diff --git a/CMakeLists.txt b/CMakeLists.txt
index be0c0fa5c3d..6fbd2f38dd8 100644
--- a/CMakeLists.txt
+++ b/CMakeLists.txt
@@ -35,8 +35,6 @@ endif()
 # For Zephyr more specifically this breaks (at least)
 #     -fmacro-prefix-map=${ZEPHYR_BASE}=
 
-project(Zephyr-Kernel VERSION ${PROJECT_VERSION})
-enable_language(C CXX ASM)
 
 # Verify that the toolchain can compile a dummy file, if it is not we
 # won't be able to test for compatibility with certain C flags.
diff --git a/cmake/app/boilerplate.cmake b/cmake/app/boilerplate.cmake
index e044e9be61c..b4fbc1182f1 100644
--- a/cmake/app/boilerplate.cmake
+++ b/cmake/app/boilerplate.cmake
@@ -470,6 +470,15 @@ endif()
 
 include(${ZEPHYR_BASE}/cmake/target_toolchain.cmake)
 
+project(Zephyr-Kernel VERSION ${PROJECT_VERSION})
+enable_language(C CXX ASM)
+
+# 'project' sets PROJECT_BINARY_DIR to ${CMAKE_CURRENT_BINARY_DIR},
+# but for legacy reasons we need it to be set to
+# ${CMAKE_CURRENT_BINARY_DIR}/zephyr
+set(PROJECT_BINARY_DIR ${CMAKE_CURRENT_BINARY_DIR}/zephyr)
+set(PROJECT_SOURCE_DIR ${ZEPHYR_BASE})
+
 set(KERNEL_NAME ${CONFIG_KERNEL_BIN_NAME})
 
 set(KERNEL_ELF_NAME   ${KERNEL_NAME}.elf)