 010ae7cbf83..13cdd4048a7 100644
--- a/src/bootstrap.ml
+++ b/src/bootstrap.ml
@@ -1 +1,3 @@
+let bootstrapping = false
+
 let data_only_path _ = false
diff --git a/src/bootstrap.mli b/src/bootstrap.mli
index abdb9cb4074..6799a3df616 100644
--- a/src/bootstrap.mli
+++ b/src/bootstrap.mli
@@ -2,6 +2,9 @@
 
 open Stdune
 
+(** Whether we're currently bootstrapping [dune] *)
+val bootstrapping : bool
+
 (** Treat the following path as if it was declared as a data only path
     in a [dune] file. *)
 val data_only_path : Path.Source.t -> bool
diff --git a/src/build_system.ml b/src/build_system.ml
index ad7d010a8ee..1db0862c4f9 100644
--- a/src/build_system.ml
+++ b/src/build_system.ml
@@ -195,7 +195,7 @@ module Alias0 = struct
 
   let dep_rec_internal ~name ~dir ~ctx_dir =
     Build.lazy_no_targets (lazy (
-      File_tree.Dir.fold dir ~traverse_ignored_dirs:false
+      File_tree.Dir.fold dir ~traverse:Sub_dirs.Status.Set.normal_only
         ~init:(Build.return true)
         ~f:(fun dir acc ->
           let path = Path.Build.append_source ctx_dir (File_tree.Dir.path dir) in
@@ -1277,7 +1277,7 @@ and get_rule t path =
 let all_targets t =
   String.Map.to_list t.contexts
   |> List.fold_left ~init:Path.Build.Set.empty ~f:(fun acc (_, ctx) ->
-    File_tree.fold t.file_tree ~traverse_ignored_dirs:true ~init:acc
+    File_tree.fold t.file_tree ~traverse:Sub_dirs.Status.Set.all ~init:acc
       ~f:(fun dir acc ->
         match
           load_dir
diff --git a/src/dune_load.ml b/src/dune_load.ml
index 3cbc36a36dd..2747f45f81e 100644
--- a/src/dune_load.ml
+++ b/src/dune_load.ml
@@ -265,7 +265,9 @@ let interpret ~dir ~project ~ignore_promoted_rules
 let load ?(ignore_promoted_rules=false) ~ancestor_vcs () =
   let ftree = File_tree.load Path.Source.root ~ancestor_vcs in
   let projects =
-    File_tree.fold ftree ~traverse_ignored_dirs:false ~init:[]
+    File_tree.fold ftree
+      ~traverse:{data_only = false; vendored = true; normal = true}
+      ~init:[]
       ~f:(fun dir acc ->
         let p = File_tree.Dir.project dir in
         if Path.Source.equal
diff --git a/src/file_tree.ml b/src/file_tree.ml
index 8f052bccf6e..d9ef79f0553 100644
--- a/src/file_tree.ml
+++ b/src/file_tree.ml
@@ -91,7 +91,7 @@ let load_jbuild_ignore path =
 module Dir = struct
   type t =
     { path     : Path.Source.t
-    ; ignored  : bool
+    ; status   : Sub_dirs.Status.t
     ; contents : contents Lazy.t
     ; project  : Dune_project.t
     ; vcs      : Vcs.t option
@@ -103,9 +103,9 @@ module Dir = struct
     ; dune_file : Dune_file.t option
     }
 
-  let create ~project ~path ~ignored ~contents ~vcs =
+  let create ~project ~path ~status ~contents ~vcs =
     { path
-    ; ignored
+    ; status
     ; contents
     ; project
     ; vcs
@@ -114,7 +114,8 @@ module Dir = struct
   let contents t = Lazy.force t.contents
 
   let path t = t.path
-  let ignored t = t.ignored
+  let ignored t = t.status = Data_only
+  let vendored t = t.status = Vendored
 
   let files     t = (contents t).files
   let sub_dirs  t = (contents t).sub_dirs
@@ -135,13 +136,14 @@ module Dir = struct
     String.Map.foldi (sub_dirs t) ~init:Path.Source.Set.empty
       ~f:(fun s _ acc -> Path.Source.Set.add acc (Path.Source.relative t.path s))
 
-  let rec fold t ~traverse_ignored_dirs ~init:acc ~f =
-    if not traverse_ignored_dirs && t.ignored then
-      acc
-    else
+  let rec fold t ~traverse ~init:acc ~f =
+    let must_traverse = Sub_dirs.Status.Map.find traverse t.status in
+    if must_traverse then
       let acc = f t acc in
       String.Map.fold (sub_dirs t) ~init:acc ~f:(fun t acc ->
-        fold t ~traverse_ignored_dirs ~init:acc ~f)
+        fold t ~traverse ~init:acc ~f)
+    else
+      acc
 
   let rec dyn_of_contents { files; sub_dirs; dune_file } =
     let open Dyn in
@@ -152,11 +154,11 @@ module Dir = struct
       ; "project", Dyn.opaque
       ]
 
