diff --git a/CHANGES.md b/CHANGES.md
index cb523a29d80..ef0d8059f7c 100644
--- a/CHANGES.md
+++ b/CHANGES.md
@@ -34,6 +34,9 @@ Unreleased
 - Added a new user action `(concurrent )` which is like `(progn )` but runs the
   actions concurrently. (#6933, @Alizter)
 
+- Allow `(stdlib ...)` to be used with `(wrapped false)` in library stanzas
+  (#7139, @anmonteiro).
+
 3.7.0 (2023-02-17)
 ------------------
 
diff --git a/src/dune_rules/dune_file.ml b/src/dune_rules/dune_file.ml
index 33c961ee62e..b9a57e7a4c3 100644
--- a/src/dune_rules/dune_file.ml
+++ b/src/dune_rules/dune_file.ml
@@ -907,7 +907,10 @@ module Library = struct
     | Some x, From _ -> From x
     | Some _, This _ (* cannot specify for wrapped for implements *)
     | None, From _ -> assert false (* cannot inherit for normal libs *)
-    | None, This (Simple false) -> This None
+    | None, This (Simple false) -> (
+      match t.stdlib with
+      | None -> This None
+      | Some _ -> This (Some (Module_name.of_local_lib_name t.name)))
     | None, This (Simple true | Yes_with_transition _) ->
       This (Some (Module_name.of_local_lib_name t.name))
 
diff --git a/src/dune_rules/modules.ml b/src/dune_rules/modules.ml
index 6561c2c28e7..b7980569c60 100644
--- a/src/dune_rules/modules.ml
+++ b/src/dune_rules/modules.ml
@@ -94,16 +94,20 @@ module Stdlib = struct
     | None -> false
     | Some n -> n = name
 
