diff --git a/cabal-testsuite/PackageTests/BuildToolDependsExternal/cabal.project b/cabal-testsuite/PackageTests/BuildToolDependsExternal/cabal.project
new file mode 100644
index 00000000000..359fdc811bd
--- /dev/null
+++ b/cabal-testsuite/PackageTests/BuildToolDependsExternal/cabal.project
@@ -0,0 +1,2 @@
+packages: client
+optional-packages: pre-proc
diff --git a/cabal-testsuite/PackageTests/BuildToolDependsExternal/client/Hello.x b/cabal-testsuite/PackageTests/BuildToolDependsExternal/client/Hello.x
new file mode 100644
index 00000000000..28f179506bf
--- /dev/null
+++ b/cabal-testsuite/PackageTests/BuildToolDependsExternal/client/Hello.x
@@ -0,0 +1,3 @@
+module Main where
+
+main = print 0
diff --git a/cabal-testsuite/PackageTests/BuildToolDependsExternal/client/client.cabal b/cabal-testsuite/PackageTests/BuildToolDependsExternal/client/client.cabal
new file mode 100644
index 00000000000..a13e99b682a
--- /dev/null
+++ b/cabal-testsuite/PackageTests/BuildToolDependsExternal/client/client.cabal
@@ -0,0 +1,13 @@
+name:                client
+version:             0.1.0.0
+synopsis:            Checks build-tool-depends are put in PATH
+license:             BSD3
+category:            Testing
+build-type:          Simple
+cabal-version:       >=1.10
+
+executable             hello-world
+  main-is:             Hello.hs
+  build-depends:       base
+  build-tool-depends:  pre-proc:alex
+  default-language:    Haskell2010
diff --git a/cabal-testsuite/PackageTests/BuildToolDependsExternal/pre-proc/MyCustomPreprocessor.hs b/cabal-testsuite/PackageTests/BuildToolDependsExternal/pre-proc/MyCustomPreprocessor.hs
new file mode 100644
index 00000000000..bcc4af46d1c
--- /dev/null
+++ b/cabal-testsuite/PackageTests/BuildToolDependsExternal/pre-proc/MyCustomPreprocessor.hs
@@ -0,0 +1,13 @@
+module Main where
+
+import System.Environment
+import System.IO
+
+-- This is a "fake" version of alex, so it should take the command line arguments
+-- as alex.
+main :: IO ()
+main = do
+  (_:"-o":target:source:_) <- getArgs
+  let f '0' = '1'
+      f c = c
+  writeFile target . map f  =<< readFile source
diff --git a/cabal-testsuite/PackageTests/BuildToolDependsExternal/pre-proc/pre-proc.cabal b/cabal-testsuite/PackageTests/BuildToolDependsExternal/pre-proc/pre-proc.cabal
new file mode 100644
index 00000000000..5724eb58296
--- /dev/null
+++ b/cabal-testsuite/PackageTests/BuildToolDependsExternal/pre-proc/pre-proc.cabal
@@ -0,0 +1,17 @@
+name:                pre-proc
+version:             999.999.999
+synopsis:            Checks build-tool-depends are put in PATH
+license:             BSD3
+category:            Testing
+build-type:          Simple
+cabal-version:       >=1.10
+
+executable             alex
+  main-is:             MyCustomPreprocessor.hs
+  build-depends:       base, directory
+  default-language:    Haskell2010
+
+executable             bad-do-not-build-me
+  main-is:             MyMissingPreprocessor.hs
+  build-depends:       base, directory
+  default-language:    Haskell2010
diff --git a/cabal-testsuite/PackageTests/BuildToolDependsExternal/scripts/alex b/cabal-testsuite/PackageTests/BuildToolDependsExternal/scripts/alex
new file mode 100755
index 00000000000..27bdc4e880d
--- /dev/null
+++ b/cabal-testsuite/PackageTests/BuildToolDependsExternal/scripts/alex
@@ -0,0 +1,4 @@
+#! /usr/bin/env bash
+
+echo "I am not the alex you are looking for"
+exit 1
diff --git a/cabal-testsuite/PackageTests/BuildToolDependsExternal/setup.out b/cabal-testsuite/PackageTests/BuildToolDependsExternal/setup.out
new file mode 100644
index 00000000000..0600824409d
--- /dev/null
+++ b/cabal-testsuite/PackageTests/BuildToolDependsExternal/setup.out
@@ -0,0 +1,14 @@
+# cabal v2-build
+Configuration is affected by the following files:
+- cabal.project
+Resolving dependencies...
+Build profile: -w ghc-<GHCVER> -O1
+In order, the following will be built:
+ - pre-proc-999.999.999 (exe:alex) (first run)
+ - client-0.1.0.0 (exe:hello-world) (first run)
+Configuring executable 'alex' for pre-proc-999.999.999...
+Preprocessing executable 'alex' for pre-proc-999.999.999...
+Building executable 'alex' for pre-proc-999.999.999...
+Configuring executable 'hello-world' for client-0.1.0.0...
+Preprocessing executable 'hello-world' for client-0.1.0.0...
+Building executable 'hello-world' for client-0.1.0.0...
diff --git a/cabal-testsuite/PackageTests/BuildToolDependsExternal/setup.test.hs b/cabal-testsuite/PackageTests/BuildToolDependsExternal/setup.test.hs
new file mode 100644
index 00000000000..6575b355838
--- /dev/null
+++ b/cabal-testsuite/PackageTests/BuildToolDependsExternal/setup.test.hs
@@ -0,0 +1,5 @@
+import Test.Cabal.Prelude
+-- Test build-tool-depends isn't influenced by PATH
+main = cabalTest $ do
+    env <- getTestEnv
+    addToPath (testTmpDir env </> "scripts/") $ cabal "v2-build" ["client"]