-  and to_dyn { path ; ignored ; contents = lazy contents ; project = _; vcs } =
+  and to_dyn { path ; status ; contents = lazy contents ; project = _; vcs } =
     let open Dyn in
     Record
       [ "path", Path.Source.to_dyn path
-      ; "ignored", Bool ignored
+      ; "status", Sub_dirs.Status.to_dyn status
       ; "contents", dyn_of_contents contents
       ; "vcs", Dyn.Encoder.option Vcs.to_dyn vcs
       ]
@@ -223,11 +225,11 @@ let readdir path =
 
 let load ?(warn_when_seeing_jbuild_file=true) path ~ancestor_vcs =
   let open Result.O in
-  let rec walk path ~dirs_visited ~project:parent_project ~vcs ~data_only
+  let rec walk path ~dirs_visited ~project:parent_project ~vcs ~(dir_status : Sub_dirs.Status.t)
     : (_, _) Result.t =
     let+ { dirs; files } = readdir path in
     let project =
-      if data_only then
+      if dir_status = Data_only then
         parent_project
       else
         Option.value (Dune_project.load ~dir:path ~files)
@@ -249,7 +251,7 @@ let load ?(warn_when_seeing_jbuild_file=true) path ~ancestor_vcs =
     in
     let contents = lazy (
       let dune_file, sub_dirs =
-        if data_only then
+        if dir_status = Data_only then
           (None, Sub_dirs.default)
         else
           let dune_file, sub_dirs =
@@ -257,10 +259,13 @@ let load ?(warn_when_seeing_jbuild_file=true) path ~ancestor_vcs =
             | [] -> (None, Sub_dirs.default)
             | [fn] ->
               let file = Path.Source.relative path fn in
+              let warn_about_jbuild =
+                warn_when_seeing_jbuild_file && dir_status <> Vendored
+              in
               if fn = "dune" then
                 ignore (Dune_project.ensure_project_file_exists project
                         : Dune_project.created_or_already_exist)
-              else if warn_when_seeing_jbuild_file then
+              else if warn_about_jbuild then
                 (* DUNE2: turn this into an error *)
                 User_warning.emit ~loc:(Loc.in_file (Path.source file))
                   [ Pp.text "jbuild files are deprecated, please \
@@ -300,14 +305,19 @@ let load ?(warn_when_seeing_jbuild_file=true) path ~ancestor_vcs =
         |> List.fold_left ~init:String.Map.empty ~f:(fun acc (fn, path, file) ->
           let status =
             if Bootstrap.data_only_path path then
-              Sub_dirs.Status.Ignored
+              Sub_dirs.Status.Or_ignored.Ignored
             else
               Sub_dirs.status sub_dirs ~dir:fn
           in
           match status with
           | Ignored -> acc
-          | Normal | Data_only ->
-            let data_only = data_only || status = Data_only in
+          | Status status ->
+            let dir_status : Sub_dirs.Status.t =
+              match dir_status, status with
+              | Data_only, _ -> Data_only
+              | Vendored, Normal -> Vendored
+              | _, _ -> status
+            in
             let dirs_visited =
               if Sys.win32 then
                 dirs_visited
@@ -321,19 +331,19 @@ let load ?(warn_when_seeing_jbuild_file=true) path ~ancestor_vcs =
                     (Path.Source.to_string_maybe_quoted path) ]
             in
             match
-              walk path ~dirs_visited ~project ~data_only ~vcs
+              walk path ~dirs_visited ~project ~dir_status ~vcs
             with
             | Ok dir -> String.Map.set acc fn dir
             | Error _ -> acc)
       in
       { Dir. files; sub_dirs; dune_file })
     in
-    Dir.create ~path ~contents ~ignored:data_only ~project ~vcs
+    Dir.create ~path ~contents ~status:dir_status ~project ~vcs
   in
   match
     walk path
       ~dirs_visited:(File.Map.singleton (File.of_source_path path) path)
-      ~data_only:false
+      ~dir_status:Normal
       ~project:(Lazy.force Dune_project.anonymous)
       ~vcs:ancestor_vcs
   with
@@ -382,11 +392,14 @@ let file_exists t path =
 
 let dir_exists t path = Option.is_some (find_dir t path)
 
