diff --git a/docs/angular/api-node/schematics/library.md b/docs/angular/api-node/schematics/library.md
index 34bc00a7b0..e429ca41b2 100644
--- a/docs/angular/api-node/schematics/library.md
+++ b/docs/angular/api-node/schematics/library.md
@@ -80,6 +80,14 @@ Type: `boolean`
 
 Create a publishable library.
 
+### rootDir
+
+Alias(es): srcRootForCompilationRoot
+
+Type: `string`
+
+Sets the rootDir for TypeScript compilation. When not defined, it uses the project's root property, or srcRootForCompilationRoot if it is defined.
+
 ### skipFormat
 
 Default: `false`
diff --git a/docs/node/api-node/schematics/library.md b/docs/node/api-node/schematics/library.md
index 24867910f1..5fc3b9d683 100644
--- a/docs/node/api-node/schematics/library.md
+++ b/docs/node/api-node/schematics/library.md
@@ -80,6 +80,14 @@ Type: `boolean`
 
 Create a publishable library.
 
+### rootDir
+
+Alias(es): srcRootForCompilationRoot
+
+Type: `string`
+
+Sets the rootDir for TypeScript compilation. When not defined, it uses the project's root property, or srcRootForCompilationRoot if it is defined.
+
 ### skipFormat
 
 Default: `false`
diff --git a/docs/react/api-node/schematics/library.md b/docs/react/api-node/schematics/library.md
index 24867910f1..5fc3b9d683 100644
--- a/docs/react/api-node/schematics/library.md
+++ b/docs/react/api-node/schematics/library.md
@@ -80,6 +80,14 @@ Type: `boolean`
 
 Create a publishable library.
 
+### rootDir
+
+Alias(es): srcRootForCompilationRoot
+
+Type: `string`
+
+Sets the rootDir for TypeScript compilation. When not defined, it uses the project's root property, or srcRootForCompilationRoot if it is defined.
+
 ### skipFormat
 
 Default: `false`
diff --git a/package.json b/package.json
index d0536c88a2..85a944ebad 100644
--- a/package.json
+++ b/package.json
@@ -249,4 +249,4 @@
       "pre-push": "yarn checkcommit && yarn documentation && pretty-quick --check"
     }
   }
-}
+}
\ No newline at end of file
diff --git a/packages/node/src/builders/package/package.impl.ts b/packages/node/src/builders/package/package.impl.ts
index c84ede3ae4..a7885093b8 100644
--- a/packages/node/src/builders/package/package.impl.ts
+++ b/packages/node/src/builders/package/package.impl.ts
@@ -19,6 +19,7 @@ export function runNodePackageBuilder(
 ) {
   const projGraph = createProjectGraph();
   const libRoot = projGraph.nodes[context.target.project].data.root;
+
   const normalizedOptions = normalizeOptions(options, context, libRoot);
   const { target, dependencies } = calculateProjectDependencies(
     projGraph,
diff --git a/packages/node/src/builders/package/utils/compile-typescript-files.ts b/packages/node/src/builders/package/utils/compile-typescript-files.ts
index e7860f36a2..20fb4c9bab 100644
--- a/packages/node/src/builders/package/utils/compile-typescript-files.ts
+++ b/packages/node/src/builders/package/utils/compile-typescript-files.ts
@@ -70,6 +70,7 @@ export default function compileTypeScriptFiles(
 
   const tsconfig = readTsConfig(tsConfigPath);
   tsconfig.options.outDir = options.normalizedOutputPath;
+
   if (options.srcRootForCompilationRoot) {
     tsconfig.options.rootDir = options.srcRootForCompilationRoot;
   } else {
diff --git a/packages/node/src/schematics/library/library.spec.ts b/packages/node/src/schematics/library/library.spec.ts
index 0c7e406505..9916fc3ef8 100644
--- a/packages/node/src/schematics/library/library.spec.ts
+++ b/packages/node/src/schematics/library/library.spec.ts
@@ -37,6 +37,19 @@ describe('lib', () => {
       });
     });
 
+    it('adds srcRootForCompilationRoot in workspace.json', async () => {
+      const tree = await runSchematic(
+        'lib',
+        { name: 'myLib', rootDir: './src', buildable: true },
+        appTree
+      );
+      const workspaceJson = readJsonInTree(tree, '/workspace.json');
+      expect(
+        workspaceJson.projects['my-lib'].architect.build.options
+          .srcRootForCompilationRoot
+      ).toEqual('./src');
+    });
+
     it('should update nx.json', async () => {
       const tree = await runSchematic(
         'lib',
diff --git a/packages/node/src/schematics/library/library.ts b/packages/node/src/schematics/library/library.ts
index 6650698833..baef95527d 100644
--- a/packages/node/src/schematics/library/library.ts
+++ b/packages/node/src/schematics/library/library.ts
@@ -126,6 +126,10 @@ function addProject(options: NormalizedSchema): Rule {
           assets: [`${options.projectRoot}/*.md`],
         },
       };
+
+      if (options.rootDir) {
+        architect.build.options.srcRootForCompilationRoot = options.rootDir;
+      }
     }
     return json;
   });
diff --git a/packages/node/src/schematics/library/schema.d.ts b/packages/node/src/schematics/library/schema.d.ts
index c8531f9aa2..623cd6409f 100644
--- a/packages/node/src/schematics/library/schema.d.ts
+++ b/packages/node/src/schematics/library/schema.d.ts
@@ -12,4 +12,5 @@ export interface Schema {
   publishable?: boolean;
   importPath?: string;
   testEnvironment: 'jsdom' | 'node';
+  rootDir?: string;
 }
diff --git a/packages/node/src/schematics/library/schema.json b/packages/node/src/schematics/library/schema.json
index 6d494d23de..d9de90e458 100644
--- a/packages/node/src/schematics/library/schema.json
+++ b/packages/node/src/schematics/library/schema.json
@@ -64,6 +64,11 @@
       "type": "string",
       "description": "The library name used to import it, like @myorg/my-awesome-lib. Must be a valid npm name."
     },
+    "rootDir": {
+      "type": "string",
+      "alias": "srcRootForCompilationRoot",
+      "description": "Sets the rootDir for TypeScript compilation. When not defined, it uses the project's root property, or srcRootForCompilationRoot if it is defined."
+    },
     "testEnvironment": {
       "type": "string",
       "enum": ["jsdom", "node"],