diff --git a/packages/nx/src/tasks-runner/__snapshots__/task-graph-creator.spec.ts.snap b/packages/nx/src/tasks-runner/__snapshots__/task-graph-creator.spec.ts.snap
index 003f18585e680..cf291ed6584e2 100644
--- a/packages/nx/src/tasks-runner/__snapshots__/task-graph-creator.spec.ts.snap
+++ b/packages/nx/src/tasks-runner/__snapshots__/task-graph-creator.spec.ts.snap
@@ -36,42 +36,6 @@ Object {
 }
 `;
 
-exports[`TaskGraphCreator (tasks with dependency configurations) should create a task graph (builds depend on builds of dependencies with intermediate projects and circular dependencies between projects) 1`] = `
-Object {
-  "dependencies": Object {
-    "app1:build": Array [
-      "common2:build",
-    ],
-    "common2:build": Array [],
-  },
-  "roots": Array [
-    "common2:build",
-  ],
-  "tasks": Object {
-    "app1:build": Object {
-      "id": "app1:build",
-      "overrides": Object {},
-      "projectRoot": "app1-root",
-      "target": Object {
-        "configuration": undefined,
-        "project": "app1",
-        "target": "build",
-      },
-    },
-    "common2:build": Object {
-      "id": "common2:build",
-      "overrides": Object {},
-      "projectRoot": "common2-root",
-      "target": Object {
-        "configuration": undefined,
-        "project": "common2",
-        "target": "build",
-      },
-    },
-  },
-}
-`;
-
 exports[`TaskGraphCreator (tasks with dependency configurations) should create a task graph (builds depend on builds of dependencies with intermediate projects and circular dependencies between projects) 2 1`] = `
 Object {
   "dependencies": Object {
diff --git a/packages/nx/src/tasks-runner/run-command.spec.ts b/packages/nx/src/tasks-runner/run-command.spec.ts
index efdffcb0d1668..44fa05968cd11 100644
--- a/packages/nx/src/tasks-runner/run-command.spec.ts
+++ b/packages/nx/src/tasks-runner/run-command.spec.ts
@@ -458,7 +458,8 @@ describe('createTasksForProjectToRun', () => {
     });
   });
 
-  it('should handle circular dependencies between projects', () => {
+  it('should handle APP1 <=> LIB1(no build) => LIB2', () => {
+    // APP1 <=> LIB1 => LIB2
     // App 1 depends on builds of its dependencies
     projectGraph.nodes.app1.data.targets.build.dependsOn = [
       {
@@ -501,13 +502,7 @@ describe('createTasksForProjectToRun', () => {
         },
       },
     };
-    projectGraph.dependencies.lib2 = [
-      {
-        type: DependencyType.static,
-        source: 'lib2',
-        target: 'lib1',
-      },
-    ];
+    projectGraph.dependencies.lib2 = [];
 
     const tasks = createTasksForProjectToRun(
       [projectGraph.nodes.app1],
@@ -534,8 +529,28 @@ describe('createTasksForProjectToRun', () => {
     });
   });
 
-  it('should handle circular dependencies between projects with no tasks', () => {
-    // App 1 depends on builds of its dependencies
+  it('should error when APP1 <=> LIB1(no build) <=> LIB2', () => {
+    jest.spyOn(process, 'exit').mockImplementation(() => {
+      throw new Error();
+    });
+
+    // Define Lib 2 with a build
+    projectGraph.nodes.lib2 = {
+      name: 'lib2',
+      type: 'lib',
+      data: {
+        root: 'lib2-root',
+        files: [],
+        targets: {
+          build: {},
+        },
+      },
+    };
+
+    // Lib 1 does not have "build"
+    delete projectGraph.nodes.lib1.data.targets.build;
+
+    // APP1 <=> LIB1 <=> LIB2
     projectGraph.nodes.app1.data.targets.build.dependsOn = [
       {
         target: 'build',
@@ -543,6 +558,13 @@ describe('createTasksForProjectToRun', () => {
       },
     ];
 
+    projectGraph.nodes.lib2.data.targets.build.dependsOn = [
+      {
+        target: 'build',
+        projects: 'dependencies',
+      },
+    ];
+
     // App 1 depends on Lib 1
     projectGraph.dependencies.app1.push({
       type: DependencyType.static,
@@ -550,8 +572,6 @@ describe('createTasksForProjectToRun', () => {
       target: 'lib1',
     });
 
