diff --git a/code/go/internal/validator/common_spec.go b/code/go/internal/validator/common_spec.go
index 61eb649f6..14e40e074 100644
--- a/code/go/internal/validator/common_spec.go
+++ b/code/go/internal/validator/common_spec.go
@@ -13,6 +13,7 @@ type commonSpec struct {
 	AdditionalContents bool                   `yaml:"additionalContents"`
 	Content            map[string]interface{} `yaml:"content"`
 	Contents           []folderItemSpec       `yaml:"contents"`
+	DevelopmentFolder  bool                   `yaml:"developmentFolder"`
 }
 
 func setDefaultValues(spec *commonSpec) error {
diff --git a/code/go/internal/validator/folder_spec.go b/code/go/internal/validator/folder_spec.go
index 5466919db..e1fe5ba25 100644
--- a/code/go/internal/validator/folder_spec.go
+++ b/code/go/internal/validator/folder_spec.go
@@ -85,7 +85,7 @@ func (s *folderSpec) validate(packageName string, folderPath string) ve.Validati
 		if itemSpec == nil && s.AdditionalContents {
 			// No spec found for current folder item but we do allow additional contents in folder.
 			if file.IsDir() {
-				if strings.Contains(fileName, "-") {
+				if !s.DevelopmentFolder && strings.Contains(fileName, "-") {
 					errs = append(errs,
 						fmt.Errorf(`file "%s/%s" is invalid: directory name inside package %s contains -: %s`,
 							folderPath, fileName, packageName, fileName))
@@ -135,6 +135,11 @@ func (s *folderSpec) validate(packageName string, folderPath string) ve.Validati
 				}
 			}
 
+			// Subfolders of development folders are also considered development folders.
+			if s.DevelopmentFolder {
+				subFolderSpec.DevelopmentFolder = true
+			}
+
 			subFolderPath := path.Join(folderPath, fileName)
 			subErrs := subFolderSpec.validate(packageName, subFolderPath)
 			if len(subErrs) > 0 {
diff --git a/test/packages/deploy_docker/_dev/deploy/docker/docker-compose.d/hi.sh b/test/packages/deploy_docker/_dev/deploy/docker/docker-compose.d/hi.sh
new file mode 100644
index 000000000..3c7fa7b8e
--- /dev/null
+++ b/test/packages/deploy_docker/_dev/deploy/docker/docker-compose.d/hi.sh
@@ -0,0 +1,3 @@
+#!/bin/sh
+
+echo "Hello!"
diff --git a/test/packages/good/data_stream/foo/_dev/deploy/docker/docker-compose.d/hi.sh b/test/packages/good/data_stream/foo/_dev/deploy/docker/docker-compose.d/hi.sh
new file mode 100644
index 000000000..3c7fa7b8e
--- /dev/null
+++ b/test/packages/good/data_stream/foo/_dev/deploy/docker/docker-compose.d/hi.sh
@@ -0,0 +1,3 @@
+#!/bin/sh
+
+echo "Hello!"
diff --git a/test/packages/good/data_stream/foo/_dev/deploy/docker/docker-compose.yml b/test/packages/good/data_stream/foo/_dev/deploy/docker/docker-compose.yml
new file mode 100644
index 000000000..65b87adfd
--- /dev/null
+++ b/test/packages/good/data_stream/foo/_dev/deploy/docker/docker-compose.yml
@@ -0,0 +1,3 @@
+version: '2.3'
+services:
+  hello_world:
\ No newline at end of file
diff --git a/versions/1/_dev/spec.yml b/versions/1/_dev/spec.yml
index 9a4004123..050c743b9 100644
--- a/versions/1/_dev/spec.yml
+++ b/versions/1/_dev/spec.yml
@@ -1,5 +1,6 @@
 spec:
   additionalContents: false
+  developmentFolder: true
   contents:
     - description: Folder containing resources related to building the package.
       type: folder
@@ -10,4 +11,4 @@ spec:
       type: folder
       name: deploy
       required: false
-      $ref: "./deploy/spec.yml"
\ No newline at end of file
+      $ref: "./deploy/spec.yml"
diff --git a/versions/1/changelog.yml b/versions/1/changelog.yml
index 44e35b5e6..9fd47c3a9 100644
--- a/versions/1/changelog.yml
+++ b/versions/1/changelog.yml
@@ -7,12 +7,15 @@
   - description: ML model file name now matches the id of the model.
     type: enhancement
     link: https://github.com/elastic/package-spec/pull/268
-  - description: Prepare for next version
-    type: enhancement
-    link: https://github.com/elastic/package-spec/pull/265
   - description: Support auxiliary files in terraform deploy spec
     type: enhancement
     link: https://github.com/elastic/package-spec/pull/272
+  - description: Add `developmentFolder` flag to mark directories with files intended for development.
+    type: enhancement
+    link: https://github.com/elastic/package-spec/pull/270
+  - description: Allow directory names with hyphens inside _dev directories.
+    type: bugfix
+    link: https://github.com/elastic/package-spec/pull/270
 - version: 1.4.0
   changes:
   - description: Report error when a directory name inside a package contains hyphens (-).
diff --git a/versions/1/data_stream/_dev/spec.yml b/versions/1/data_stream/_dev/spec.yml
index 859081f56..a6b719238 100644
--- a/versions/1/data_stream/_dev/spec.yml
+++ b/versions/1/data_stream/_dev/spec.yml
@@ -1,5 +1,6 @@
 spec:
   additionalContents: false
+  developmentFolder: true
   contents:
     - description: Folder containing test resources
       type: folder
@@ -10,4 +11,4 @@ spec:
       type: folder
       name: deploy
       required: false
-      $ref: "./../../_dev/deploy/spec.yml" # Use "deploy" spec for package
\ No newline at end of file
+      $ref: "./../../_dev/deploy/spec.yml" # Use "deploy" spec for package