diff --git a/docs/generated/packages/nest/generators/application.json b/docs/generated/packages/nest/generators/application.json
index b14777ae8e8e0..9bb9beb8f354a 100644
--- a/docs/generated/packages/nest/generators/application.json
+++ b/docs/generated/packages/nest/generators/application.json
@@ -1,6 +1,6 @@
 {
   "name": "application",
-  "factory": "./src/generators/application/application",
+  "factory": "./src/generators/application/application#applicationGeneratorInternal",
   "schema": {
     "$schema": "http://json-schema.org/schema",
     "$id": "NxNestApplicationGenerator",
@@ -13,12 +13,18 @@
         "description": "The name of the application.",
         "type": "string",
         "$default": { "$source": "argv", "index": 0 },
-        "x-prompt": "What name would you like to use for the node application?"
+        "x-prompt": "What name would you like to use for the node application?",
+        "pattern": "^[a-zA-Z][^:]*$"
       },
       "directory": {
         "description": "The directory of the new application.",
         "type": "string"
       },
+      "projectNameAndRootFormat": {
+        "description": "Whether to generate the project name and root directory as provided (`as-provided`) or generate them composing their values and taking the configured layout into account (`derived`).",
+        "type": "string",
+        "enum": ["as-provided", "derived"]
+      },
       "skipFormat": {
         "description": "Skip formatting files.",
         "type": "boolean",
@@ -82,7 +88,7 @@
   "aliases": ["app"],
   "x-type": "application",
   "description": "Create a NestJS application.",
-  "implementation": "/packages/nest/src/generators/application/application.ts",
+  "implementation": "/packages/nest/src/generators/application/application#applicationGeneratorInternal.ts",
   "hidden": false,
   "path": "/packages/nest/src/generators/application/schema.json",
   "type": "generator"
diff --git a/docs/generated/packages/nest/generators/library.json b/docs/generated/packages/nest/generators/library.json
index d2132961017dc..5d9efb2f94bd5 100644
--- a/docs/generated/packages/nest/generators/library.json
+++ b/docs/generated/packages/nest/generators/library.json
@@ -1,6 +1,6 @@
 {
   "name": "library",
-  "factory": "./src/generators/library/library",
+  "factory": "./src/generators/library/library#libraryGeneratorInternal",
   "schema": {
     "$schema": "http://json-schema.org/schema",
     "$id": "NxNestLibraryGenerator",
@@ -19,13 +19,19 @@
         "description": "Library name.",
         "type": "string",
         "$default": { "$source": "argv", "index": 0 },
-        "x-prompt": "What name would you like to use for the library?"
+        "x-prompt": "What name would you like to use for the library?",
+        "pattern": "(?:^@[a-zA-Z0-9-*~][a-zA-Z0-9-*._~]*\\/[a-zA-Z0-9-~][a-zA-Z0-9-._~]*|^[a-zA-Z][^:]*)$"
       },
       "directory": {
         "description": "A directory where the library is placed.",
         "type": "string",
         "alias": "dir"
       },
+      "projectNameAndRootFormat": {
+        "description": "Whether to generate the project name and root directory as provided (`as-provided`) or generate them composing their values and taking the configured layout into account (`derived`).",
+        "type": "string",
+        "enum": ["as-provided", "derived"]
+      },
       "linter": {
         "description": "The tool to use for running lint checks.",
         "type": "string",
@@ -143,7 +149,7 @@
   "aliases": ["lib"],
   "x-type": "library",
   "description": "Create a new NestJS library.",
-  "implementation": "/packages/nest/src/generators/library/library.ts",
+  "implementation": "/packages/nest/src/generators/library/library#libraryGeneratorInternal.ts",
   "hidden": false,
   "path": "/packages/nest/src/generators/library/schema.json",
   "type": "generator"
diff --git a/packages/nest/generators.json b/packages/nest/generators.json
index 4993de48ceef6..7b3a61cc5a45a 100644
--- a/packages/nest/generators.json
+++ b/packages/nest/generators.json
@@ -108,7 +108,7 @@
   },
   "generators": {
     "application": {
-      "factory": "./src/generators/application/application",
+      "factory": "./src/generators/application/application#applicationGeneratorInternal",
       "schema": "./src/generators/application/schema.json",
       "aliases": ["app"],
       "x-type": "application",
@@ -128,7 +128,7 @@
       "hidden": true
     },
     "library": {
-      "factory": "./src/generators/library/library",
+      "factory": "./src/generators/library/library#libraryGeneratorInternal",
       "schema": "./src/generators/library/schema.json",
       "aliases": ["lib"],
       "x-type": "library",
diff --git a/packages/nest/src/generators/application/application.ts b/packages/nest/src/generators/application/application.ts
index 18e8ea3bbf646..caf90e1b6577f 100644
--- a/packages/nest/src/generators/application/application.ts
+++ b/packages/nest/src/generators/application/application.ts
@@ -15,7 +15,17 @@ export async function applicationGenerator(
   tree: Tree,
   rawOptions: ApplicationGeneratorOptions
 ): Promise<GeneratorCallback> {
-  const options = normalizeOptions(tree, rawOptions);
+  return await applicationGeneratorInternal(tree, {
+    projectNameAndRootFormat: 'derived',
+    ...rawOptions,
+  });
+}
+
+export async function applicationGeneratorInternal(
+  tree: Tree,
+  rawOptions: ApplicationGeneratorOptions
+): Promise<GeneratorCallback> {
+  const options = await normalizeOptions(tree, rawOptions);
   const initTask = await initGenerator(tree, {
     skipPackageJson: options.skipPackageJson,
     unitTestRunner: options.unitTestRunner,
diff --git a/packages/nest/src/generators/application/lib/create-files.ts b/packages/nest/src/generators/application/lib/create-files.ts
index 4ee1d6e9deefa..cec49874e5b3c 100644
--- a/packages/nest/src/generators/application/lib/create-files.ts
+++ b/packages/nest/src/generators/application/lib/create-files.ts
@@ -9,7 +9,7 @@ export function createFiles(tree: Tree, options: NormalizedOptions): void {
     joinPathFragments(options.appProjectRoot, 'src'),
     {
       tmpl: '',
-      name: options.name,
+      name: options.appProjectName,
       root: options.appProjectRoot,
     }
   );
diff --git a/packages/nest/src/generators/application/lib/normalize-options.ts b/packages/nest/src/generators/application/lib/normalize-options.ts
index 4e358a0c2f9f5..3c2d402439da1 100644
--- a/packages/nest/src/generators/application/lib/normalize-options.ts
+++ b/packages/nest/src/generators/application/lib/normalize-options.ts
@@ -1,31 +1,32 @@
-import { extractLayoutDirectory, Tree } from '@nx/devkit';
-import { getWorkspaceLayout, joinPathFragments, names } from '@nx/devkit';
+import { Tree } from '@nx/devkit';
+import { determineProjectNameAndRootOptions } from '@nx/devkit/src/generators/project-name-and-root-utils';
 import { Linter } from '@nx/linter';
 import type { Schema as NodeApplicationGeneratorOptions } from '@nx/node/src/generators/application/schema';
 import type { ApplicationGeneratorOptions, NormalizedOptions } from '../schema';
 