+let dir_is_vendored t path =
+  Option.map ~f:(fun dir -> Dir.vendored dir) (find_dir t path)
+
 let files_recursively_in t ~prefix_with path =
   match find_dir t path with
   | None -> Path.Set.empty
   | Some dir ->
-    Dir.fold dir ~init:Path.Set.empty ~traverse_ignored_dirs:true
+    Dir.fold dir ~init:Path.Set.empty ~traverse:Sub_dirs.Status.Set.all
       ~f:(fun dir acc ->
         let path = Path.append_source prefix_with (Dir.path dir) in
         String.Set.fold (Dir.files dir) ~init:acc ~f:(fun fn acc ->
diff --git a/src/file_tree.mli b/src/file_tree.mli
index 1f31e4e6cef..3e28da50e99 100644
--- a/src/file_tree.mli
+++ b/src/file_tree.mli
@@ -42,11 +42,15 @@ module Dir : sig
      or [jbuild-ignore] file in one of its ancestor directories. *)
   val ignored : t -> bool
 
+  (** Whether this directory is vendored or sits within a vendored
+      directory *)
+  val vendored : t -> bool
+
   val vcs : t -> Vcs.t option
 
   val fold
     :  t
-    -> traverse_ignored_dirs:bool
+    -> traverse:Sub_dirs.Status.Set.t
     -> init:'a
     -> f:(t -> 'a -> 'a)
     -> 'a
@@ -72,12 +76,12 @@ val load
   -> ancestor_vcs:Vcs.t option
   -> t
 
-(** Passing [~traverse_ignored_dirs:true] to this functions causes the
+(** Passing [~traverse_data_only_dirs:true] to this functions causes the
     whole source tree to be deeply scanned, including ignored
     sub-trees. *)
 val fold
   :  t
-  -> traverse_ignored_dirs:bool
+  -> traverse:Sub_dirs.Status.Set.t
   -> init:'a
   -> f:(Dir.t -> 'a -> 'a)
   -> 'a
@@ -99,6 +103,10 @@ val files_of : t -> Path.Source.t -> Path.Source.Set.t
 (** [true] iff the path is a directory *)
 val dir_exists : t -> Path.Source.t -> bool
 
+(** [dir_is_vendored t path] tells whether [path] is a vendored directory.
+    Returns [None] if it doesn't describe a directory within [t]. *)
+val dir_is_vendored : t -> Path.Source.t -> bool option
+
 (** [true] iff the path is a file *)
 val file_exists : t -> Path.Source.t -> bool
 
diff --git a/src/gen_rules.ml b/src/gen_rules.ml
index 3f9121d5453..a148b0a9cef 100644
--- a/src/gen_rules.ml
+++ b/src/gen_rules.ml
@@ -161,7 +161,8 @@ module Gen(P : sig val sctx : Super_context.t end) = struct
     in
     let allow_approx_merlin =
       let dune_project = Scope.project scope in
-      Dune_project.allow_approx_merlin dune_project in
+      let dir_is_vendored = Super_context.dir_is_vendored sctx src_dir in
+      dir_is_vendored || Dune_project.allow_approx_merlin dune_project in
     Option.iter (Merlin.merge_all ~allow_approx_merlin merlins)
       ~f:(fun m ->
         let more_src_dirs =
diff --git a/src/merlin.ml b/src/merlin.ml
index 712fae6e32e..91de0e3e191 100644
--- a/src/merlin.ml
+++ b/src/merlin.ml
@@ -37,7 +37,7 @@ module Preprocess = struct
       if Action_dune_lang.compare_no_locs a1 a2 <> Ordering.Eq then
         warn_dropped_pp loc ~allow_approx_merlin
           ~reason:"this action preprocessor is not equivalent to other \
-                   preproocessor specifications.";
+                   preprocessor specifications.";
       Action (loc, a1)
     | Pps _, Action (loc, _)
     | Action (loc, _), Pps _ ->
diff --git a/src/ocaml_flags.ml b/src/ocaml_flags.ml
index eb669cd3843..1fd8099311e 100644
--- a/src/ocaml_flags.ml
+++ b/src/ocaml_flags.ml
@@ -26,6 +26,9 @@ let dev_mode_warnings =
 let default_warnings =
   "-40"
 
+let vendored_warnings =
+  ["-w"; "-a"]
+
 let default_flags ~profile =
   if profile = "dev" then
     [ "-w"; dev_mode_warnings ^ default_warnings
@@ -99,6 +102,8 @@ let append_common t flags = {t with common = t.common >>^ fun l -> l @ flags}
 
 let prepend_common flags t = {t with common = t.common >>^ fun l -> flags @ l}
 
+let with_vendored_warnings t = append_common t vendored_warnings
+
 let common t = t.common
 
 let dump t =
diff --git a/src/ocaml_flags.mli b/src/ocaml_flags.mli
index a47d915c411..5ce5426a821 100644
--- a/src/ocaml_flags.mli
+++ b/src/ocaml_flags.mli
@@ -29,6 +29,8 @@ val get_for_cm : t -> cm_kind:Cm_kind.t -> (unit, string list) Build.t
 val append_common : t -> string list -> t
 val prepend_common : string list -> t -> t
 
