diff --git a/cmake/CPM.cmake b/cmake/CPM.cmake
index 6e260791..3885dcbd 100644
--- a/cmake/CPM.cmake
+++ b/cmake/CPM.cmake
@@ -257,11 +257,19 @@ function(cpm_find_package NAME VERSION)
         YES
         PARENT_SCOPE
     )
+    set(${NAME}_LOCAL
+        YES
+        PARENT_SCOPE
+    )
   else()
     set(CPM_PACKAGE_FOUND
         NO
         PARENT_SCOPE
     )
+    set(${NAME}_LOCAL
+        NO
+        PARENT_SCOPE
+    )
   endif()
 endfunction()
 
@@ -533,7 +541,8 @@ endfunction()
 # method to overwrite internal FetchContent properties, to allow using CPM.cmake to overload
 # FetchContent calls. As these are internal cmake properties, this method should be used carefully
 # and may need modification in future CMake versions. Source:
-# https://github.com/Kitware/CMake/blob/dc3d0b5a0a7d26d43d6cfeb511e224533b5d188f/Modules/FetchContent.cmake#L1152
+# https://github.com/Kitware/CMake/blob/dc3d0b5a0a7d26d43d6cfeb511e224533b5d188f/Modules/FetchContent.cmake
+# #L1152
 function(cpm_override_fetchcontent contentName)
   cmake_parse_arguments(PARSE_ARGV 1 arg "" "SOURCE_DIR;BINARY_DIR" "")
   if(NOT "${arg_UNPARSED_ARGUMENTS}" STREQUAL "")
@@ -731,6 +740,7 @@ function(CPMAddPackage)
         )
       endif()
     endif()
+    set(${CPM_ARGS_NAME}_LOCAL NO)
   endif()
 
   CPMRegisterPackage("${CPM_ARGS_NAME}" "${CPM_ARGS_VERSION}")
@@ -937,6 +947,10 @@ macro(cpm_export_variables name)
       "${${name}_ADDED}"
       PARENT_SCOPE
   )
+  set(${name}_LOCAL
+      "${${name}_LOCAL}"
+      PARENT_SCOPE
+  )
   set(CPM_LAST_PACKAGE_NAME
       "${name}"
       PARENT_SCOPE
@@ -1065,7 +1079,7 @@ function(
       list(APPEND addSubdirectoryExtraArgs EXCLUDE_FROM_ALL)
     endif()
     if("${SYSTEM}" AND "${CMAKE_VERSION}" VERSION_GREATER_EQUAL "3.25")
-      # https://cmake.org/cmake/help/latest/prop_dir/SYSTEM.html#prop_dir:SYSTEM
+      # https://cmake.org/cmake/help/latest/prop_dir/SYSTEM.html #prop_dir:SYSTEM
       list(APPEND addSubdirectoryExtraArgs SYSTEM)
     endif()
     if(OPTIONS)
diff --git a/test/unit/is_local.cmake b/test/unit/is_local.cmake
new file mode 100644
index 00000000..2c3d9637
--- /dev/null
+++ b/test/unit/is_local.cmake
@@ -0,0 +1,58 @@
+cmake_minimum_required(VERSION 3.14 FATAL_ERROR)
+
+include(${CPM_PATH}/testing.cmake)
+include(CMakePackageConfigHelpers)
+
+set(TEST_BUILD_DIR ${CMAKE_CURRENT_BINARY_DIR}/is_local/)
+
+configure_package_config_file(
+  "${CMAKE_CURRENT_LIST_DIR}/is_local/will_be_local/CMakeLists.txt.in"
+  "${CMAKE_CURRENT_LIST_DIR}/is_local/will_be_local/CMakeLists.txt"
+  INSTALL_DESTINATION ${CMAKE_CURRENT_BINARY_DIR}/is_local/will_be_local/
+)
+
+execute_process(
+  COMMAND ${CMAKE_COMMAND} "-S${CMAKE_CURRENT_LIST_DIR}/is_local/will_be_local/"
