diff --git a/java/compiler/impl/src/com/intellij/compiler/CompilerConfigurationImpl.java b/java/compiler/impl/src/com/intellij/compiler/CompilerConfigurationImpl.java
index 1ae478adfae8..5c57b8383f66 100644
--- a/java/compiler/impl/src/com/intellij/compiler/CompilerConfigurationImpl.java
+++ b/java/compiler/impl/src/com/intellij/compiler/CompilerConfigurationImpl.java
@@ -763,7 +763,8 @@ public class CompilerConfigurationImpl extends CompilerConfiguration implements
           final Element moduleElement = new Element("module");
           bytecodeTarget.addContent(moduleElement);
           moduleElement.setAttribute("name", name);
-          moduleElement.setAttribute("target", myModuleBytecodeTarget.get(name));
+          final String value = myModuleBytecodeTarget.get(name);
+          moduleElement.setAttribute("target", value != null? value : "");
         }
       }
     }
diff --git a/java/compiler/impl/src/com/intellij/compiler/options/TargetOptionsComponent.java b/java/compiler/impl/src/com/intellij/compiler/options/TargetOptionsComponent.java
index 7abb35489a92..da8f5bb839e4 100644
--- a/java/compiler/impl/src/com/intellij/compiler/options/TargetOptionsComponent.java
+++ b/java/compiler/impl/src/com/intellij/compiler/options/TargetOptionsComponent.java
@@ -44,7 +44,7 @@ import java.util.List;
  */
 public class TargetOptionsComponent extends JPanel {
   private static final String[] KNOWN_TARGETS = new String[] {"1.1", "1.2", "1.3","1.4","1.5", "1.6", "1.7", "1.8"};
-  private static final String COMPILER_DEFAULT = "compiler default";
+  private static final String COMPILER_DEFAULT = "JDK default";
 
   private ComboBox myCbProjectTargetLevel;
   private JBTable myTable;
@@ -74,7 +74,7 @@ public class TargetOptionsComponent extends JPanel {
     targetLevelColumn.setMinWidth(width);
     targetLevelColumn.setMaxWidth(width);
 
-    add(new JLabel("Project bytecode version (leave blank for compiler default): "),
+    add(new JLabel("Project bytecode version (leave blank for jdk default): "),
         constraints(0, 0, 1, 1, 0.0, 0.0, GridBagConstraints.NONE));
     add(myCbProjectTargetLevel, constraints(1, 0, 1, 1, 1.0, 0.0, GridBagConstraints.NONE));
     add(new JLabel("Per-module bytecode version:"), constraints(0, 1, 2, 1, 1.0, 0.0, GridBagConstraints.NONE));
diff --git a/jps/jps-builders/src/org/jetbrains/jps/incremental/java/JavaBuilder.java b/jps/jps-builders/src/org/jetbrains/jps/incremental/java/JavaBuilder.java
index 80786ed78a48..8d8ed4338457 100644
--- a/jps/jps-builders/src/org/jetbrains/jps/incremental/java/JavaBuilder.java
+++ b/jps/jps-builders/src/org/jetbrains/jps/incremental/java/JavaBuilder.java
@@ -591,15 +591,45 @@ public class JavaBuilder extends ModuleLevelBuilder {
       cached = JAVAC_OPTIONS.get(context);
     }
     final List<String> options = new ArrayList<String>(cached);
-    final Module module = chunk.getModules().iterator().next();
-    final String langlevel = module.getLanguageLevel();
+    final String langlevel = chunk.getModules().iterator().next().getLanguageLevel();
     if (!StringUtil.isEmpty(langlevel)) {
       options.add("-source");
       options.add(langlevel);
     }
+
+    final BytecodeTargetConfiguration targetConfig = context.getProject().getCompilerConfiguration().getBytecodeTarget();
+    String bytecodeTarget = null;
+    for (Module module : chunk.getModules()) {
+      final String moduleTarget = getModuleTarget(targetConfig, module);
+      if (moduleTarget == null) {
+        continue;
+      }
+      if (bytecodeTarget == null) {
+        bytecodeTarget = moduleTarget;
+      }
+      else {
+        if (moduleTarget.compareTo(bytecodeTarget) < 0) {
+          bytecodeTarget = moduleTarget; // use the lower possible target among modules that form the chunk
+        }
+      }
+    }
+    if (bytecodeTarget != null) {
+      options.add("-target");
+      options.add(bytecodeTarget);
+    }
+
     return options;
   }
 
+  @Nullable
+  private static String getModuleTarget(BytecodeTargetConfiguration config, Module module) {
+    final String level = config.getModulesBytecodeTarget().get(module.getName());
+    if (level != null) {
+      return level.isEmpty()? null : level;
+    }
+    return config.getProjectBytecodeTarget();
+  }
+
   private static void loadJavacOptions(CompileContext context) {
     final List<String> options = new ArrayList<String>();
     final List<String> vmOptions = new ArrayList<String>();
diff --git a/jps/model/src/org/jetbrains/jps/CompilerConfiguration.groovy b/jps/model/src/org/jetbrains/jps/CompilerConfiguration.groovy
index 3049ff44c0ce..826087af3ada 100644
--- a/jps/model/src/org/jetbrains/jps/CompilerConfiguration.groovy
+++ b/jps/model/src/org/jetbrains/jps/CompilerConfiguration.groovy
@@ -11,6 +11,7 @@ class CompilerConfiguration {
   boolean clearOutputDirectoryOnRebuild = true
   boolean addNotNullAssertions = true
   AnnotationProcessingConfiguration annotationProcessing = new AnnotationProcessingConfiguration()
+  BytecodeTargetConfiguration bytecodeTarget = new BytecodeTargetConfiguration()
   CompilerExcludes excludes = new CompilerExcludes()
 }
 
@@ -20,4 +21,9 @@ class AnnotationProcessingConfiguration {
   String processorsPath
   Map<String, String> processorsOptions = [:]
   Map<String, String> processModule = [:]
+}
+
+class BytecodeTargetConfiguration {
+  String projectBytecodeTarget
+  Map<String, String> modulesBytecodeTarget = [:]
 }
\ No newline at end of file
diff --git a/jps/model/src/org/jetbrains/jps/idea/IdeaProjectLoader.groovy b/jps/model/src/org/jetbrains/jps/idea/IdeaProjectLoader.groovy
index 231de9ede3e2..a500b889211d 100644
--- a/jps/model/src/org/jetbrains/jps/idea/IdeaProjectLoader.groovy
+++ b/jps/model/src/org/jetbrains/jps/idea/IdeaProjectLoader.groovy
@@ -266,6 +266,15 @@ public class IdeaProjectLoader {
       }
     }
 
+    def targetLevels = componentTag?.bytecodeTargetLevel
+    if (!targetLevels.isEmpty()) {
+      def targetLevelTag = targetLevels.first()
+      configuration.bytecodeTarget.projectBytecodeTarget = targetLevelTag."@target" ?: null;
+      targetLevelTag.module?.each {
+        configuration.bytecodeTarget.modulesBytecodeTarget[it."@name"] = it."@target" ?: ""
+      }
+    }
+
     def addNotNullTag = componentTag?.addNotNullAssertions
     if (addNotNullTag != null) {
       project.compilerConfiguration.addNotNullAssertions = parseBoolean(addNotNullTag."@enabled", true);