diff --git a/CHANGELOG.md b/CHANGELOG.md
index b61f12b92..54738c7ed 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -13,10 +13,15 @@
 * Properly serialize array settings when running `config-dump`.  
   [Samuel Giddins](https://github.com/segiddins)
 
-* Add iMessage extensions. 
+* Add iMessage extensions.  
   [wade0317](https://github.com/wade0317)
   [#723](https://github.com/CocoaPods/Xcodeproj/pull/723)
 
+* Fix errors when using mutually recursive build settings.  
+  [revolter](https://github.com/revolter)
+  [#727](https://github.com/CocoaPods/Xcodeproj/pull/727)
+
+
 ## 1.13.0 (2019-10-16)
 
 ##### Enhancements
diff --git a/lib/xcodeproj/project/object/build_configuration.rb b/lib/xcodeproj/project/object/build_configuration.rb
index 770b3cd62..6b913ad0e 100644
--- a/lib/xcodeproj/project/object/build_configuration.rb
+++ b/lib/xcodeproj/project/object/build_configuration.rb
@@ -6,6 +6,10 @@ module Object
       # {PBXProject} or a {PBXNativeTarget}.
       #
       class XCBuildConfiguration < AbstractObject
+        MUTUAL_RECURSION_SENTINEL = 'xcodeproj.mutual_recursion_sentinel'.freeze
+
+        private_constant :MUTUAL_RECURSION_SENTINEL
+
         # @!group Attributes
 
         # @return [String] the name of the Target.
@@ -79,16 +83,19 @@ def type
         #        the key of the build setting.
         #
         # @param [PBXNativeTarget] root_target
-        #        use this to resolve complete recursion between project and targets
+        #        use this to resolve complete recursion between project and targets.
+        #
+        # @param [String] previous_key
+        #        use this to resolve complete recursion between different build settings.
         #
         # @return [String] The value of the build setting
         #
-        def resolve_build_setting(key, root_target = nil)
+        def resolve_build_setting(key, root_target = nil, previous_key = nil)
           setting = build_settings[key]
-          setting = resolve_variable_substitution(key, setting, root_target)
+          setting = resolve_variable_substitution(key, setting, root_target, previous_key)
 
           config_setting = config[key]
-          config_setting = resolve_variable_substitution(key, config_setting, root_target)
+          config_setting = resolve_variable_substitution(key, config_setting, root_target, previous_key)
 
           project_setting = project.build_configuration_list[name]
           project_setting = nil if equal?(project_setting)
@@ -99,6 +106,12 @@ def resolve_build_setting(key, root_target = nil)
             'SRCROOT' => project.project_dir.to_s,
           }
 
+          # if previous_key is nil, it means that we're back at the first call, so we can replace our sentinel string
+          # used to prevent recursion with nil
+          if previous_key.nil? && setting == MUTUAL_RECURSION_SENTINEL
+            setting = nil
+          end
+
           [defaults[key], project_setting, config_setting, setting, ENV[key]].compact.reduce(nil) do |inherited, value|
             expand_build_setting(value, inherited)
           end
@@ -142,7 +155,7 @@ def expand_build_setting(build_setting_value, config_value)
           build_setting_value.flat_map { |value| Constants::INHERITED_KEYWORDS.include?(value) ? inherited : value }
         end
 
-        def resolve_variable_substitution(key, value, root_target)
+        def resolve_variable_substitution(key, value, root_target, previous_key = nil)
           case value
           when Array
             return value.map { |v| resolve_variable_substitution(key, v, root_target) }
@@ -168,9 +181,20 @@ def resolve_variable_substitution(key, value, root_target)
           when key
             # to prevent infinite recursion
             nil
+          when previous_key
+            # to prevent infinite recursion; we don't return nil as for the self recursion because it needs to be
+            # distinguished outside this method too
+            MUTUAL_RECURSION_SENTINEL
           else
             configuration_to_resolve_against = root_target ? root_target.build_configuration_list[name] : self
-            resolved_value_for_variable = configuration_to_resolve_against.resolve_build_setting(variable, root_target) || ''
+            resolved_value_for_variable = configuration_to_resolve_against.resolve_build_setting(variable, root_target, key) || ''
+
+            # we use this sentinel string instead of nil, because, otherwise, it would be swallowed by the default empty
+            # string from the preceding line, and we want to distinguish between mutual recursion and other cases
+            if resolved_value_for_variable == MUTUAL_RECURSION_SENTINEL
+              return MUTUAL_RECURSION_SENTINEL
+            end
+
             value = value.gsub(variable_reference, resolved_value_for_variable)
             resolve_variable_substitution(key, value, root_target)
           end
diff --git a/spec/project/object/build_configuration_spec.rb b/spec/project/object/build_configuration_spec.rb
index 0d573204f..dbb304922 100644
--- a/spec/project/object/build_configuration_spec.rb
+++ b/spec/project/object/build_configuration_spec.rb
@@ -72,7 +72,8 @@ module ProjectSpecs
             'inherited_suffix' => 'suffix',
             'FOOS' => %w(a b c d ${i} ${inherited} ${I${e}} ${${i}E}),
             'self_recursive' => 'hi $(self_recursive)',
-            'mutually_recursive' => 'm1: ${mutually_recursive_1} m2: ${mutually_recursive_1}',
+            'mutually_recursive' => 'mn: ${mutually_recursive_nested}',
+            'mutually_recursive_nested' => 'm1: ${mutually_recursive_1} m2: ${mutually_recursive_1}',
             'mutually_recursive_1' => 'mr2=${mutually_recursive_2}',
             'mutually_recursive_2' => 'mr1=${mutually_recursive_1}',
             'mixes_braces_and_parens' => '${ab) $(cd}){})',
@@ -115,9 +116,10 @@ module ProjectSpecs
           @configuration.resolve_build_setting('mixes_braces_and_parens').should == '${ab) $(cd}){})'
         end
 
-        xit 'resolves mutually-recursive references to nil' do
+        it 'resolves mutually-recursive references to nil' do
           @configuration.resolve_build_setting('mutually_recursive_1').should.nil?
           @configuration.resolve_build_setting('mutually_recursive_2').should.nil?
+          @configuration.resolve_build_setting('mutually_recursive_nested').should.nil?
           @configuration.resolve_build_setting('mutually_recursive').should.nil?
         end
       end