-    // Lib 1 does not have build but depends on Lib 2
-    delete projectGraph.nodes.lib1.data.targets.build;
     projectGraph.dependencies.lib1.push(
       {
         type: DependencyType.static,
@@ -565,45 +585,36 @@ describe('createTasksForProjectToRun', () => {
       }
     );
 
-    // Lib 2 has a build
-    projectGraph.nodes.lib2 = {
-      name: 'lib2',
-      type: 'lib',
-      data: {
-        root: 'lib2-root',
-        files: [],
-        targets: {
-          build: {},
-        },
-      },
-    };
-    projectGraph.dependencies.lib2 = [];
-
-    const tasks = createTasksForProjectToRun(
-      [projectGraph.nodes.app1],
+    projectGraph.dependencies.lib2 = [
       {
-        target: 'build',
-        configuration: undefined,
-        overrides: {},
+        type: DependencyType.static,
+        source: 'lib2',
+        target: 'lib1',
       },
-      projectGraph,
-      projectGraph.nodes.app1.name
-    );
+    ];
 
-    expect(tasks).toContainEqual({
-      id: 'app1:build',
-      target: { project: 'app1', target: 'build' },
-      projectRoot: 'app1-root',
-      overrides: {},
-    });
-    expect(tasks).toContainEqual({
-      id: 'lib2:build',
-      target: { project: 'lib2', target: 'build' },
-      projectRoot: 'lib2-root',
-      overrides: {},
-    });
+    try {
+      createTasksForProjectToRun(
+        [projectGraph.nodes.app1],
+        {
+          target: 'build',
+          configuration: undefined,
+          overrides: {},
+        },
+        projectGraph,
+        projectGraph.nodes.app1.name
+      );
+      fail();
+    } catch (e) {
+      expect(process.exit).toHaveBeenCalledWith(1);
+    }
   });
 
+  // Technically, this could work but it creates a lot of problems in the implementation,
+  // so instead we error saying that the circular dependency cannot be handled.
+  // xit('should handle APP1 => LIB1(no build) <=> LIB2', () => {
+  // });
+
   it('should throw an error for an invalid target', () => {
     jest.spyOn(process, 'exit').mockImplementation(() => {
       throw new Error();
diff --git a/packages/nx/src/tasks-runner/run-command.ts b/packages/nx/src/tasks-runner/run-command.ts
index 5aa0a1aa3502f..6abb619a30777 100644
--- a/packages/nx/src/tasks-runner/run-command.ts
+++ b/packages/nx/src/tasks-runner/run-command.ts
@@ -258,7 +258,7 @@ function addTasksForProjectTarget(
   projectGraph: ProjectGraph,
   originalTargetExecutor: string,
   tasksMap: Map<string, Task>,
-  path: string[],
+  path: { targetIdentifier: string; hasTarget: boolean }[],
   seenSet: Set<string>
 ) {
   const task = createTask({
@@ -356,7 +356,7 @@ function addTasksForProjectDependencyConfig(
   projectGraph: ProjectGraph,
   originalTargetExecutor: string,
   tasksMap: Map<string, Task>,
-  path: string[],
+  path: { targetIdentifier: string; hasTarget: boolean }[],
   seenSet: Set<string>
 ) {
   const targetIdentifier = getId({
@@ -364,15 +364,14 @@ function addTasksForProjectDependencyConfig(
     target,
     configuration,
   });
-  seenSet.add(project.name);
 
-  if (path.includes(targetIdentifier)) {
-    output.error({
-      title: `Could not execute ${path[0]} because it has a circular dependency`,
-      bodyLines: [`${[...path, targetIdentifier].join(' --> ')}`],
-    });
-    process.exit(1);
-  }
+  const pathFragment = {
+    targetIdentifier,
+    hasTarget: projectHasTarget(project, target),
+  };
+
+  const newPath = [...path, pathFragment];
+  seenSet.add(project.name);
 
