diff --git a/Sources/PackageLoading/TargetSourcesBuilder.swift b/Sources/PackageLoading/TargetSourcesBuilder.swift
index 58f4af0ae53..a008afcb9eb 100644
--- a/Sources/PackageLoading/TargetSourcesBuilder.swift
+++ b/Sources/PackageLoading/TargetSourcesBuilder.swift
@@ -158,6 +158,10 @@ public struct TargetSourcesBuilder {
                     } else {
                         matchedRule = .compile
                     }
+                    // The source file might have been declared twice so
+                    // exit on first match.
+                    // FIXME: We should emitting warnings for duplicate// declarations.
+                    break
                 }
             }
         }
diff --git a/Tests/PackageLoadingTests/PackageBuilderTests.swift b/Tests/PackageLoadingTests/PackageBuilderTests.swift
index 00f6936f7e3..531146b6e96 100644
--- a/Tests/PackageLoadingTests/PackageBuilderTests.swift
+++ b/Tests/PackageLoadingTests/PackageBuilderTests.swift
@@ -290,6 +290,32 @@ class PackageBuilderTests: XCTestCase {
         }
     }
 
+    func testOverlappingDeclaredSources() throws {
+        let fs = InMemoryFileSystem(emptyFiles:
+            "/Sources/clib/subfolder/foo.h",
+            "/Sources/clib/subfolder/foo.c",
+            "/Sources/clib/bar.h",
+            "/Sources/clib/bar.c",
+            "/done"
+        )
+
+        let manifest = Manifest.createV4Manifest(
+            name: "MyPackage",
+            targets: [
+                TargetDescription(
+                    name: "clib",
+                    path: "Sources",
+                    sources: ["clib", "clib/subfolder"]
+                ),
+            ]
+        )
+        PackageBuilderTester(manifest, in: fs) { result in
+            result.checkModule("clib") { module in
+                module.checkSources(sources: ["clib/bar.c", "clib/subfolder/foo.c"])
+            }
+        }
+    }
+
     func testDeclaredExecutableProducts() {
         // Check that declaring executable product doesn't collide with the
         // inferred products.
diff --git a/Tests/PackageLoadingTests/XCTestManifests.swift b/Tests/PackageLoadingTests/XCTestManifests.swift
index c461ffd536b..8342812e502 100644
--- a/Tests/PackageLoadingTests/XCTestManifests.swift
+++ b/Tests/PackageLoadingTests/XCTestManifests.swift
@@ -31,6 +31,7 @@ extension PackageBuilderTests {
         ("testCustomTargetPaths", testCustomTargetPaths),
         ("testCustomTargetPathsOverlap", testCustomTargetPathsOverlap),
         ("testDeclaredExecutableProducts", testDeclaredExecutableProducts),
+        ("testDeclaredSourcesWithDot", testDeclaredSourcesWithDot),
         ("testDotFilesAreIgnored", testDotFilesAreIgnored),
         ("testDuplicateProducts", testDuplicateProducts),
         ("testDuplicateTargetDependencies", testDuplicateTargetDependencies),
@@ -46,6 +47,7 @@ extension PackageBuilderTests {
         ("testMixedSources", testMixedSources),
         ("testModuleMapLayout", testModuleMapLayout),
         ("testMultipleTestProducts", testMultipleTestProducts),
+        ("testOverlappingDeclaredSources", testOverlappingDeclaredSources),
         ("testPlatforms", testPlatforms),
         ("testPredefinedTargetSearchError", testPredefinedTargetSearchError),
         ("testPublicHeadersPath", testPublicHeadersPath),