diff --git a/internal/integrationtest/arduino-cli.go b/internal/integrationtest/arduino-cli.go
index f3266a7e153..9ba990476bc 100644
--- a/internal/integrationtest/arduino-cli.go
+++ b/internal/integrationtest/arduino-cli.go
@@ -158,6 +158,12 @@ func (cli *ArduinoCLI) SketchbookDir() *paths.Path {
 	return cli.sketchbookDir
 }
 
+// SetSketchbookDir sets the sketchbook directory
+func (cli *ArduinoCLI) SetSketchbookDir(d *paths.Path) {
+	cli.sketchbookDir = d
+	cli.cliEnvVars["ARDUINO_SKETCHBOOK_DIR"] = d.String()
+}
+
 // WorkingDir returns the working directory
 func (cli *ArduinoCLI) WorkingDir() *paths.Path {
 	return cli.workingDir
diff --git a/internal/integrationtest/compile_2/compile_test.go b/internal/integrationtest/compile_2/compile_test.go
index 42312ca7477..f5ba921bbb2 100644
--- a/internal/integrationtest/compile_2/compile_test.go
+++ b/internal/integrationtest/compile_2/compile_test.go
@@ -26,6 +26,7 @@ import (
 	"github.com/go-git/go-git/v5"
 	"github.com/go-git/go-git/v5/plumbing"
 	"github.com/stretchr/testify/require"
+	"go.bug.st/testifyjson/requirejson"
 )
 
 func TestCompilePart4(t *testing.T) {
@@ -449,3 +450,41 @@ func TestCompileWithKnownPlatformNotInstalled(t *testing.T) {
 	// Verifies command to fix error is shown to user
 	require.Contains(t, string(stderr), "Try running `arduino-cli core install arduino:avr`")
 }
+
+func TestSketchWithVendoredLibraries(t *testing.T) {
+	sketchBook, err := paths.New("testdata", "sketchbook_1").Abs()
+	require.NoError(t, err)
+
+	env, cli := integrationtest.CreateArduinoCLIWithEnvironment(t)
+	defer env.CleanUp()
+
+	cli.SetSketchbookDir(sketchBook)
+
+	_, _, err = cli.Run("core", "install", "arduino:avr")
+	require.NoError(t, err)
+
+	{
+		sketchWithLibsPath := sketchBook.Join("SketchWithLibraries")
+		// Sketch should use sketch bundled "MyLib" with and without profiles
+		out, _, err := cli.Run("compile", "-b", "arduino:avr:uno", sketchWithLibsPath.String(), "--format", "json")
+		require.NoError(t, err)
+		requirejson.Query(t, out, ".builder_result.used_libraries[0].name", `"MyLib"`)
+		requirejson.Query(t, out, ".builder_result.used_libraries[0].author", `"user"`)
+		out, _, err = cli.Run("compile", "--profile", "uno", sketchWithLibsPath.String(), "--format", "json")
+		require.NoError(t, err)
+		requirejson.Query(t, out, ".builder_result.used_libraries[0].name", `"MyLib"`)
+		requirejson.Query(t, out, ".builder_result.used_libraries[0].author", `"user"`)
+	}
+
+	{
+		sketchWithoutLibsPath := sketchBook.Join("SketchWithoutLibraries")
+		// This sketch should take the user-installed MyLib
+		out, _, err := cli.Run("compile", "-b", "arduino:avr:uno", sketchWithoutLibsPath.String(), "--format", "json")
+		require.NoError(t, err)
+		requirejson.Query(t, out, ".builder_result.used_libraries[0].name", `"MyLib"`)
+		requirejson.Query(t, out, ".builder_result.used_libraries[0].author", `"upstream"`)
+		// This sketch should fail to compile since profiles will not see the user-installed MyLib
+		_, _, err = cli.Run("compile", "--profile", "uno", sketchWithoutLibsPath.String())
+		require.Error(t, err)
+	}
+}
diff --git a/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/SketchWithLibraries.ino b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/SketchWithLibraries.ino
new file mode 100644
index 00000000000..b66e280362f
--- /dev/null
+++ b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/SketchWithLibraries.ino
@@ -0,0 +1,6 @@
+#include <MyLib.h>
+
+void setup() {}
+void loop() {
+    myFunction();
+}
diff --git a/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/libraries/AnotherLib/AnotherLib.h b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/libraries/AnotherLib/AnotherLib.h