+val with_vendored_warnings : t -> t
+
 val common : t -> (unit, string list) Build.t
 
 val dump : t -> (unit, Dune_lang.t list) Build.t
diff --git a/src/sub_dirs.ml b/src/sub_dirs.ml
index 064f10f8f76..66aadbea391 100644
--- a/src/sub_dirs.ml
+++ b/src/sub_dirs.ml
@@ -1,9 +1,51 @@
 open! Stdune
 
-type 'set t =
-  { dirs : 'set
-  ; data_only : 'set
-  }
+module Status = struct
+  type t = Data_only | Normal | Vendored
+
+  module Map = struct
+    type 'a t =
+      { data_only : 'a
+      ; vendored : 'a
+      ; normal : 'a
+      }
+
+    let find {data_only; vendored; normal} = function
+      | Data_only -> data_only
+      | Vendored -> vendored
+      | Normal -> normal
+  end
+
+  let to_dyn t =
+    let open Dyn in
+    match t with
+    | Data_only -> Variant ("Data_only", [])
+    | Vendored -> Variant ("Vendored", [])
+    | Normal -> Variant ("Normal", [])
+
+  module Or_ignored = struct
+    type nonrec t = Ignored | Status of t
+  end
+
+  module Set = struct
+    open Map
+    type t = bool Map.t
+
+    let all = {data_only = true; vendored = true; normal = true}
+    let normal_only = {data_only = false; vendored = false; normal = true}
+  end
+end
+
+let status { Status.Map.normal; data_only ; vendored }
+      ~dir : Status.Or_ignored.t =
+  match String.Set.mem normal dir
+      , String.Set.mem data_only dir
+      , String.Set.mem vendored dir with
+  | true, false, false  -> Status Normal
+  | true, false, true -> Status Vendored
+  | true, true, _   -> Status Data_only
+  | false, false, _ -> Ignored
+  | false, true, _  -> assert false
 
 let default =
   let standard_dirs =
@@ -11,44 +53,51 @@ let default =
       | "" -> false
       | s -> s.[0] <> '.' && s.[0] <> '_')
   in
-  { dirs = standard_dirs
+  { Status.Map.
+    normal = standard_dirs
   ; data_only = Predicate_lang.empty
+  ; vendored = Predicate_lang.empty
   }
 
-let make ~dirs ~data_only ~ignored_sub_dirs =
-  let dirs = Option.value dirs ~default:default.dirs in
+let make ~dirs ~data_only ~ignored_sub_dirs ~vendored_dirs =
+  let normal = Option.value dirs ~default:default.normal in
   let data_only =
     let data_only = Option.value data_only ~default:default.data_only in
     Predicate_lang.union (data_only :: ignored_sub_dirs)
   in
-  { dirs ; data_only }
+  let vendored = Option.value vendored_dirs ~default:default.vendored in
+  { Status.Map. normal ; data_only ; vendored }
 
-let add_data_only_dirs t ~dirs =
-  { t with data_only =
-             Predicate_lang.union
-               [t.data_only; (Predicate_lang.of_string_set dirs)] }
+let add_data_only_dirs (t : _ Status.Map.t) ~dirs =
+  { t with
+    Status.Map.
+    data_only =
+      Predicate_lang.union
+        [t.data_only; Predicate_lang.of_string_set dirs] }
 
-let eval t ~dirs =
-  let dirs = Predicate_lang.filter t.dirs ~standard:default.dirs dirs in
-  let data_only =
-    Predicate_lang.filter t.data_only ~standard:default.data_only dirs
-    |> String.Set.of_list
-  in
-  let dirs = String.Set.of_list dirs in
-  { dirs
-  ; data_only
-  }
-
-module Status = struct
-  type t = Ignored | Data_only | Normal
-end
-
-let status t ~dir =
-  match String.Set.mem t.dirs dir, String.Set.mem t.data_only dir with
-  | true, false  -> Status.Normal
-  | true, true   -> Data_only
-  | false, false -> Ignored
-  | false, true  -> assert false
+let eval (t : _ Status.Map.t) ~dirs =
+  let normal = Predicate_lang.filter t.normal ~standard:default.normal dirs in
+  let to_set ~standard pred =
+    String.Set.of_list (Predicate_lang.filter pred ~standard dirs) in
+  let data_only = to_set ~standard:default.data_only t.data_only in
+  let vendored =
+    to_set ~standard:default.vendored t.vendored in
+  let both_vendored_and_data = String.Set.inter data_only vendored in
+  match String.Set.choose both_vendored_and_data with
+  | None ->
+    let normal = String.Set.of_list normal in
+    { Status.Map.
+      normal
+    ; data_only
+    ; vendored
+    }
+  | Some dir ->
+    User_error.raise
+      [ Pp.textf
+          "Directory %s was marked as vendored and data_only, \
+           it can't be marked as both."
+          dir
+      ]
 