+          "-B${TEST_BUILD_DIR}/will_be_local/" "-DCPM_SOURCE_CACHE=${CPM_SOURCE_CACHE_DIR}"
+  RESULT_VARIABLE ret
+)
+
+assert_equal(${ret} "0")
+
+execute_process(
+  COMMAND ${CMAKE_COMMAND} "--build" "${TEST_BUILD_DIR}/will_be_local/" "--verbose"
+  RESULT_VARIABLE ret
+)
+
+assert_equal(${ret} "0")
+
+execute_process(
+  COMMAND ${CMAKE_COMMAND} "--install" "${TEST_BUILD_DIR}/will_be_local/" "--prefix"
+          "${TEST_BUILD_DIR}/install_dir" RESULT_VARIABLE ret
+)
+
+assert_equal(${ret} "0")
+
+# It's better to have this layer of indirection, because we need to add
+# -DCMAKE_PREFIX_PATH=binfolder/is_local/will_be_local/install_dir
+configure_package_config_file(
+  "${CMAKE_CURRENT_LIST_DIR}/is_local/CMakeLists.txt.in"
+  "${CMAKE_CURRENT_LIST_DIR}/is_local/CMakeLists.txt"
+  INSTALL_DESTINATION ${CMAKE_CURRENT_BINARY_DIR}/is_local/
+)
+
+execute_process(
+  COMMAND
+    ${CMAKE_COMMAND} "-S${CMAKE_CURRENT_LIST_DIR}/is_local/" "-B${TEST_BUILD_DIR}/"
+    "-DCMAKE_PREFIX_PATH=${TEST_BUILD_DIR}/install_dir/"
+    "-DCPM_SOURCE_CACHE=${CPM_SOURCE_CACHE_DIR}"
+  RESULT_VARIABLE ret
+)
+
+assert_equal(${ret} "0")
+
+execute_process(
+  COMMAND ${CMAKE_COMMAND} "--build" "${TEST_BUILD_DIR}/" "--verbose" RESULT_VARIABLE ret
+)
+
+assert_equal(${ret} "0")
diff --git a/test/unit/is_local/.gitignore b/test/unit/is_local/.gitignore
new file mode 100644
index 00000000..fe35cb3e
--- /dev/null
+++ b/test/unit/is_local/.gitignore
@@ -0,0 +1,2 @@
+/CMakeLists.txt
+/package-lock.cmake
diff --git a/test/unit/is_local/CMakeLists.txt.in b/test/unit/is_local/CMakeLists.txt.in
new file mode 100644
index 00000000..e75319d9
--- /dev/null
+++ b/test/unit/is_local/CMakeLists.txt.in
@@ -0,0 +1,51 @@
+cmake_minimum_required(VERSION 3.14 FATAL_ERROR)
+
+include(@CPM_PATH@/CPM.cmake)
+include(@CPM_PATH@/testing.cmake)
+
+set(CPM_LOCAL_PACKAGES_ONLY 1)
+
+# Expected that project substractor is installed and can be found. In case of the test, since we do
+# not want to make tests be sudo-required, we use CMAKE_INSTALL_PREFIX to a folder in which the
+# project was installed via `cmake --install build_folder_substractor --prefix a_folder`
+
+CPMAddPackage(NAME substractor VERSION 1.0.0.0)
+
+assert_defined(substractor_ADDED)
+assert_equal("${substractor_ADDED}" "") # it's broken in this case.
+assert_defined(substractor_LOCAL)
+assert_equal("${substractor_LOCAL}" "YES")
+
+# just check the logic 10 times. Can be any number, but 10 is sufficient.
+foreach(loop_var RANGE 1 10 1)
+  CPMAddPackage(NAME substractor VERSION 1.0.0.0)
+
+  assert_equal("${substractor_ADDED}" "NO")
+  assert_equal("${substractor_LOCAL}" "YES")
+endforeach()
+
+# now same logic but for downloaded package.
+set(CPM_LOCAL_PACKAGES_ONLY 0)
+set(CPM_DOWNLOAD_ONLY 1)
+
+# testpack-fibonacci is chosen as not local target.
