diff --git a/Cargo.lock b/Cargo.lock
index 25e181acd..04b642ead 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -565,6 +565,16 @@ dependencies = [
  "subtle",
 ]
 
+[[package]]
+name = "ctor"
+version = "0.1.23"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "cdffe87e1d521a10f9696f833fe502293ea446d7f256c06128293a4119bdf4cb"
+dependencies = [
+ "quote",
+ "syn",
+]
+
 [[package]]
 name = "data-encoding"
 version = "2.3.2"
@@ -591,6 +601,12 @@ dependencies = [
  "console",
 ]
 
+[[package]]
+name = "diff"
+version = "0.1.13"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "56254986775e3233ffa9c4d7d3faaf6d36a2c09d30b20687e9f88bc8bafc16c8"
+
 [[package]]
 name = "digest"
 version = "0.9.0"
@@ -1262,6 +1278,7 @@ dependencies = [
  "once_cell",
  "pep440",
  "platform-info",
+ "pretty_assertions",
  "pretty_env_logger",
  "pyproject-toml",
  "python-pkginfo",
@@ -1590,6 +1607,15 @@ dependencies = [
  "regex",
 ]
 
+[[package]]
+name = "output_vt100"
+version = "0.1.3"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "628223faebab4e3e40667ee0b2336d34a5b960ff60ea743ddfdbcf7770bcfb66"
+dependencies = [
+ "winapi",
+]
+
 [[package]]
 name = "parking"
 version = "2.0.0"
@@ -1695,6 +1721,18 @@ version = "0.2.16"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "eb9f9e6e233e5c4a35559a617bf40a4ec447db2e84c20b55a6f83167b7e57872"
 
+[[package]]
+name = "pretty_assertions"
+version = "1.3.0"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "a25e9bcb20aa780fd0bb16b72403a9064d6b3f22f026946029acb941a50af755"
+dependencies = [
+ "ctor",
+ "diff",
+ "output_vt100",
+ "yansi",
+]
+
 [[package]]
 name = "pretty_env_logger"
 version = "0.4.0"
@@ -2825,6 +2863,12 @@ dependencies = [
  "zip",
 ]
 
+[[package]]
+name = "yansi"
+version = "0.5.1"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "09041cd90cf85f7f8b2df60c646f853b7f535ce68f85244eb6731cf89fa498ec"
+
 [[package]]
 name = "zbus"
 version = "1.9.3"
diff --git a/Cargo.toml b/Cargo.toml
index b24b7c20f..66f26d3dd 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -77,6 +77,7 @@ native-tls-crate = { package = "native-tls", version = "0.2.8", optional = true
 
 [dev-dependencies]
 indoc = "1.0.3"
+pretty_assertions = "1.3.0"
 
 [features]
 default = ["log", "upload", "rustls", "human-panic"]
diff --git a/src/auditwheel/audit.rs b/src/auditwheel/audit.rs
index bca9571c3..c56e985dc 100644
--- a/src/auditwheel/audit.rs
+++ b/src/auditwheel/audit.rs
@@ -467,6 +467,7 @@ pub fn relpath(to: &Path, from: &Path) -> PathBuf {
 #[cfg(test)]
 mod test {
     use crate::auditwheel::audit::relpath;
+    use pretty_assertions::assert_eq;
     use std::path::Path;
 
     #[test]
diff --git a/src/auditwheel/policy.rs b/src/auditwheel/policy.rs
index b9e84c502..dc52e25d9 100644
--- a/src/auditwheel/policy.rs
+++ b/src/auditwheel/policy.rs
@@ -116,6 +116,7 @@ impl Policy {
 #[cfg(test)]
 mod test {
     use super::{Arch, Policy, MANYLINUX_POLICIES, MUSLLINUX_POLICIES};
+    use pretty_assertions::assert_eq;
 