-  let make ~(stdlib : Ocaml_stdlib.t) ~modules ~main_module_name =
+  let make ~(stdlib : Ocaml_stdlib.t) ~modules ~wrapped ~main_module_name =
     let modules =
-      Module_name.Map.map modules ~f:(fun m ->
-          if
-            Module.name m = main_module_name || special_compiler_module stdlib m
-          then m
-          else
-            let path = [ main_module_name; Module.name m ] in
-            let m = Module.set_path m path in
-            Module.set_obj_name m (Module_name.Path.wrap path))
+      match wrapped with
+      | Wrapped.Simple true | Yes_with_transition _ ->
+        Module_name.Map.map modules ~f:(fun m ->
+            if
+              Module.name m = main_module_name
+              || special_compiler_module stdlib m
+            then m
+            else
+              let path = [ main_module_name; Module.name m ] in
+              let m = Module.set_path m path in
+              Module.set_obj_name m (Module_name.Path.wrap path))
+      | Simple false -> modules
     in
     let unwrapped = stdlib.modules_before_stdlib in
     let exit_module = stdlib.exit_module in
@@ -805,7 +809,7 @@ let lib ~obj_dir ~main_module_name ~wrapped ~stdlib ~lib_name ~implements
   | Some stdlib ->
     let main_module_name = Option.value_exn main_module_name in
     let modules = Module_trie.to_map modules in
-    Stdlib (Stdlib.make ~stdlib ~modules ~main_module_name)
+    Stdlib (Stdlib.make ~stdlib ~modules ~wrapped ~main_module_name)
   | None -> (
     match (wrapped, main_module_name, Module_trie.as_singleton modules) with
     | Simple false, _, Some m -> Singleton m
diff --git a/test/blackbox-tests/test-cases/stdlib-compilation-depend-on-library.t b/test/blackbox-tests/test-cases/stdlib/stdlib-compilation-depend-on-library.t
similarity index 100%
rename from test/blackbox-tests/test-cases/stdlib-compilation-depend-on-library.t
rename to test/blackbox-tests/test-cases/stdlib/stdlib-compilation-depend-on-library.t
diff --git a/test/blackbox-tests/test-cases/stdlib/stdlib-compilation-wrapping.t b/test/blackbox-tests/test-cases/stdlib/stdlib-compilation-wrapping.t
new file mode 100644
index 00000000000..aa255832112
--- /dev/null
+++ b/test/blackbox-tests/test-cases/stdlib/stdlib-compilation-wrapping.t
@@ -0,0 +1,45 @@
+Compile a library with `(stdlib ..)` and wrapped settings
+
+  $ cat > dune-project <<EOF
+  > (lang dune 3.7)
+  > (using experimental_building_ocaml_compiler_with_dune 0.1)
+  > EOF
+
+  $ mkdir stdlib
+  $ runtest() {
+  > cat >stdlib/dune <<EOF
+  > (library
+  >  (name mystdlib)
+  >  (wrapped $1)
+  >  (stdlib
+  >   (internal_modules Camlinternal*)))
+  > EOF
+  > dune build
+  > find _build/default/stdlib -iname '*.cmi' | sort;
+  > }
+
+  $ cat > stdlib/other.ml <<EOF
+  > let other () = Mystdlib.defined_in_stdlib
+  > EOF
+  $ cat > stdlib/one_module.ml <<EOF
+  > let foo = "foo"
+  > EOF
+  $ cat > stdlib/mystdlib.ml <<EOF
+  > let defined_in_stdlib = "defined"
+  > module One_module = One_module
+  > module Other = Other
+  > EOF
+
+First we test wrapped:
+
+  $ runtest "true"
+  _build/default/stdlib/.mystdlib.objs/byte/mystdlib.cmi
+  _build/default/stdlib/.mystdlib.objs/byte/mystdlib__One_module.cmi
+  _build/default/stdlib/.mystdlib.objs/byte/mystdlib__Other.cmi
+
+And now unwrapped:
+
+  $ runtest "false"
+  _build/default/stdlib/.mystdlib.objs/byte/mystdlib.cmi
+  _build/default/stdlib/.mystdlib.objs/byte/one_module.cmi
+  _build/default/stdlib/.mystdlib.objs/byte/other.cmi
diff --git a/test/blackbox-tests/test-cases/stdlib-compilation.t/dune-project b/test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/dune-project
similarity index 100%
rename from test/blackbox-tests/test-cases/stdlib-compilation.t/dune-project
rename to test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/dune-project
diff --git a/test/blackbox-tests/test-cases/stdlib-compilation.t/run.t b/test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/run.t
similarity index 100%
rename from test/blackbox-tests/test-cases/stdlib-compilation.t/run.t
rename to test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/run.t
diff --git a/test/blackbox-tests/test-cases/stdlib-compilation.t/src/camlinternalFormatBasics.ml b/test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/src/camlinternalFormatBasics.ml
similarity index 100%
rename from test/blackbox-tests/test-cases/stdlib-compilation.t/src/camlinternalFormatBasics.ml
rename to test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/src/camlinternalFormatBasics.ml
diff --git a/test/blackbox-tests/test-cases/stdlib-compilation.t/src/dune b/test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/src/dune
similarity index 100%
rename from test/blackbox-tests/test-cases/stdlib-compilation.t/src/dune
rename to test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/src/dune
diff --git a/test/blackbox-tests/test-cases/stdlib-compilation.t/src/list.ml b/test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/src/list.ml
similarity index 100%
rename from test/blackbox-tests/test-cases/stdlib-compilation.t/src/list.ml
rename to test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/src/list.ml
diff --git a/test/blackbox-tests/test-cases/stdlib-compilation.t/src/std_exit.ml b/test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/src/std_exit.ml
similarity index 100%
rename from test/blackbox-tests/test-cases/stdlib-compilation.t/src/std_exit.ml
rename to test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/src/std_exit.ml
diff --git a/test/blackbox-tests/test-cases/stdlib-compilation.t/src/stdlib.ml b/test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/src/stdlib.ml
similarity index 100%
rename from test/blackbox-tests/test-cases/stdlib-compilation.t/src/stdlib.ml
rename to test/blackbox-tests/test-cases/stdlib/stdlib-compilation.t/src/stdlib.ml