diff --git a/CMakeLists.txt b/CMakeLists.txt
index 9a5cf99631..69de5395fa 100644
--- a/CMakeLists.txt
+++ b/CMakeLists.txt
@@ -6,9 +6,14 @@ option(LLVM_SPIRV_INCLUDE_TESTS
   "Generate build targets for the llvm-spirv lit tests."
   ${LLVM_INCLUDE_TESTS})
 
-# check if we build inside llvm or not
-if(CMAKE_SOURCE_DIR STREQUAL CMAKE_CURRENT_SOURCE_DIR)
-  set(BUILD_EXTERNAL YES)
+if (NOT DEFINED LLVM_SPIRV_BUILD_EXTERNAL)
+  # check if we build inside llvm or not
+  if(CMAKE_SOURCE_DIR STREQUAL CMAKE_CURRENT_SOURCE_DIR)
+    set(LLVM_SPIRV_BUILD_EXTERNAL YES)
+  endif(CMAKE_SOURCE_DIR STREQUAL CMAKE_CURRENT_SOURCE_DIR)
+endif (NOT DEFINED LLVM_SPIRV_BUILD_EXTERNAL)
+
+if(LLVM_SPIRV_BUILD_EXTERNAL)
   project(LLVM_SPIRV
     VERSION
       ${LLVM_SPIRV_VERSION}
@@ -43,11 +48,7 @@ if(CMAKE_SOURCE_DIR STREQUAL CMAKE_CURRENT_SOURCE_DIR)
   include(AddLLVM)
 
   message(STATUS "Found LLVM: ${LLVM_VERSION}")
-else(CMAKE_SOURCE_DIR STREQUAL CMAKE_CURRENT_SOURCE_DIR)
-  set(BUILD_EXTERNAL NO)
-endif(CMAKE_SOURCE_DIR STREQUAL CMAKE_CURRENT_SOURCE_DIR)
 
-if(BUILD_EXTERNAL)
   find_program(CCACHE_EXE_FOUND ccache)
   if(CCACHE_EXE_FOUND)
     message(STATUS "Found ccache: ${CCACHE_EXE_FOUND}")
diff --git a/README.md b/README.md
index 96e20396e0..5e4fbcc0a1 100644
--- a/README.md
+++ b/README.md
@@ -38,13 +38,23 @@ make llvm-spirv -j`nproc`
 
 ### Build with pre-built LLVM
 
-If you have a custom build(based on the latest version) of LLVM libraries you can link the translator against it. 
+If you have a custom build (based on the latest version) of LLVM libraries you
+can link the translator against it.
+
 ```
 git clone https://github.com/KhronosGroup/SPIRV-LLVM-Translator.git
 mkdir SPIRV-LLVM-Translator/build && cd SPIRV-LLVM-Translator/build
 cmake .. -DLLVM_DIR=<llvm_build_dir>/lib/cmake/llvm/
 make llvm-spirv -j`nproc`
 ```
+
+If the translator is used as part of another CMake project, you will need
+to define `LLVM_SPIRV_BUILD_EXTERNAL`:
+
+```
+cmake .. -DLLVM_DIR=<llvm_build_dir>/lib/cmake/llvm/ -DLLVM_SPIRV_BUILD_EXTERNAL=YES
+```
+
 Where `llvm_build_dir` is the LLVM build directory.
 
 ### LLVM in-tree build
diff --git a/test/CMakeLists.txt b/test/CMakeLists.txt
index 211f804c9d..3348c034ad 100644
--- a/test/CMakeLists.txt
+++ b/test/CMakeLists.txt
@@ -40,7 +40,7 @@ configure_lit_site_cfg(
     ${CMAKE_CURRENT_SOURCE_DIR}/lit.cfg.py
 )
 
-if(NOT BUILD_EXTERNAL)
+if(NOT LLVM_SPIRV_BUILD_EXTERNAL)
   set(LLVM_SPIRV_TEST_DEPS
     FileCheck
     count
@@ -63,7 +63,7 @@ if(NOT BUILD_EXTERNAL)
       llvm-readobj
     )
   endif(NOT SPIRV_SKIP_DEBUG_INFO_TESTS)
-endif(NOT BUILD_EXTERNAL)
+endif(NOT LLVM_SPIRV_BUILD_EXTERNAL)
 
 
 add_lit_testsuite(check-llvm-spirv "Running the LLVM-SPIRV regression tests"
@@ -77,7 +77,7 @@ add_lit_testsuite(check-llvm-spirv "Running the LLVM-SPIRV regression tests"
 
 # to enable a custom test target on cmake below 3.11
 # starting with 3.11 "test" is only reserved if ENABLE_TESTING(ON)
-if(BUILD_EXTERNAL)
+if(LLVM_SPIRV_BUILD_EXTERNAL)
   cmake_policy(PUSH)
   if(POLICY CMP0037 AND ${CMAKE_VERSION} VERSION_LESS "3.11.0")
     cmake_policy(SET CMP0037 OLD)
@@ -87,4 +87,4 @@ if(BUILD_EXTERNAL)
       check-llvm-spirv
   )
   cmake_policy(POP)
-endif(BUILD_EXTERNAL)
+endif(LLVM_SPIRV_BUILD_EXTERNAL)
diff --git a/tools/llvm-spirv/CMakeLists.txt b/tools/llvm-spirv/CMakeLists.txt
index cf5541202f..9aa96d9c41 100644
--- a/tools/llvm-spirv/CMakeLists.txt
+++ b/tools/llvm-spirv/CMakeLists.txt
@@ -14,7 +14,7 @@ add_llvm_tool(llvm-spirv
   NO_INSTALL_RPATH
 )
 
-if (BUILD_EXTERNAL)
+if (LLVM_SPIRV_BUILD_EXTERNAL)
   target_link_libraries(llvm-spirv PRIVATE LLVMSPIRVLib)
 endif()