 let decode =
   let open Stanza.Decoder in
@@ -86,10 +135,21 @@ let decode =
     Syntax.since Stanza.syntax (1, 6) >>>
     Predicate_lang.decode
   in
+  let vendored_dirs =
+    let decode =
+      if Bootstrap.bootstrapping then
+        let pred = Predicate_lang.of_pred (fun _ -> true) in
+        Dune_lang.Decoder.(map ~f:(fun () -> pred) (keyword "*"))
+      else
+        Predicate_lang.decode
+    in
+    located (Syntax.since Stanza.syntax (1, 11) >>> decode)
+  in
   let decode =
     let+ dirs = field_o "dirs" (located plang)
     and+ data_only = field_o "data_only_dirs" (located plang)
     and+ ignored_sub_dirs = multi_field "ignored_subdirs" ignored_sub_dirs
+    and+ vendored_dirs = field_o "vendored_dirs" vendored_dirs
     and+ rest = leftover_fields
     in
     match data_only, dirs, ignored_sub_dirs with
@@ -104,7 +164,8 @@ let decode =
     | _ ->
       let dirs = Option.map ~f:snd dirs in
       let data_only = Option.map ~f:snd data_only in
-      ( make ~dirs ~data_only ~ignored_sub_dirs
+      let vendored_dirs = Option.map ~f:snd vendored_dirs in
+      ( make ~dirs ~data_only ~ignored_sub_dirs ~vendored_dirs
       , rest
       )
   in
diff --git a/src/sub_dirs.mli b/src/sub_dirs.mli
index e6082946766..65165761c43 100644
--- a/src/sub_dirs.mli
+++ b/src/sub_dirs.mli
@@ -1,23 +1,46 @@
 open Stdune
 
-type 'set t = private
-  { dirs : 'set
-  ; data_only : 'set
-  }
-
 module Status : sig
-  type t = Ignored | Data_only | Normal
+  type t = Data_only | Normal | Vendored
+
+  val to_dyn : t -> Dyn.t
+
+  module Or_ignored : sig
+    type nonrec t = Ignored | Status of t
+  end
+
+  module Map : sig
+    type status
+    type 'a t =
+      { data_only : 'a
+      ; vendored : 'a
+      ; normal : 'a
+      }
+
+    val find : 'a t -> status -> 'a
+  end with type status := t
+
+  module Set : sig
+    type t = bool Map.t
+
+    val all : t
+    val normal_only : t
+  end
 end
 
-val default : Predicate_lang.t t
+val default : Predicate_lang.t Status.Map.t
 
 val add_data_only_dirs
-  :  Predicate_lang.t t
+  :  Predicate_lang.t Status.Map.t
   -> dirs:String.Set.t
-  -> Predicate_lang.t t
+  -> Predicate_lang.t Status.Map.t
 
-val eval : Predicate_lang.t t -> dirs:string list -> String.Set.t t
+val eval
+  : Predicate_lang.t Status.Map.t
+  -> dirs:string list
+  -> String.Set.t Status.Map.t
 
-val status : String.Set.t t -> dir:string -> Status.t
+val status : String.Set.t Status.Map.t -> dir:string -> Status.Or_ignored.t
 
-val decode : (Predicate_lang.t t * Dune_lang.Ast.t list) Stanza.Decoder.t
+val decode
+  : (Predicate_lang.t Status.Map.t * Dune_lang.Ast.t list) Stanza.Decoder.t
diff --git a/src/super_context.ml b/src/super_context.ml
index 2112a0b446e..9083ca348ec 100644
--- a/src/super_context.ml
+++ b/src/super_context.ml
@@ -268,13 +268,30 @@ let partial_expand sctx ~dep_kind ~targets_written_by_user ~map_exe
   let partial = Action_unexpanded.partial_expand t ~expander ~map_exe in
   (partial, acc)
 
+let dir_is_vendored t src_dir =
+  Option.value ~default:false (File_tree.dir_is_vendored t.file_tree src_dir)
+
+let build_dir_is_vendored t build_dir =
+  let opt =
+    let open Option.O in
+    let+ src_dir = Path.Build.drop_build_context build_dir in
+    dir_is_vendored t src_dir
+  in
+  Option.value ~default:false opt
+
 let ocaml_flags t ~dir (x : Dune_file.Buildable.t) =
-  let t = t.env_context in
-  let expander = Env.expander t ~dir in
-  Ocaml_flags.make
-    ~spec:x.flags
-    ~default:(Env.ocaml_flags t ~dir)
-    ~eval:(Expander.expand_and_eval_set expander)
+  let expander = Env.expander t.env_context ~dir in
+  let flags =
+    Ocaml_flags.make
+      ~spec:x.flags
+      ~default:(Env.ocaml_flags t.env_context ~dir)
+      ~eval:(Expander.expand_and_eval_set expander)
+  in
+  let dir_is_vendored = build_dir_is_vendored t dir in
+  if dir_is_vendored then
+    Ocaml_flags.with_vendored_warnings flags
+  else
+    flags
 