new file mode 100644
index 00000000000..96e57ec5d58
--- /dev/null
+++ b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/libraries/AnotherLib/AnotherLib.h
@@ -0,0 +1,3 @@
+
+void anotherFunction() {
+}
diff --git a/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/libraries/AnotherLib/library.properties b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/libraries/AnotherLib/library.properties
new file mode 100644
index 00000000000..f165fefe9ec
--- /dev/null
+++ b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/libraries/AnotherLib/library.properties
@@ -0,0 +1 @@
+name=AnotherLib
diff --git a/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/libraries/MyLib/MyLib.h b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/libraries/MyLib/MyLib.h
new file mode 100644
index 00000000000..5ed3d655e94
--- /dev/null
+++ b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/libraries/MyLib/MyLib.h
@@ -0,0 +1,3 @@
+
+void myFunction() {
+}
diff --git a/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/libraries/MyLib/library.properties b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/libraries/MyLib/library.properties
new file mode 100644
index 00000000000..07f99b93d96
--- /dev/null
+++ b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/libraries/MyLib/library.properties
@@ -0,0 +1,2 @@
+name=MyLib
+author=user
diff --git a/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/sketch.yaml b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/sketch.yaml
new file mode 100644
index 00000000000..79937bdfac2
--- /dev/null
+++ b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithLibraries/sketch.yaml
@@ -0,0 +1,6 @@
+profiles:
+  uno:
+    fqbn: arduino:avr:uno
+    platforms:
+      - platform: arduino:avr (1.8.5)
+
diff --git a/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithoutLibraries/SketchWithoutLibraries.ino b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithoutLibraries/SketchWithoutLibraries.ino
new file mode 100644
index 00000000000..a0220e4a7f1
--- /dev/null
+++ b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithoutLibraries/SketchWithoutLibraries.ino
@@ -0,0 +1,6 @@
+#include <MyLib.h>
+
+void setup() {}
+void loop() {
+    myWrongFunction();
+}
diff --git a/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithoutLibraries/sketch.yaml b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithoutLibraries/sketch.yaml
new file mode 100644
index 00000000000..79937bdfac2
--- /dev/null
+++ b/internal/integrationtest/compile_2/testdata/sketchbook_1/SketchWithoutLibraries/sketch.yaml
@@ -0,0 +1,6 @@
+profiles:
+  uno:
+    fqbn: arduino:avr:uno
+    platforms:
+      - platform: arduino:avr (1.8.5)
+
diff --git a/internal/integrationtest/compile_2/testdata/sketchbook_1/libraries/MyLib/MyLib.h b/internal/integrationtest/compile_2/testdata/sketchbook_1/libraries/MyLib/MyLib.h
new file mode 100644
index 00000000000..2ce641a99a4
--- /dev/null
+++ b/internal/integrationtest/compile_2/testdata/sketchbook_1/libraries/MyLib/MyLib.h
@@ -0,0 +1,5 @@
+
+// This is the wrong library to include (the sketch-bundled one should take priority)
+
+void myWrongFunction() {
+}
diff --git a/internal/integrationtest/compile_2/testdata/sketchbook_1/libraries/MyLib/library.properties b/internal/integrationtest/compile_2/testdata/sketchbook_1/libraries/MyLib/library.properties
new file mode 100644
index 00000000000..0d0b76480a9
--- /dev/null
+++ b/internal/integrationtest/compile_2/testdata/sketchbook_1/libraries/MyLib/library.properties
@@ -0,0 +1,2 @@
+name=MyLib
+author=upstream