diff --git a/Sources/SwiftBuildSupport/PackagePIFProjectBuilder+Modules.swift b/Sources/SwiftBuildSupport/PackagePIFProjectBuilder+Modules.swift
index ae3de279e84..fe2ba3597f0 100644
--- a/Sources/SwiftBuildSupport/PackagePIFProjectBuilder+Modules.swift
+++ b/Sources/SwiftBuildSupport/PackagePIFProjectBuilder+Modules.swift
@@ -227,7 +227,7 @@ extension PackagePIFProjectBuilder {
         case macro
     }
 
-    /// Constructs a *PIF target* for building a *module* target as a particular type.
+    /// Constructs a *PIF target* for building a *module* as a particular type.
     /// An optional target identifier suffix is passed when building variants of a target.
     @discardableResult
     private mutating func buildSourceModule(
@@ -245,7 +245,8 @@ extension PackagePIFProjectBuilder {
 
         switch desiredModuleType {
         case .dynamicLibrary:
-            if pifBuilder.createDylibForDynamicProducts { // We are re-using this default for dynamic targets as well.
+            // We are re-using this default for dynamic targets as well.
+            if pifBuilder.createDylibForDynamicProducts {
                 pifProductName = "lib\(sourceModule.name).dylib"
                 executableName = pifProductName
                 productType = .dynamicLibrary
@@ -762,18 +763,25 @@ extension PackagePIFProjectBuilder {
             }
         }
 
-        // Set the imparted settings, which are ones that clients (both direct and indirect ones) use.
-        var debugImpartedSettings = impartedSettings
-        debugImpartedSettings[.LD_RUNPATH_SEARCH_PATHS] =
-            ["$(BUILT_PRODUCTS_DIR)/PackageFrameworks"] +
-            (debugImpartedSettings[.LD_RUNPATH_SEARCH_PATHS] ?? ["$(inherited)"])
+        // Set the **imparted** settings, which are ones that clients (both direct and indirect ones) use.
+        // For instance, given targets A, B, C with the following dependency graph:
+        //
+        //   A (executable) -> B (dynamicLibrary) -> C (objectFile)
+        //
+        // An imparted build setting on C will propagate back to both B and A.
+        impartedSettings[.LD_RUNPATH_SEARCH_PATHS] =
+            ["@loader_path"] +
+            (impartedSettings[.LD_RUNPATH_SEARCH_PATHS] ?? ["$(inherited)"])
+
+        var impartedDebugSettings = impartedSettings
+        impartedDebugSettings[.LD_RUNPATH_SEARCH_PATHS]! += ["$(BUILT_PRODUCTS_DIR)/PackageFrameworks"]
 
         self.project[keyPath: sourceModuleTargetKeyPath].common.addBuildConfig { id in
             BuildConfig(
                 id: id,
                 name: "Debug",
                 settings: debugSettings,
-                impartedBuildSettings: debugImpartedSettings
+                impartedBuildSettings: impartedDebugSettings
             )
         }
         self.project[keyPath: sourceModuleTargetKeyPath].common.addBuildConfig { id in