diff --git a/plugins/gradle/testSources/org/jetbrains/plugins/gradle/importing/GradleCompositeImportingTest.java b/plugins/gradle/testSources/org/jetbrains/plugins/gradle/importing/GradleCompositeImportingTest.java
index 293952cb009d..9c50d596295f 100644
--- a/plugins/gradle/testSources/org/jetbrains/plugins/gradle/importing/GradleCompositeImportingTest.java
+++ b/plugins/gradle/testSources/org/jetbrains/plugins/gradle/importing/GradleCompositeImportingTest.java
@@ -549,4 +549,53 @@ public class GradleCompositeImportingTest extends GradleImportingTestCase {
 
     assertModuleModuleDeps("root-project.sub-project.main", "myId.main");
   }
+
+  @Test
+  @TargetVersions("3.1+")
+  public void testScopeUpdateForSubstituteDependency() throws Exception {
+    createSettingsFile("rootProject.name = 'pA'\n" +
+                       "include 'pA-1', 'pA-2'\n" +
+                       "includeBuild('pB')\n" +
+                       "includeBuild('pC')");
+
+    createProjectSubFile("pB/settings.gradle");
+    createProjectSubFile("pC/settings.gradle");
+
+    createProjectSubFile("pA-1/build.gradle",
+                         new GradleBuildScriptBuilderEx()
+                           .applyPlugin("'java-library'")
+                           .addDependency("implementation 'group:pC'")
+                           .generate());
+
+    createProjectSubFile("pA-2/build.gradle",
+                         new GradleBuildScriptBuilderEx()
+                           .applyPlugin("'java-library'")
+                           .addDependency("implementation project(':pA-1')")
+                           .addDependency("implementation 'group:pB'")
+                           .generate());
+
+    createProjectSubFile("pB/build.gradle",
+                         new GradleBuildScriptBuilderEx()
+                           .addPostfix("group = 'group'")
+                           .applyPlugin("'java-library'")
+                           .addDependency("api 'group:pC'")
+                           .generate());
+
+    createProjectSubFile("pC/build.gradle",
+                         new GradleBuildScriptBuilderEx()
+                           .addPostfix("group = 'group'")
+                           .applyPlugin("'java-library'")
+                           .generate());
+
+    //enableGradleDebugWithSuspend();
+    importProject("");
+
+    assertModules("pA",
+                  "pA.pA-1", "pA.pA-1.main", "pA.pA-1.test",
+                  "pA.pA-2", "pA.pA-2.main", "pA.pA-2.test",
+                  "pB", "pB.main", "pB.test",
+                  "pC", "pC.main", "pC.test");
+
+    assertModuleModuleDepScope("pA.pA-2.main", "pC.main", COMPILE);
+  }
 }
diff --git a/plugins/gradle/tooling-extension-impl/src/org/jetbrains/plugins/gradle/tooling/util/resolve/DependencyResolverImpl.java b/plugins/gradle/tooling-extension-impl/src/org/jetbrains/plugins/gradle/tooling/util/resolve/DependencyResolverImpl.java
index a7555792bd1c..e82cf2632484 100644
--- a/plugins/gradle/tooling-extension-impl/src/org/jetbrains/plugins/gradle/tooling/util/resolve/DependencyResolverImpl.java
+++ b/plugins/gradle/tooling-extension-impl/src/org/jetbrains/plugins/gradle/tooling/util/resolve/DependencyResolverImpl.java
@@ -527,9 +527,24 @@ public class DependencyResolverImpl implements DependencyResolver {
                                       @NotNull ExternalDependency nextDependency) {
     Collection<File> seenFiles = getFiles(seenDependency);
     Collection<File> nextFiles = getFiles(nextDependency);
-    return seenFiles.containsAll(nextFiles);
+    boolean filesSeen = seenFiles.containsAll(nextFiles);
+    boolean projectDependencySeen = compareAsProjectDependencies(seenDependency, nextDependency);
+
+    return filesSeen || projectDependencySeen;
   }
 
+  private static boolean compareAsProjectDependencies(@NotNull ExternalDependency seenDependency,
+                                               @NotNull ExternalDependency newDependency) {
+    if (seenDependency instanceof ExternalProjectDependency
+    && newDependency instanceof ExternalProjectDependency) {
+      String seenConfiguration = ((ExternalProjectDependency)seenDependency).getConfigurationName();
+      String newConfiguration = ((ExternalProjectDependency)newDependency).getConfigurationName();
+      return
+        seenDependency.getId().equals(newDependency.getId())
+      && ((seenConfiguration == newConfiguration) || (seenConfiguration != null && seenConfiguration.equals(newConfiguration)));
+    }
+    return false;
+  }
 
   private static void upgradeScopeIfNeeded(@NotNull ExternalDependency targetDependency, @NotNull String newScope) {
     if (targetDependency.getScope().equals(COMPILE_SCOPE) || !(targetDependency instanceof AbstractExternalDependency)) {