     #[test]
     fn test_load_policy() {
diff --git a/src/build_context.rs b/src/build_context.rs
index b0b696cd0..cedfba1d8 100644
--- a/src/build_context.rs
+++ b/src/build_context.rs
@@ -83,6 +83,8 @@ pub struct BuildContext {
     pub bridge: BridgeModel,
     /// Whether this project is pure rust or rust mixed with python
     pub project_layout: ProjectLayout,
+    /// The path to pyproject.toml. Required for the source distribution
+    pub pyproject_toml_path: PathBuf,
     /// Parsed pyproject.toml if any
     pub pyproject_toml: Option<PyProjectToml>,
     /// Python Package Metadata 2.1
diff --git a/src/build_options.rs b/src/build_options.rs
index 10c9e1a86..249c26b4d 100644
--- a/src/build_options.rs
+++ b/src/build_options.rs
@@ -489,6 +489,7 @@ impl BuildOptions {
             project_layout,
             cargo_toml_path,
             cargo_toml,
+            pyproject_toml_path,
             pyproject_toml,
             module_name,
             metadata21,
@@ -690,6 +691,7 @@ impl BuildOptions {
             target,
             bridge,
             project_layout,
+            pyproject_toml_path,
             pyproject_toml,
             metadata21,
             crate_name,
@@ -1175,6 +1177,7 @@ impl CargoOptions {
 #[cfg(test)]
 mod test {
     use cargo_metadata::MetadataCommand;
+    use pretty_assertions::assert_eq;
     use std::path::Path;
 
     use super::*;
diff --git a/src/cargo_toml.rs b/src/cargo_toml.rs
index f06b607f8..523f60c7c 100644
--- a/src/cargo_toml.rs
+++ b/src/cargo_toml.rs
@@ -184,6 +184,7 @@ pub struct RemainingCoreMetadata {
 mod test {
     use super::*;
     use indoc::indoc;
+    use pretty_assertions::assert_eq;
 
     #[test]
     fn test_metadata_from_cargo_toml() {
diff --git a/src/metadata.rs b/src/metadata.rs
index 8557e0304..eff2d8ab0 100644
--- a/src/metadata.rs
+++ b/src/metadata.rs
@@ -555,6 +555,7 @@ fn fold_header(text: &str) -> String {
 mod test {
     use super::*;
     use indoc::indoc;
+    use pretty_assertions::assert_eq;
     use std::io::Write;
 
     fn assert_metadata_from_cargo_toml(readme: &str, cargo_toml: &str, expected: &str) {
diff --git a/src/project_layout.rs b/src/project_layout.rs
index d3677d938..295d9e181 100644
--- a/src/project_layout.rs
+++ b/src/project_layout.rs
@@ -32,6 +32,8 @@ pub struct ProjectResolver {
     pub cargo_toml_path: PathBuf,
     /// Parsed Cargo.toml
     pub cargo_toml: CargoToml,
+    /// pyproject.toml path
+    pub pyproject_toml_path: PathBuf,
     /// Parsed pyproject.toml
     pub pyproject_toml: Option<PyProjectToml>,
     /// Rust module name
@@ -143,6 +145,7 @@ impl ProjectResolver {
             project_layout,
             cargo_toml_path: manifest_file,
             cargo_toml,
+            pyproject_toml_path: pyproject_file,
             pyproject_toml,
             module_name,
             metadata21,
diff --git a/src/pyproject_toml.rs b/src/pyproject_toml.rs
index 524fa235b..9cd6d5473 100644
--- a/src/pyproject_toml.rs
+++ b/src/pyproject_toml.rs
@@ -193,6 +193,7 @@ impl PyProjectToml {
 mod tests {
     use crate::PyProjectToml;
     use fs_err as fs;
+    use pretty_assertions::assert_eq;
     use std::path::Path;
     use tempfile::TempDir;
 
diff --git a/src/python_interpreter/config.rs b/src/python_interpreter/config.rs
index c40f6b210..0d6771079 100644
--- a/src/python_interpreter/config.rs
+++ b/src/python_interpreter/config.rs
@@ -241,6 +241,7 @@ suppress_build_script_link_lines=false"#,
 #[cfg(test)]
 mod test {
     use super::*;
+    use pretty_assertions::assert_eq;
 
     #[test]
     fn test_load_sysconfig() {
diff --git a/src/source_distribution.rs b/src/source_distribution.rs
index 9098871a7..27a9a009e 100644
--- a/src/source_distribution.rs
+++ b/src/source_distribution.rs
@@ -121,12 +121,14 @@ fn rewrite_cargo_toml(
 /// Runs `cargo package --list --allow-dirty` to obtain a list of files to package.
 fn add_crate_to_source_distribution(
     writer: &mut SDistWriter,
+    pyproject_toml_path: impl AsRef<Path>,
     manifest_path: impl AsRef<Path>,
     prefix: impl AsRef<Path>,
     known_path_deps: &HashMap<String, PathBuf>,
     root_crate: bool,
 ) -> Result<()> {
     let manifest_path = manifest_path.as_ref();
+    let pyproject_toml_path = pyproject_toml_path.as_ref();
     let output = Command::new("cargo")
         .args(&["package", "--list", "--allow-dirty", "--manifest-path"])
         .arg(manifest_path)
@@ -154,12 +156,21 @@ fn add_crate_to_source_distribution(
         .collect();
 
     let manifest_dir = manifest_path.parent().unwrap();
+    let abs_manifest_dir = manifest_dir.canonicalize()?;
+    let pyproject_dir = pyproject_toml_path.parent().unwrap().canonicalize()?;
+    let cargo_toml_in_subdir = root_crate
+        && abs_manifest_dir != pyproject_dir
+        && abs_manifest_dir.starts_with(pyproject_dir.canonicalize()?);
 
