diff --git a/Sources/BuildSystemIntegration/SwiftPMBuildSystem.swift b/Sources/BuildSystemIntegration/SwiftPMBuildSystem.swift
index 90b7cf4ca..adb790a74 100644
--- a/Sources/BuildSystemIntegration/SwiftPMBuildSystem.swift
+++ b/Sources/BuildSystemIntegration/SwiftPMBuildSystem.swift
@@ -783,7 +783,7 @@ package actor SwiftPMBuildSystem: BuiltInBuildSystem {
 
   /// Retrieve settings for a package manifest (Package.swift).
   private func settings(forPackageManifest path: AbsolutePath) throws -> TextDocumentSourceKitOptionsResponse? {
-    let compilerArgs = swiftPMWorkspace.interpreterFlags(for: path.parentDirectory) + [path.pathString]
+    let compilerArgs = try swiftPMWorkspace.interpreterFlags(for: path) + [path.pathString]
     return TextDocumentSourceKitOptionsResponse(compilerArguments: compilerArgs)
   }
 }
diff --git a/Tests/BuildSystemIntegrationTests/SwiftPMBuildSystemTests.swift b/Tests/BuildSystemIntegrationTests/SwiftPMBuildSystemTests.swift
index 339ea64f0..f800b0a2f 100644
--- a/Tests/BuildSystemIntegrationTests/SwiftPMBuildSystemTests.swift
+++ b/Tests/BuildSystemIntegrationTests/SwiftPMBuildSystemTests.swift
@@ -1148,6 +1148,39 @@ final class SwiftPMBuildSystemTests: XCTestCase {
       XCTAssert(compilerArgs.contains(try versionSpecificManifestURL.filePath))
     }
   }
+
+  func testBuildSettingsForInvalidManifest() async throws {
+    try await withTestScratchDir { tempDir in
+      try FileManager.default.createFiles(
+        root: tempDir,
+        files: [
+          "pkg/Sources/lib/a.swift": "",
+          "pkg/Package.swift": """
+          // swift-tools-version: 4.2
+          import PackageDescription
+          """,
+        ]
+      )
+      let packageRoot = try tempDir.appendingPathComponent("pkg").realpath
+      let manifestURL = packageRoot.appendingPathComponent("Package.swift")
+      let buildSystemManager = await BuildSystemManager(
+        buildSystemSpec: BuildSystemSpec(kind: .swiftPM, projectRoot: packageRoot),
+        toolchainRegistry: .forTesting,
+        options: SourceKitLSPOptions(),
+        connectionToClient: DummyBuildSystemManagerConnectionToClient(),
+        buildSystemTestHooks: BuildSystemTestHooks()
+      )
+      await buildSystemManager.waitForUpToDateBuildGraph()
+      let settings = await buildSystemManager.buildSettingsInferredFromMainFile(
+        for: DocumentURI(manifestURL),
+        language: .swift,
+        fallbackAfterTimeout: false
+      )
+      let compilerArgs = try XCTUnwrap(settings?.compilerArguments)
+      XCTAssert(compilerArgs.contains("-package-description-version"))
+      XCTAssert(compilerArgs.contains(try manifestURL.filePath))
+    }
+  }
 }
 
 private func assertArgumentsDoNotContain(