   if (tasksMap.has(targetIdentifier)) {
     return;
@@ -385,10 +384,21 @@ function addTasksForProjectDependencyConfig(
         const depProject = projectGraph.nodes[
           dep.target
         ] as ProjectGraphProjectNode;
+
         if (
           depProject &&
           projectHasTarget(depProject, dependencyConfig.target)
         ) {
+          const depTargetId = getId({
+            project: depProject.name,
+            target,
+            configuration: configuration,
+          });
+          exitOnCircularDep(newPath, depTargetId);
+          if (seenSet.has(dep.target)) {
+            continue;
+          }
+
           addTasksForProjectTarget(
             {
               project: depProject,
@@ -401,17 +411,26 @@ function addTasksForProjectDependencyConfig(
             projectGraph,
             originalTargetExecutor,
             tasksMap,
-            [...path, targetIdentifier],
+            newPath,
             seenSet
           );
         } else {
-          if (seenSet.has(dep.target)) {
-            continue;
-          }
           if (!depProject) {
             seenSet.add(dep.target);
             continue;
           }
+          const depTargetId = getId({
+            project: depProject.name,
+            target,
+            configuration: configuration,
+          });
+
+          exitOnCircularDep(newPath, depTargetId);
+
+          if (seenSet.has(dep.target)) {
+            continue;
+          }
+
           addTasksForProjectDependencyConfig(
             depProject,
             { target, configuration, overrides },
@@ -420,7 +439,7 @@ function addTasksForProjectDependencyConfig(
             projectGraph,
             originalTargetExecutor,
             tasksMap,
-            path,
+            newPath,
             seenSet
           );
         }
@@ -439,12 +458,30 @@ function addTasksForProjectDependencyConfig(
       projectGraph,
       originalTargetExecutor,
       tasksMap,
-      [...path, targetIdentifier],
+      newPath,
       seenSet
     );
   }
 }
 
+function exitOnCircularDep(
+  path: { targetIdentifier: string; hasTarget: boolean }[],
+  targetIdentifier: string
+) {
+  if (
+    path.length > 0 &&
+    path[path.length - 1].hasTarget &&
+    path.filter((p) => p.targetIdentifier === targetIdentifier).length > 0
+  ) {
+    const identifiers = path.map((p) => p.targetIdentifier);
+    output.error({
+      title: `Could not execute ${identifiers[0]} because it has a circular dependency`,
+      bodyLines: [`${[...identifiers, targetIdentifier].join(' --> ')}`],
+    });
+    process.exit(1);
+  }
+}
+
 function getId({
   project,
   target,
diff --git a/packages/nx/src/tasks-runner/task-graph-creator.spec.ts b/packages/nx/src/tasks-runner/task-graph-creator.spec.ts
index ceb59edbbfe26..1f707ac5a6380 100644
--- a/packages/nx/src/tasks-runner/task-graph-creator.spec.ts
+++ b/packages/nx/src/tasks-runner/task-graph-creator.spec.ts
@@ -320,38 +320,6 @@ describe('TaskGraphCreator', () => {
       expect(taskGraph).toMatchSnapshot();
     });
 
-    it('should create a task graph (builds depend on builds of dependencies with intermediate projects and circular dependencies between projects)', () => {
-      delete projectGraph.nodes.common1.data.targets.build;
-      projectGraph.dependencies.common1.push({
-        type: DependencyType.static,
-        source: 'common1',
-        target: 'common2',
-      });
-
-      projectGraph.dependencies.common2.push({
-        type: DependencyType.static,
-        source: 'common2',
-        target: 'common1',
-      });
-
-      const tasks = createTasksForProjectToRun(
-        [projectGraph.nodes.app1],
-        {
-          target: 'build',
-          configuration: undefined,
-          overrides: {},
-        },
-        projectGraph,
-        null
-      );
-
-      const taskGraph = new TaskGraphCreator(projectGraph, {}).createTaskGraph(
-        tasks
-      );
-
-      expect(taskGraph).toMatchSnapshot();
-    });
-
     it('should create a task graph (builds depend on builds of dependencies with intermediate projects and circular dependencies between projects) 2', () => {
       delete projectGraph.nodes.common1.data.targets.build;
       projectGraph.dependencies.common1.push({
diff --git a/packages/nx/src/utils/project-graph-utils.ts b/packages/nx/src/utils/project-graph-utils.ts
index 41c3063a86318..ab83ec404ef38 100644
--- a/packages/nx/src/utils/project-graph-utils.ts
+++ b/packages/nx/src/utils/project-graph-utils.ts
@@ -10,7 +10,11 @@ export function projectHasTarget(
   project: ProjectGraphProjectNode,
   target: string
 ) {
-  return project.data && project.data.targets && project.data.targets[target];
+  return !!(
+    project.data &&
+    project.data.targets &&
+    project.data.targets[target]
+  );
 }
 
 export function projectHasTargetAndConfiguration(