diff --git a/mps/Makefile.in b/mps/Makefile.in
index 15b16a2c74e..743a1cfe6cd 100644
--- a/mps/Makefile.in
+++ b/mps/Makefile.in
@@ -23,11 +23,12 @@ MPS_BUILD_NAME=@MPS_BUILD_NAME@
 MPS_TARGET_NAME=$(MPS_OS_NAME)$(MPS_ARCH_NAME)$(MPS_BUILD_NAME)
 EXTRA_TARGETS=@EXTRA_TARGETS@
 prefix=$(DESTDIR)@prefix@
+srcdir=@srcdir@
 CC=@CC@
 CFLAGSCOMPILERSTRICT=-Wno-error -std=c89 -pedantic
-TARGET_OPTS=-C code -f $(MPS_TARGET_NAME).gmk \
-	CC='$(CC)' \
-	CFLAGSCOMPILERSTRICT='$(CFLAGSCOMPILERSTRICT)' \
+COMMON_OPTS=-C code SRCDIR=../$(srcdir)/code \
+	CC='$(CC)' CFLAGSCOMPILERSTRICT='$(CFLAGSCOMPILERSTRICT)'
+TARGET_OPTS=$(COMMON_OPTS) -f $(MPS_TARGET_NAME).gmk \
 	EXTRA_TARGETS="$(EXTRA_TARGETS)"
 XCODEBUILD=xcrun xcodebuild -project code/mps.xcodeproj
 
@@ -41,7 +42,7 @@ clean-make-build:
 	$(MAKE) $(TARGET_OPTS) clean
 
 install-make-build: make-install-dirs build-via-make
-	$(INSTALL_DATA) code/mps*.h $(prefix)/include/
+	$(INSTALL_DATA) $(srcdir)/code/mps*.h $(prefix)/include/
 	$(INSTALL_DATA) code/$(MPS_TARGET_NAME)/cool/mps.a $(prefix)/lib/libmps-debug.a
 	$(INSTALL_DATA) code/$(MPS_TARGET_NAME)/hot/mps.a $(prefix)/lib/libmps.a
 	for PROGRAM in $(EXTRA_TARGETS); do $(INSTALL_PROGRAM) code/$(MPS_TARGET_NAME)/hot/$$PROGRAM $(prefix)/bin/$$PROGRAM; done
@@ -60,15 +61,15 @@ install-xcode-build: make-install-dirs build-via-xcode
 	$(INSTALL_DATA) code/xc/Release/libmps.a $(prefix)/lib/libmps.a
 	for PROGRAM in $(EXTRA_TARGETS); do $(INSTALL_PROGRAM) code/xc/Release/$$PROGRAM $(prefix)/bin/$$PROGRAM; done
 
-Makefile: Makefile.in config.status
+Makefile: $(srcdir)/Makefile.in config.status
 	./config.status Makefile
 
 clean: @CLEAN_TARGET@
 
-config.status: configure
+config.status: $(srcdir)/configure
 
-configure: configure.ac
-	autoreconf -vif
+$(srcdir)/configure: $(srcdir)/configure.ac
+	autoreconf -vif $(srcdir)
 
 distclean: clean
 	rm -rf autom4te.cache/ config.log config.status Makefile
@@ -82,14 +83,12 @@ install: @INSTALL_TARGET@
 
 test-make-build:
 	$(MAKE) $(TARGET_OPTS) testci testratio testscheme
-	$(MAKE) -C code -f anan$(MPS_BUILD_NAME).gmk VARIETY=cool \
-		CC='$(CC)' \
-		CFLAGSCOMPILERSTRICT='$(CFLAGSCOMPILERSTRICT)' \
+	$(MAKE) $(COMMON_OPTS) \
+		-f anan$(MPS_BUILD_NAME).gmk VARIETY=cool \
 		clean-testansi
-	$(MAKE) -C code -f anan$(MPS_BUILD_NAME).gmk VARIETY=cool \
-		CC='$(CC)' \
+	$(MAKE) $(COMMON_OPTS) \
+		-f anan$(MPS_BUILD_NAME).gmk VARIETY=cool \
 		CFLAGS="-DCONFIG_POLL_NONE" \
-		CFLAGSCOMPILERSTRICT='$(CFLAGSCOMPILERSTRICT)' \
 		clean-testpollnone
 
 test-xcode-build:
diff --git a/mps/code/comm.gmk b/mps/code/comm.gmk
index cac85c4ee6a..37610d71e3f 100644
--- a/mps/code/comm.gmk
+++ b/mps/code/comm.gmk
@@ -69,6 +69,9 @@ ifndef CFLAGSOPT
 error "comm.gmk: CFLAGSOPT not defined"
 endif
 
+ifdef SRCDIR
+VPATH=$(SRCDIR)
+endif
 
 # TELEMETRY TARGETS
 
diff --git a/mps/configure.ac b/mps/configure.ac
index 0cbf640fdcb..18c8a1494c0 100644
--- a/mps/configure.ac
+++ b/mps/configure.ac
@@ -193,6 +193,20 @@ AC_SUBST(LDFLAGS)
 AC_SUBST(CPPFLAGS)
 AC_CONFIG_FILES(Makefile example/scheme/Makefile)
 
+AC_CONFIG_COMMANDS(
+  [gmk],
+  [case $srcdir in
+     .) # in-place build
+        ;;
+     *) echo "copying .gmk files"
+        (cd $srcdir &&
+         cp --parents code/*.gmk \
+	    tool/testcases.txt tool/testrun.sh \
+	    example/scheme/*.scm \
+	    $ac_pwd)
+	 ;;
+   esac])
+
 AC_OUTPUT
 
 echo 1>&2 "CONFIGURE/MAKE IS NOT THE BEST WAY TO BUILD THE MPS
diff --git a/mps/example/scheme/Makefile.in b/mps/example/scheme/Makefile.in
index 77ed1f4f0e6..3ee9e473abe 100644
--- a/mps/example/scheme/Makefile.in
+++ b/mps/example/scheme/Makefile.in
@@ -4,7 +4,9 @@
 
 CFLAGS = @CFLAGS@ @CPPFLAGS@ @LDFLAGS@ -std=c99
 
-MPS = ../../code
+MPS = @srcdir@/../../code
+
+VPATH = @srcdir@
 
 TARGETS = scheme-malloc scheme scheme-advanced
 
@@ -15,7 +17,6 @@ all: $(TARGETS)
 $(TARGETS): %: %.c Makefile
 	$(CC) $(CFLAGS) -o $@ -I $(MPS) $< $(MPS)/mps.c
 
-
 scheme-boehm: %: %.c Makefile
 	$(CC) $(CFLAGS) -o $@ $< -lgc