+set(fibonachi_VERSION 2.0)
+CPMAddPackage(
+  NAME fibonachi
+  VERSION ${fibonachi_VERSION}
+  URL https://github.com/cpm-cmake/testpack-fibonacci/archive/refs/tags/v${fibonachi_VERSION}.tar.gz
+)
+
+assert_equal("${fibonachi_ADDED}" "YES")
+assert_equal("${fibonachi_LOCAL}" "NO")
+
+foreach(loop_var RANGE 1 10 1)
+  CPMAddPackage(
+    NAME fibonachi
+    VERSION ${fibonachi_VERSION}
+    URL https://github.com/cpm-cmake/testpack-fibonacci/archive/refs/tags/v${fibonachi_VERSION}.tar.gz
+  )
+
+  assert_equal("${fibonachi_ADDED}" "NO")
+  assert_equal("${fibonachi_LOCAL}" "NO")
+endforeach()
diff --git a/test/unit/is_local/will_be_local/.gitignore b/test/unit/is_local/will_be_local/.gitignore
new file mode 100644
index 00000000..fe35cb3e
--- /dev/null
+++ b/test/unit/is_local/will_be_local/.gitignore
@@ -0,0 +1,2 @@
+/CMakeLists.txt
+/package-lock.cmake
diff --git a/test/unit/is_local/will_be_local/CMakeLists.txt.in b/test/unit/is_local/will_be_local/CMakeLists.txt.in
new file mode 100644
index 00000000..84c9beff
--- /dev/null
+++ b/test/unit/is_local/will_be_local/CMakeLists.txt.in
@@ -0,0 +1,41 @@
+cmake_minimum_required(VERSION 3.14 FATAL_ERROR)
+
+project(
+  substractor
+  VERSION 1.0.0.0
+  LANGUAGES C
+)
+
+add_library(${PROJECT_NAME} src/substractor.c include/substractor.h)
+target_include_directories(
+  ${PROJECT_NAME} PUBLIC $<BUILD_INTERFACE:${PROJECT_SOURCE_DIR}/include>
+                         $<INSTALL_INTERFACE:include/${PROJECT_NAME}>
+)
+
+include(@CPM_PATH@/CPM.cmake)
+
+set(packageProject_VERSION 1.11.2)
+CPMAddPackage(
+  NAME PackageProject.cmake
+  VERSION ${packageProject_VERSION}
+  URL "https://github.com/TheLartians/PackageProject.cmake/archive/refs/tags/v${packageProject_VERSION}.zip"
+)
+
+string(TOLOWER ${PROJECT_NAME}/version.h VERSION_HEADER_LOCATION)
+string(TOLOWER ${PROJECT_NAME}/export.h EXPORT_HEADER_LOCATION)
+
+set_property(TARGET ${PROJECT_NAME} PROPERTY VERSION ${PROJECT_VERSION})
+set_property(TARGET ${PROJECT_NAME} PROPERTY SOVERSION 1)
+
+packageProject(
+  NAME ${PROJECT_NAME}
+  VERSION ${PROJECT_VERSION}
+  NAMESPACE ${PROJECT_NAME}
+  BINARY_DIR ${PROJECT_BINARY_DIR}
+  INCLUDE_DIR ${PROJECT_SOURCE_DIR}/include
+  INCLUDE_DESTINATION include/${PROJECT_NAME}
+  VERSION_HEADER "${VERSION_HEADER_LOCATION}"
+  EXPORT_HEADER "${EXPORT_HEADER_LOCATION}"
+  COMPATIBILITY "AnyNewerVersion"
+  DISABLE_VERSION_SUFFIX ON
+)
diff --git a/test/unit/is_local/will_be_local/include/substractor.h b/test/unit/is_local/will_be_local/include/substractor.h
new file mode 100644
index 00000000..9c37093a
--- /dev/null
+++ b/test/unit/is_local/will_be_local/include/substractor.h
@@ -0,0 +1,6 @@
+#ifndef INCLUDE_WILL_BE_LOCAL_SUBSTRACTOR_H_
+#define INCLUDE_WILL_BE_LOCAL_SUBSTRACTOR_H_
+
+long substract(int, int);
+
+#endif  // INCLUDE_WILL_BE_LOCAL_SUBSTRACTOR_H_
diff --git a/test/unit/is_local/will_be_local/src/substractor.c b/test/unit/is_local/will_be_local/src/substractor.c
new file mode 100644
index 00000000..511bd89c
--- /dev/null
+++ b/test/unit/is_local/will_be_local/src/substractor.c
@@ -0,0 +1 @@
+long substract(int a, int b) { return (long)a - b; }