-export function normalizeOptions(
+export async function normalizeOptions(
   tree: Tree,
   options: ApplicationGeneratorOptions
-): NormalizedOptions {
-  const { layoutDirectory, projectDirectory } = extractLayoutDirectory(
-    options.directory
-  );
-
-  const appDirectory = projectDirectory
-    ? `${names(projectDirectory).fileName}/${names(options.name).fileName}`
-    : names(options.name).fileName;
-
-  const appProjectRoot = options.rootProject
-    ? '.'
-    : joinPathFragments(
-        layoutDirectory ?? getWorkspaceLayout(tree).appsDir,
-        appDirectory
-      );
+): Promise<NormalizedOptions> {
+  const {
+    projectName: appProjectName,
+    projectRoot: appProjectRoot,
+    projectNameAndRootFormat,
+  } = await determineProjectNameAndRootOptions(tree, {
+    name: options.name,
+    projectType: 'application',
+    directory: options.directory,
+    projectNameAndRootFormat: options.projectNameAndRootFormat,
+    rootProject: options.rootProject,
+    callingGenerator: '@nx/nest:application',
+  });
+  options.rootProject = appProjectRoot === '.';
+  options.projectNameAndRootFormat = projectNameAndRootFormat;
 
   return {
     ...options,
     strict: options.strict ?? false,
+    appProjectName,
     appProjectRoot,
     linter: options.linter ?? Linter.EsLint,
     unitTestRunner: options.unitTestRunner ?? 'jest',
diff --git a/packages/nest/src/generators/application/schema.d.ts b/packages/nest/src/generators/application/schema.d.ts
index 42a2b6ad3bd2e..a0a18e5b19704 100644
--- a/packages/nest/src/generators/application/schema.d.ts
+++ b/packages/nest/src/generators/application/schema.d.ts
@@ -1,8 +1,10 @@
-import { Linter } from '@nx/linter';
+import type { ProjectNameAndRootFormat } from '@nx/devkit/src/generators/project-name-and-root-utils';
+import type { Linter } from '@nx/linter';
 
