diff --git a/changelog/12625.improvement.rst b/changelog/12625.improvement.rst
new file mode 100644
index 00000000000..7823a71297e
--- /dev/null
+++ b/changelog/12625.improvement.rst
@@ -0,0 +1,2 @@
+Conditionally ignore collection of setuptools artifacts dirnames only if the
+directories reside inside a setuptools project, i.e. `setup.cfg`, is present, etc.
diff --git a/src/_pytest/main.py b/src/_pytest/main.py
index e5534e98d69..ff36b85a5cd 100644
--- a/src/_pytest/main.py
+++ b/src/_pytest/main.py
@@ -63,9 +63,7 @@ def pytest_addoption(parser: Parser) -> None:
             "*.egg",
             ".*",
             "_darcs",
-            "build",
             "CVS",
-            "dist",
             "node_modules",
             "venv",
             "{arch}",
@@ -367,6 +365,47 @@ def pytest_runtestloop(session: Session) -> bool:
     return True
 
 
+def _is_setuptools_in_pyproject_toml(toml: Path) -> bool:
+    """Attempt to decode a toml file into a dict, returning None if fails."""
+    if sys.version_info >= (3, 11):
+        import tomllib
+    else:
+        import tomli as tomllib
+
+    try:
+        toml_text = toml.read_text(encoding="utf-8")
+        parsed_toml = tomllib.loads(toml_text)
+        build_system = parsed_toml.get("build-system", {}).get("requires")
+        if "setuptools" in build_system:
+            return True
+    except Exception:
+        pass
+
+    return False
+
+
+def _in_build(path: Path) -> bool:
+    """Attempt to detect if ``path`` is the root of a buildsystem's artifacts
+    by checking known dirnames patterns, and the presence of configuration in
+    the parent dir by checking for a setup.py, setup.cfg, or pyproject.toml.
+    """
+    if not path.is_dir():
+        return False
+
+    if any(fnmatch_ex(pat, path) for pat in ("build", "dist")):
+        setup_cfg = path.parent / "setup.cfg"
+        if (setup_cfg).is_file():
+            setup_py = path.parent / "setup.py"
+            if setup_py.is_file():
+                return True
+
+            toml = path.parent / "pyproject.toml"
+            if toml.is_file() and _is_setuptools_in_pyproject_toml(toml):
+                return True
+
+    return False
+
+
 def _in_venv(path: Path) -> bool:
     """Attempt to detect if ``path`` is the root of a Virtual Environment by
     checking for the existence of the pyvenv.cfg file.
@@ -418,6 +457,10 @@ def pytest_ignore_collect(collection_path: Path, config: Config) -> bool | None:
     if not allow_in_venv and _in_venv(collection_path):
         return True
 
+    allow_in_build = False  # config.getoption("collect_in_build")
+    if not allow_in_build and _in_build(collection_path):
+        return True
+
     if collection_path.is_dir():
         norecursepatterns = config.getini("norecursedirs")
         if any(fnmatch_ex(pat, collection_path) for pat in norecursepatterns):
diff --git a/testing/test_collection.py b/testing/test_collection.py
index aba8f8ea48d..9713afeee99 100644
--- a/testing/test_collection.py
+++ b/testing/test_collection.py
@@ -137,8 +137,6 @@ def test_foo():
 class TestCollectFS:
     def test_ignored_certain_directories(self, pytester: Pytester) -> None:
         tmp_path = pytester.path
-        ensure_file(tmp_path / "build" / "test_notfound.py")
-        ensure_file(tmp_path / "dist" / "test_notfound.py")
         ensure_file(tmp_path / "_darcs" / "test_notfound.py")
         ensure_file(tmp_path / "CVS" / "test_notfound.py")
         ensure_file(tmp_path / "{arch}" / "test_notfound.py")
@@ -276,6 +274,53 @@ def test_missing_permissions_on_unselected_directory_doesnt_crash(
         assert result.ret == ExitCode.OK
         result.assert_outcomes(passed=1)
 
+    known_build_dirs = pytest.mark.parametrize("build_dir", ["build", "dist"])
+
+    @known_build_dirs
+    def test_build_dirs_collected_when_setuptools_setup_py_present(
+        self, pytester: Pytester, build_dir: str
+    ) -> None:
+        tmp_path = pytester.path
+        ensure_file(tmp_path / build_dir / "test_module.py").write_text(
+            "def test_hello(): pass", encoding="utf-8"
+        )
+
+        result = pytester.runpytest("--collect-only").stdout.str()
+        assert "test_module" in result
+
+        ensure_file(tmp_path / "setup.cfg")
+
+        result = pytester.runpytest("--collect-only").stdout.str()
+        assert "test_module" in result
+
+        ensure_file(tmp_path / "setup.py")
+        result = pytester.runpytest("--collect-only").stdout.str()
+        assert "test_module" not in result
+
+    @known_build_dirs
+    def test_build_dirs_collected_when_setuptools_present_in_pyproject_toml(
+        self, pytester: Pytester, build_dir: str
+    ) -> None:
+        tmp_path = pytester.path
+        ensure_file(tmp_path / build_dir / "test_module.py").write_text(
+            "def test_hello(): pass", encoding="utf-8"
+        )
+
+        result = pytester.runpytest("--collect-only").stdout.str()
+        assert "test_module" in result
+
+        ensure_file(tmp_path / "setup.cfg")
+
+        result = pytester.runpytest("--collect-only").stdout.str()
+        assert "test_module" in result
+
+        ensure_file(tmp_path / "pyproject.toml").write_text(
+            '[build-system]\nrequires = ["setuptools", "setuptools-scm"]\n',
+            encoding="utf-8",
+        )
+        result = pytester.runpytest("--collect-only").stdout.str()
+        assert "test_module" not in result
+
 
 class TestCollectPluginHookRelay:
     def test_pytest_collect_file(self, pytester: Pytester) -> None: