diff --git a/cabal-install/Distribution/Client/SetupWrapper.hs b/cabal-install/Distribution/Client/SetupWrapper.hs
index 47814a62c71..64a2bb2f5c7 100644
--- a/cabal-install/Distribution/Client/SetupWrapper.hs
+++ b/cabal-install/Distribution/Client/SetupWrapper.hs
@@ -568,7 +568,9 @@ externalSetupMethod verbosity options pkg bt mkargs = do
             , ghcOptObjDir          = Flag setupDir
             , ghcOptHiDir           = Flag setupDir
             , ghcOptSourcePathClear = Flag True
-            , ghcOptSourcePath      = toNubListR [workingDir]
+            , ghcOptSourcePath      = case bt of
+                                      Custom -> toNubListR [workingDir]
+                                      _      -> mempty
             , ghcOptPackageDBs      = usePackageDB options''
             , ghcOptHideAllPackages = Flag newPedanticDeps
             , ghcOptCabal           = Flag newPedanticDeps