 let c_flags t ~dir ~expander ~flags =
   let t = t.env_context in
diff --git a/src/super_context.mli b/src/super_context.mli
index 8853918d040..9e203df1c82 100644
--- a/src/super_context.mli
+++ b/src/super_context.mli
@@ -69,6 +69,9 @@ val dump_env : t -> dir:Path.Build.t -> (unit, Dune_lang.t list) Build.t
 val find_scope_by_dir  : t -> Path.Build.t        -> Scope.t
 val find_scope_by_name : t -> Dune_project.Name.t -> Scope.t
 
+(** Tells whether the given source directory is marked as vendored *)
+val dir_is_vendored : t -> Path.Source.t -> bool
+
 val add_rule
   :  t
   -> ?sandbox:bool
diff --git a/src/upgrader.ml b/src/upgrader.ml
index dcd5ec71021..69b88f1663c 100644
--- a/src/upgrader.ml
+++ b/src/upgrader.ml
@@ -371,8 +371,8 @@ let upgrade ft =
     ; to_edit = []
     }
   in
-  File_tree.fold ft ~traverse_ignored_dirs:false ~init:() ~f:(fun dir () ->
-    upgrade_dir todo dir);
+  File_tree.fold ft ~traverse:Sub_dirs.Status.Set.normal_only ~init:()
+    ~f:(fun dir () -> upgrade_dir todo dir);
   let git = lazy (
     match Bin.which ~path:(Env.path Env.initial) "git" with
     | Some x -> x
diff --git a/src/utop.ml b/src/utop.ml
index 7e8a26bfd73..09f1fe063f0 100644
--- a/src/utop.ml
+++ b/src/utop.ml
@@ -26,7 +26,7 @@ let libs_under_dir sctx ~db ~dir =
   (let open Option.O in
    let* dir = Path.drop_build_context dir in
    let+ dir = File_tree.find_dir (Super_context.file_tree sctx) dir in
-   File_tree.Dir.fold dir ~traverse_ignored_dirs:true
+   File_tree.Dir.fold dir ~traverse:Sub_dirs.Status.Set.all
      ~init:[] ~f:(fun dir acc ->
        let dir =
          Path.Build.append_source (Super_context.build_dir sctx)
diff --git a/test/blackbox-tests/dune.inc b/test/blackbox-tests/dune.inc
index 30066b08617..2bb6422b093 100644
--- a/test/blackbox-tests/dune.inc
+++ b/test/blackbox-tests/dune.inc
@@ -1542,6 +1542,14 @@
    test-cases/variants-wrong-external-declaration
    (progn (run %{exe:cram.exe} -test run.t) (diff? run.t run.t.corrected)))))
 