 export interface ApplicationGeneratorOptions {
   name: string;
   directory?: string;
+  projectNameAndRootFormat?: ProjectNameAndRootFormat;
   frontendProject?: string;
   linter?: Linter;
   skipFormat?: boolean;
@@ -17,5 +19,6 @@ export interface ApplicationGeneratorOptions {
 }
 
 interface NormalizedOptions extends ApplicationGeneratorOptions {
+  appProjectName: string;
   appProjectRoot: Path;
 }
diff --git a/packages/nest/src/generators/application/schema.json b/packages/nest/src/generators/application/schema.json
index 55c69037e4a10..24e04c88f9d41 100644
--- a/packages/nest/src/generators/application/schema.json
+++ b/packages/nest/src/generators/application/schema.json
@@ -13,12 +13,18 @@
         "$source": "argv",
         "index": 0
       },
-      "x-prompt": "What name would you like to use for the node application?"
+      "x-prompt": "What name would you like to use for the node application?",
+      "pattern": "^[a-zA-Z][^:]*$"
     },
     "directory": {
       "description": "The directory of the new application.",
       "type": "string"
     },
+    "projectNameAndRootFormat": {
+      "description": "Whether to generate the project name and root directory as provided (`as-provided`) or generate them composing their values and taking the configured layout into account (`derived`).",
+      "type": "string",
+      "enum": ["as-provided", "derived"]
+    },
     "skipFormat": {
       "description": "Skip formatting files.",
       "type": "boolean",
diff --git a/packages/nest/src/generators/library/lib/add-project.ts b/packages/nest/src/generators/library/lib/add-project.ts
index dac4adc3b6d6d..d33950f958813 100644
--- a/packages/nest/src/generators/library/lib/add-project.ts
+++ b/packages/nest/src/generators/library/lib/add-project.ts
@@ -15,10 +15,7 @@ export function addProject(tree: Tree, options: NormalizedOptions): void {
     executor: '@nx/js:tsc',
     outputs: ['{options.outputPath}'],
     options: {
-      outputPath:
-        options.libsDir && options.libsDir !== '.'
-          ? `dist/${options.libsDir}/${options.projectDirectory}`
-          : `dist/${options.projectDirectory}`,
+      outputPath: `dist/${options.projectRoot}`,
       tsConfig: `${options.projectRoot}/tsconfig.lib.json`,
       packageJson: `${options.projectRoot}/package.json`,
       main: `${options.projectRoot}/src/index.ts`,
diff --git a/packages/nest/src/generators/library/lib/normalize-options.ts b/packages/nest/src/generators/library/lib/normalize-options.ts
index f3319494ff9ff..032a54c2a5d36 100644
--- a/packages/nest/src/generators/library/lib/normalize-options.ts
+++ b/packages/nest/src/generators/library/lib/normalize-options.ts
@@ -1,33 +1,31 @@
+import { Tree } from '@nx/devkit';
+import { determineProjectNameAndRootOptions } from '@nx/devkit/src/generators/project-name-and-root-utils';
+import { getNpmScope } from '@nx/js/src/utils/package-json/get-npm-scope';
 import type { LibraryGeneratorSchema as JsLibraryGeneratorSchema } from '@nx/js/src/utils/schema';
 import { Linter } from '@nx/linter';
-import {
-  extractLayoutDirectory,
-  getWorkspaceLayout,
-  joinPathFragments,
-  names,
-  Tree,
-} from '@nx/devkit';
 import type { LibraryGeneratorOptions, NormalizedOptions } from '../schema';
-import { getNpmScope } from '@nx/js/src/utils/package-json/get-npm-scope';
 
-export function normalizeOptions(
+export async function normalizeOptions(
   tree: Tree,
   options: LibraryGeneratorOptions
-): NormalizedOptions {
-  const { layoutDirectory, projectDirectory } = extractLayoutDirectory(
-    options.directory
-  );
-  const { libsDir: defaultLibsDir } = getWorkspaceLayout(tree);
-  const libsDir = layoutDirectory ?? defaultLibsDir;
-  const name = names(options.name).fileName;
-  const fullProjectDirectory = projectDirectory
-    ? `${names(projectDirectory).fileName}/${name}`
-    : name;
-
-  const projectName = fullProjectDirectory.replace(new RegExp('/', 'g'), '-');
-  const fileName = options.simpleName ? name : projectName;
-  const projectRoot = joinPathFragments(libsDir, fullProjectDirectory);
+): Promise<NormalizedOptions> {
+  const {
+    projectName,
+    names: projectNames,
+    projectRoot,
+    importPath,
+  } = await determineProjectNameAndRootOptions(tree, {
+    name: options.name,
+    projectType: 'library',
+    directory: options.directory,
+    importPath: options.importPath,
+    projectNameAndRootFormat: options.projectNameAndRootFormat,
+    callingGenerator: '@nx/nest:library',
+  });
 
