diff --git a/packages/nx/src/utils/project-graph-utils.spec.ts b/packages/nx/src/utils/project-graph-utils.spec.ts
index e6c34c52a4..cb006e2e6f 100644
--- a/packages/nx/src/utils/project-graph-utils.spec.ts
+++ b/packages/nx/src/utils/project-graph-utils.spec.ts
@@ -77,6 +77,18 @@ describe('project graph utils', () => {
       expect(paths).toContain(projGraph.nodes['core'].data.sourceRoot);
     });
 
+    it('should handle circular dependencies', () => {
+      projGraph.dependencies['core'] = [
+        {
+          type: 'static',
+          source: 'core',
+          target: 'demo-app',
+        },
+      ];
+      const paths = getSourceDirOfDependentProjects('demo-app', projGraph);
+      expect(paths).toContain(projGraph.nodes['ui'].data.sourceRoot);
+    });
+
     it('should throw an error if the project does not exist', () => {
       expect(() =>
         getSourceDirOfDependentProjects('non-existent-app', projGraph)
diff --git a/packages/nx/src/utils/project-graph-utils.ts b/packages/nx/src/utils/project-graph-utils.ts
index ab83ec404e..3e4eeea82e 100644
--- a/packages/nx/src/utils/project-graph-utils.ts
+++ b/packages/nx/src/utils/project-graph-utils.ts
@@ -139,6 +139,11 @@ function collectDependentProjectNodesNames(
       continue;
     }
 
+    // skip dependencies already added (avoid circular dependencies)
+    if (dependencyNodeNames.has(dependencyName)) {
+      continue;
+    }
+
     dependencyNodeNames.add(dependencyName);
 
     // Get the dependencies of the dependencies