diff --git a/python/scripts/mkvenv.py b/python/scripts/mkvenv.py
index b4662d33e6..8ed6a35450 100644
--- a/python/scripts/mkvenv.py
+++ b/python/scripts/mkvenv.py
@@ -662,6 +662,7 @@ def pip_install(
     args: Sequence[str],
     online: bool = False,
     wheels_dir: Optional[Union[str, Path]] = None,
+    env: Optional[Dict[str, str]] = None,
 ) -> None:
     """
     Use pip to install a package or package(s) as specified in @args.
@@ -687,6 +688,7 @@ def pip_install(
     full_args += list(args)
     subprocess.run(
         full_args,
+        env=env,
         check=True,
     )
 
@@ -733,9 +735,14 @@ def _do_ensure(
     :param wheels_dir: If specified, search this path for packages.
     """
     absent = []
+    local_packages = []
     present = []
     canary = None
     for name, info in group.items():
+        if "path" in info:
+            pkgpath = Path(__file__).parents[2].joinpath(info["path"])
+            local_packages.append(str(pkgpath))
+            continue
         constraint = _make_version_constraint(info, False)
         matcher = Matcher(name + constraint)
         print(f"mkvenv: checking for {matcher}", file=sys.stderr)
@@ -770,15 +777,33 @@ def _do_ensure(
             print(f"mkvenv: installing {', '.join(absent)}", file=sys.stderr)
             try:
                 pip_install(args=absent, online=online, wheels_dir=wheels_dir)
-                return None
+                absent = []
             except subprocess.CalledProcessError:
                 pass
 
-        return diagnose(
-            absent[0],
-            online,
-            wheels_dir,
-            canary,
+        if absent:
+            return diagnose(
+                absent[0],
+                online,
+                wheels_dir,
+                canary,
+            )
+
+    # Handle local packages separately and last so we can use different
+    # installation arguments (-e), and so that any dependencies that may
+    # be covered above will be handled according to the depfile
+    # specifications.
+    if local_packages:
+        print(f"mkvenv: installing {', '.join(local_packages)}",
+              file=sys.stderr)
+        env = dict(os.environ)
+        env['PIP_CONFIG_SETTINGS'] = "editable_mode=compat"
+        pip_install(
+            args=["--no-build-isolation",
+                  "-e"] + local_packages,
+            online=online,
+            wheels_dir=wheels_dir,
+            env=env,
         )
 
     return None