+  const fileName = options.simpleName
+    ? projectNames.projectSimpleName
+    : projectNames.projectFileName;
   const parsedTags = options.tags
     ? options.tags.split(',').map((s) => s.trim())
     : [];
@@ -41,14 +39,13 @@ export function normalizeOptions(
     linter: options.linter ?? Linter.EsLint,
     parsedTags,
     prefix: getNpmScope(tree), // we could also allow customizing this
-    projectDirectory: fullProjectDirectory,
     projectName,
     projectRoot,
+    importPath,
     service: options.service ?? false,
     target: options.target ?? 'es6',
     testEnvironment: options.testEnvironment ?? 'node',
     unitTestRunner: options.unitTestRunner ?? 'jest',
-    libsDir,
   };
 
   return normalized;
diff --git a/packages/nest/src/generators/library/library.ts b/packages/nest/src/generators/library/library.ts
index 0ad139b35baec..09e93fa4553bb 100644
--- a/packages/nest/src/generators/library/library.ts
+++ b/packages/nest/src/generators/library/library.ts
@@ -17,7 +17,17 @@ export async function libraryGenerator(
   tree: Tree,
   rawOptions: LibraryGeneratorOptions
 ): Promise<GeneratorCallback> {
-  const options = normalizeOptions(tree, rawOptions);
+  return await libraryGeneratorInternal(tree, {
+    projectNameAndRootFormat: 'derived',
+    ...rawOptions,
+  });
+}
+
+export async function libraryGeneratorInternal(
+  tree: Tree,
+  rawOptions: LibraryGeneratorOptions
+): Promise<GeneratorCallback> {
+  const options = await normalizeOptions(tree, rawOptions);
   await jsLibraryGenerator(tree, toJsLibraryGeneratorOptions(options));
   const installDepsTask = addDependencies(tree);
   deleteFiles(tree, options);
diff --git a/packages/nest/src/generators/library/schema.d.ts b/packages/nest/src/generators/library/schema.d.ts
index 85e076df98b26..0588a2bc93817 100644
--- a/packages/nest/src/generators/library/schema.d.ts
+++ b/packages/nest/src/generators/library/schema.d.ts
@@ -1,11 +1,13 @@
-import { Linter } from '@nx/linter';
-import { UnitTestRunner } from '../utils';
+import type { ProjectNameAndRootFormat } from '@nx/devkit/src/generators/project-name-and-root-utils';
+import type { Linter } from '@nx/linter';
+import type { UnitTestRunner } from '../utils';
 
 export interface LibraryGeneratorOptions {
   name: string;
   buildable?: boolean;
   controller?: boolean;
   directory?: string;
+  projectNameAndRootFormat?: ProjectNameAndRootFormat;
   global?: boolean;
   importPath?: string;
   linter?: Linter;
@@ -38,8 +40,6 @@ export interface NormalizedOptions extends LibraryGeneratorOptions {
   fileName: string;
   parsedTags: string[];
   prefix: string;
-  projectDirectory: string;
   projectName: string;
   projectRoot: Path;
-  libsDir: string;
 }
diff --git a/packages/nest/src/generators/library/schema.json b/packages/nest/src/generators/library/schema.json
index 70b465046cf6e..05b4bad001af9 100644
--- a/packages/nest/src/generators/library/schema.json
+++ b/packages/nest/src/generators/library/schema.json
@@ -19,13 +19,19 @@
         "$source": "argv",
         "index": 0
       },
-      "x-prompt": "What name would you like to use for the library?"
+      "x-prompt": "What name would you like to use for the library?",
+      "pattern": "(?:^@[a-zA-Z0-9-*~][a-zA-Z0-9-*._~]*\\/[a-zA-Z0-9-~][a-zA-Z0-9-._~]*|^[a-zA-Z][^:]*)$"
     },
     "directory": {
       "description": "A directory where the library is placed.",
       "type": "string",
       "alias": "dir"
     },
+    "projectNameAndRootFormat": {
+      "description": "Whether to generate the project name and root directory as provided (`as-provided`) or generate them composing their values and taking the configured layout into account (`derived`).",
+      "type": "string",
+      "enum": ["as-provided", "derived"]
+    },
     "linter": {
       "description": "The tool to use for running lint checks.",
       "type": "string",