+(alias
+ (name vendor)
+ (deps (package dune) (source_tree test-cases/vendor))
+ (action
+  (chdir
+   test-cases/vendor
+   (progn (run %{exe:cram.exe} -test run.t) (diff? run.t run.t.corrected)))))
+
 (alias
  (name vlib)
  (deps (package dune) (source_tree test-cases/vlib))
@@ -1787,6 +1795,7 @@
   (alias variants-multi-project)
   (alias variants-only-package)
   (alias variants-wrong-external-declaration)
+  (alias vendor)
   (alias vlib)
   (alias vlib-default-impl)
   (alias vlib-wrong-default-impl)
@@ -1957,6 +1966,7 @@
   (alias variants-multi-project)
   (alias variants-only-package)
   (alias variants-wrong-external-declaration)
+  (alias vendor)
   (alias vlib)
   (alias vlib-default-impl)
   (alias vlib-wrong-default-impl)
diff --git a/test/blackbox-tests/test-cases/vendor/conflicts-with-data-only/dir/dune b/test/blackbox-tests/test-cases/vendor/conflicts-with-data-only/dir/dune
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/test/blackbox-tests/test-cases/vendor/conflicts-with-data-only/dune b/test/blackbox-tests/test-cases/vendor/conflicts-with-data-only/dune
new file mode 100644
index 00000000000..066527c4328
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/conflicts-with-data-only/dune
@@ -0,0 +1,3 @@
+(vendored_dirs *)
+
+(data_only_dirs *)
diff --git a/test/blackbox-tests/test-cases/vendor/conflicts-with-data-only/dune-project b/test/blackbox-tests/test-cases/vendor/conflicts-with-data-only/dune-project
new file mode 100644
index 00000000000..0636ab6acf4
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/conflicts-with-data-only/dune-project
@@ -0,0 +1 @@
+(lang dune 1.11)
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/dune-project b/test/blackbox-tests/test-cases/vendor/duniverse/dune-project
new file mode 100644
index 00000000000..0636ab6acf4
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/duniverse/dune-project
@@ -0,0 +1 @@
+(lang dune 1.11)
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/dune b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/dune
new file mode 100644
index 00000000000..806de809491
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/dune
@@ -0,0 +1 @@
+(vendored_dirs *)
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/dune-project b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/dune-project
new file mode 100644
index 00000000000..bc29044968d
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/dune-project
@@ -0,0 +1,2 @@
+(lang dune 1.10)
+(name vendored)
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/lib/dune b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/lib/dune
new file mode 100644
index 00000000000..ff43b81c072
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/lib/dune
@@ -0,0 +1,2 @@
+(library
+ (public_name vendored))
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/lib/vendored.ml b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/lib/vendored.ml
new file mode 100644
index 00000000000..3282b724e89
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/lib/vendored.ml
@@ -0,0 +1 @@
+let say_hello () = Printf.printf "Hello from vendored lib!\n"
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/tests/dune b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/tests/dune
new file mode 100644
index 00000000000..424d13f6598
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/tests/dune
@@ -0,0 +1,3 @@
+(test
+ (name test)
+ (libraries vendored))
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/tests/test.ml b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/tests/test.ml
new file mode 100644
index 00000000000..a1d72716532
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/tests/test.ml
@@ -0,0 +1 @@
+let () = Vendored.say_hello ()
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/vendored.opam b/test/blackbox-tests/test-cases/vendor/duniverse/duniverse/vendored/vendored.opam
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/lib/dune b/test/blackbox-tests/test-cases/vendor/duniverse/lib/dune
new file mode 100644
index 00000000000..73ad23b414b
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/duniverse/lib/dune
@@ -0,0 +1,3 @@
+(library
+ (public_name main)
+ (libraries vendored))
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/lib/main.ml b/test/blackbox-tests/test-cases/vendor/duniverse/lib/main.ml
new file mode 100644
index 00000000000..03f3828cacc
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/duniverse/lib/main.ml
@@ -0,0 +1,3 @@
+let _ = Vendored.say_hello
+
+let say_hello () = Printf.printf "Hello from main lib!\n"
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/main.opam b/test/blackbox-tests/test-cases/vendor/duniverse/main.opam
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/tests/dune b/test/blackbox-tests/test-cases/vendor/duniverse/tests/dune
new file mode 100644
index 00000000000..b4a9ad42806
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/duniverse/tests/dune
@@ -0,0 +1,3 @@
+(test
+ (name test)
+ (libraries main))
diff --git a/test/blackbox-tests/test-cases/vendor/duniverse/tests/test.ml b/test/blackbox-tests/test-cases/vendor/duniverse/tests/test.ml
new file mode 100644
index 00000000000..0a29d9c1105
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/duniverse/tests/test.ml
@@ -0,0 +1 @@
+let () = Main.say_hello ()
diff --git a/test/blackbox-tests/test-cases/vendor/from-1-11/dune b/test/blackbox-tests/test-cases/vendor/from-1-11/dune
new file mode 100644
index 00000000000..806de809491
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/from-1-11/dune
@@ -0,0 +1 @@
+(vendored_dirs *)
diff --git a/test/blackbox-tests/test-cases/vendor/from-1-11/dune-project b/test/blackbox-tests/test-cases/vendor/from-1-11/dune-project
new file mode 100644
index 00000000000..42c0c167431
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/from-1-11/dune-project
@@ -0,0 +1 @@
+(lang dune 1.10)
diff --git a/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/dune b/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/dune
