diff --git a/python/src/com/jetbrains/python/projectModel/poetry/PoetryProjectModelResolver.kt b/python/src/com/jetbrains/python/projectModel/poetry/PoetryProjectModelResolver.kt
index 9fcd5688e5f8..3953169ee1ef 100644
--- a/python/src/com/jetbrains/python/projectModel/poetry/PoetryProjectModelResolver.kt
+++ b/python/src/com/jetbrains/python/projectModel/poetry/PoetryProjectModelResolver.kt
@@ -7,9 +7,13 @@ import com.jetbrains.python.projectModel.ExternalProjectGraph
 import com.jetbrains.python.projectModel.PythonProjectModelResolver
 import org.apache.tuweni.toml.Toml
 import org.apache.tuweni.toml.TomlTable
+import java.net.URI
 import java.nio.file.Path
 import kotlin.io.path.*
 
+// e.g. "lib @ file:///home/user/projects/main/lib"
+private val PEP_621_PATH_DEPENDENCY = """([\w-]+) @ (file:.*)""".toRegex()
+
 data class PoetryProject(
   override val name: String,
   override val root: Path,
@@ -52,15 +56,28 @@ object PoetryProjectModelResolver : PythonProjectModelResolver<PoetryProject> {
   }
 
   private fun readPoetryPyProjectToml(pyprojectTomlPath: Path): PoetryPyProjectToml? {
-    // TODO read editable dependencies in newer pyproject.toml
     val pyprojectToml = Toml.parse(pyprojectTomlPath)
     val projectName = pyprojectToml.getString("tool.poetry.name") ?: pyprojectToml.getString("project.name")
     if (projectName == null) {
       return null
     }
+    
+    val moduleDependencies = pyprojectToml.getArrayOrEmpty("project.dependencies")
+      .toList()
+      .filterIsInstance<String>()
+      .mapNotNull { depSpec ->
+        val match = PEP_621_PATH_DEPENDENCY.matchEntire(depSpec)
+        if (match == null) return@mapNotNull null
+        val (depName, depUri) = match.destructured
+        val depPath = runCatching { Path.of(URI(depUri)) }.getOrNull() ?: return@mapNotNull null
+        if (depPath.isDirectory() && depPath.resolve(PoetryConstants.PYPROJECT_TOML).exists()) {
+          return@mapNotNull depName to depPath
+        }
+        return@mapNotNull null
+      }
+      .toMap()
 
-    // Editable path dependencies can appear only inside tool.poetry.dependencies
-    val moduleDependencies: Map<String, Path> = pyprojectToml.getTableOrEmpty("tool.poetry.dependencies")
+    val oldStyleModuleDependencies: Map<String, Path> = pyprojectToml.getTableOrEmpty("tool.poetry.dependencies")
       .toMap().entries
       .mapNotNull { (depName, depSpec) ->
         if (depSpec is TomlTable && depSpec.getBoolean("develop") == true) {
@@ -76,7 +93,7 @@ object PoetryProjectModelResolver : PythonProjectModelResolver<PoetryProject> {
     return PoetryPyProjectToml(
       projectName = projectName,
       root = pyprojectTomlPath.parent,
-      editablePathDependencies = moduleDependencies
+      editablePathDependencies = moduleDependencies.ifEmpty { oldStyleModuleDependencies }
     )
   }
 
diff --git a/python/testSrc/com/jetbrains/python/projectModel/poetry/PoetryProjectSyncIntegrationTest.kt b/python/testSrc/com/jetbrains/python/projectModel/poetry/PoetryProjectSyncIntegrationTest.kt
index 8f1a7fed63e4..f919fcc94252 100644
--- a/python/testSrc/com/jetbrains/python/projectModel/poetry/PoetryProjectSyncIntegrationTest.kt
+++ b/python/testSrc/com/jetbrains/python/projectModel/poetry/PoetryProjectSyncIntegrationTest.kt
@@ -54,7 +54,45 @@ class PoetryProjectSyncIntegrationTest {
   }
 
   @Test
-  fun `project with path dependencies is properly mapped to IJ modules`() = timeoutRunBlocking {
+  fun `project with new-style PEP-621 path dependencies`() = timeoutRunBlocking {
+    testRoot.createFile("pyproject.toml").writeText("""
+      [project]
+      name = "main"
+      dependencies = [
+          "lib @ ${testRoot.toUri()}/lib"
+      ]
+    """.trimIndent())
+
+    testRoot.createFile("lib/pyproject.toml").writeText("""
+      [project]
+      name = "lib"
+      dependencies = [
+      ]
+    """.trimIndent())
+
+    multiprojectFixture.linkProject(project, testRoot, PoetryConstants.SYSTEM_ID)
+    syncAllProjects(project)
+
+    val virtualFileUrlManager = project.workspaceModel.getVirtualFileUrlManager()
+    ModuleAssertions.assertModules(project, "main", "lib")
+    ModuleAssertions.assertModuleEntity(project, "main") { module ->
+      ContentRootAssertions.assertContentRoots(virtualFileUrlManager, module, testRoot)
+      DependencyAssertions.assertDependencies(module, INHERITED_SDK, MODULE_SOURCE, "lib")
+      DependencyAssertions.assertModuleDependency(module, "lib") { dependency ->
+        Assertions.assertTrue(dependency.exported)
+      }
+    }
+
+    ModuleAssertions.assertModuleEntity(project, "lib") { module ->
+      ContentRootAssertions.assertContentRoots(virtualFileUrlManager, module, testRoot.resolve("lib"))
+      DependencyAssertions.assertDependencies(module, INHERITED_SDK, MODULE_SOURCE)
+    }
+  }
+
+  // This format of path dependencies was used before Poetry 2.0
+  // https://python-poetry.org/history/#added-2
+  @Test
+  fun `project with old-style path dependencies`() = timeoutRunBlocking {
     testRoot.createFile("pyproject.toml").writeText("""
       [tool.poetry]
       name = "main"