new file mode 100644
index 00000000000..67b077aef4a
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/dune
@@ -0,0 +1,6 @@
+(alias
+ (name inaccurate-merlins-are-ok)
+ (deps vendored/a.ml)
+ (action (echo "There should be no inaccurate .merlin warning above!")))
+
+(vendored_dirs vendored)
diff --git a/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/dune-project b/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/dune-project
new file mode 100644
index 00000000000..0636ab6acf4
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/dune-project
@@ -0,0 +1 @@
+(lang dune 1.11)
diff --git a/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/vendored/a.ml b/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/vendored/a.ml
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/vendored/b.ml b/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/vendored/b.ml
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/vendored/dune b/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/vendored/dune
new file mode 100644
index 00000000000..134706f4c7b
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/inaccurate-merlin/vendored/dune
@@ -0,0 +1,9 @@
+(library
+ (name a)
+ (modules a)
+ (preprocess (action (bash "some_command"))))
+
+(library
+ (name b)
+ (modules b)
+ (preprocess (action (bash "some_other_command"))))
diff --git a/test/blackbox-tests/test-cases/vendor/jbuild-files/dune b/test/blackbox-tests/test-cases/vendor/jbuild-files/dune
new file mode 100644
index 00000000000..75359159337
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/jbuild-files/dune
@@ -0,0 +1,6 @@
+(alias
+ (name jbuild-are-ok)
+ (deps vendored/lib.cmxa)
+ (action (echo "There should be no jbuild warning above!")))
+
+(vendored_dirs vendored)
diff --git a/test/blackbox-tests/test-cases/vendor/jbuild-files/dune-project b/test/blackbox-tests/test-cases/vendor/jbuild-files/dune-project
new file mode 100644
index 00000000000..0636ab6acf4
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/jbuild-files/dune-project
@@ -0,0 +1 @@
+(lang dune 1.11)
diff --git a/test/blackbox-tests/test-cases/vendor/jbuild-files/vendored/jbuild b/test/blackbox-tests/test-cases/vendor/jbuild-files/vendored/jbuild
new file mode 100644
index 00000000000..20b3f6191f3
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/jbuild-files/vendored/jbuild
@@ -0,0 +1 @@
+(library ((name lib)))
diff --git a/test/blackbox-tests/test-cases/vendor/jbuild-files/vendored/lib.ml b/test/blackbox-tests/test-cases/vendor/jbuild-files/vendored/lib.ml
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/test/blackbox-tests/test-cases/vendor/run.t b/test/blackbox-tests/test-cases/vendor/run.t
new file mode 100644
index 00000000000..7982477864e
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/run.t
@@ -0,0 +1,48 @@
+Vendored directories should be traversed to find targets so that they are built when they are depend upon
+
+  $ dune build --root duniverse
+  Entering directory 'duniverse'
+
+Aliases should not be resolved in vendored sub directories
+
+  $ dune runtest --root duniverse
+  Entering directory 'duniverse'
+          test alias tests/runtest
+  Hello from main lib!
+
+When compiling vendored code, all warnings should be disabled
+
+  $ dune build --root warnings @no-warnings-please 
+  Entering directory 'warnings'
+  There should be no OCaml warning above!
+
+Dune will not warn about jbuild files within vendored directories
+
+  $ dune build --root jbuild-files @jbuild-are-ok
+  Entering directory 'jbuild-files'
+  There should be no jbuild warning above!
+
+Dune will not warn about generating inaccurate .merlin files within vendored directories
+
+  $ dune build --root inaccurate-merlin @inaccurate-merlins-are-ok
+  Entering directory 'inaccurate-merlin'
+  There should be no inaccurate .merlin warning above!
+
+The vendored_dirs stanza is available from version 1.11 of the dune language
+
+  $ dune build --root from-1-11
+  Entering directory 'from-1-11'
+  File "dune", line 1, characters 0-17:
+  1 | (vendored_dirs *)
+      ^^^^^^^^^^^^^^^^^
+  Error: 'vendored_dirs' is only available since version 1.11 of the dune
+  language
+  [1]
+
+The same directory cannot be marked as both vendored and data-only
+
+  $ dune build --root conflicts-with-data-only
+  Entering directory 'conflicts-with-data-only'
+  Error: Directory dir was marked as vendored and data_only, it can't be marked
+  as both.
+  [1]
diff --git a/test/blackbox-tests/test-cases/vendor/warnings/dune b/test/blackbox-tests/test-cases/vendor/warnings/dune
new file mode 100644
index 00000000000..55e794d9a9e
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/warnings/dune
@@ -0,0 +1,6 @@
+(alias
+ (name no-warnings-please)
+ (deps vendored/lib.cmxa)
+ (action (echo "There should be no OCaml warning above!")))
+
+(vendored_dirs vendored)
diff --git a/test/blackbox-tests/test-cases/vendor/warnings/dune-project b/test/blackbox-tests/test-cases/vendor/warnings/dune-project
new file mode 100644
index 00000000000..0636ab6acf4
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/warnings/dune-project
@@ -0,0 +1 @@
+(lang dune 1.11)
diff --git a/test/blackbox-tests/test-cases/vendor/warnings/vendored/dune b/test/blackbox-tests/test-cases/vendor/warnings/vendored/dune
new file mode 100644
index 00000000000..4ce22d14f6c
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/warnings/vendored/dune
@@ -0,0 +1,2 @@
+(library
+  (name lib))
diff --git a/test/blackbox-tests/test-cases/vendor/warnings/vendored/lib.ml b/test/blackbox-tests/test-cases/vendor/warnings/vendored/lib.ml
new file mode 100644
index 00000000000..39ac22eefcf
--- /dev/null
+++ b/test/blackbox-tests/test-cases/vendor/warnings/vendored/lib.ml
@@ -0,0 +1,2 @@
+let do_something = function
+  | [] -> ()
diff --git a/vendor/dune b/vendor/dune
new file mode 100644
index 00000000000..806de809491
--- /dev/null
+++ b/vendor/dune
@@ -0,0 +1 @@
+(vendored_dirs *)