-    let target_source: Vec<(PathBuf, PathBuf)> = file_list
+    let mut target_source: Vec<(PathBuf, PathBuf)> = file_list
         .iter()
         .map(|relative_to_manifests| {
             let relative_to_cwd = manifest_dir.join(relative_to_manifests);
-            (relative_to_manifests.to_path_buf(), relative_to_cwd)
+            if root_crate && cargo_toml_in_subdir {
+                (relative_to_cwd.clone(), relative_to_cwd)
+            } else {
+                (relative_to_manifests.to_path_buf(), relative_to_cwd)
+            }
         })
         // We rewrite Cargo.toml and add it separately
         .filter(|(target, source)| {
@@ -178,10 +189,19 @@ fn add_crate_to_source_distribution(
             .iter()
             .any(|(target, _)| target == Path::new("pyproject.toml"))
     {
-        bail!(
-            "pyproject.toml was not included by `cargo package`. \
-                 Please make sure pyproject.toml is not excluded or build without `--sdist`"
-        )
+        // Add pyproject.toml to the source distribution
+        // if Cargo.toml is in subdirectory of pyproject.toml directory
+        if cargo_toml_in_subdir {
+            target_source.push((
+                PathBuf::from("pyproject.toml"),
+                pyproject_toml_path.to_path_buf(),
+            ));
+        } else {
+            bail!(
+                "pyproject.toml was not included by `cargo package`. \
+                     Please make sure pyproject.toml is not excluded or build without `--sdist`"
+            )
+        }
     }
 
     let rewritten_cargo_toml = rewrite_cargo_toml(&manifest_path, known_path_deps, root_crate)?;
@@ -257,6 +277,7 @@ pub fn source_distribution(
     for (name, path_dep) in known_path_deps.iter() {
         add_crate_to_source_distribution(
             &mut writer,
+            &build_context.pyproject_toml_path,
             &path_dep,
             &root_dir.join(LOCAL_DEPENDENCIES_FOLDER).join(name),
             &known_path_deps,
@@ -272,6 +293,7 @@ pub fn source_distribution(
     // Add the main crate
     add_crate_to_source_distribution(
         &mut writer,
+        &build_context.pyproject_toml_path,
         &manifest_path,
         &root_dir,
         &known_path_deps,
diff --git a/src/target.rs b/src/target.rs
index ccd165c2b..2667e7e19 100644
--- a/src/target.rs
+++ b/src/target.rs
@@ -701,6 +701,7 @@ fn emcc_version() -> Result<String> {
 #[cfg(test)]
 mod test {
     use super::macosx_deployment_target;
+    use pretty_assertions::assert_eq;
 
     #[test]
     fn test_macosx_deployment_target() {
diff --git a/tests/common/errors.rs b/tests/common/errors.rs
index 216db7705..0de3f202c 100644
--- a/tests/common/errors.rs
+++ b/tests/common/errors.rs
@@ -2,6 +2,7 @@ use anyhow::format_err;
 use anyhow::{bail, Result};
 use clap::Parser;
 use maturin::BuildOptions;
+use pretty_assertions::assert_eq;
 
 pub fn abi3_without_version() -> Result<()> {
     // The first argument is ignored by clap
diff --git a/tests/common/other.rs b/tests/common/other.rs
index 86b28679f..9bbec3560 100644
--- a/tests/common/other.rs
+++ b/tests/common/other.rs
@@ -2,7 +2,8 @@ use anyhow::{Context, Result};
 use clap::Parser;
 use flate2::read::GzDecoder;
 use maturin::{BuildOptions, CargoOptions};
-use std::collections::HashSet;
+use pretty_assertions::assert_eq;
+use std::collections::BTreeSet;
 use std::iter::FromIterator;
 use std::path::{Path, PathBuf};
 use tar::Archive;
@@ -139,14 +140,14 @@ pub fn test_source_distribution(
     let tar_gz = fs_err::File::open(path)?;
     let tar = GzDecoder::new(tar_gz);
     let mut archive = Archive::new(tar);
-    let mut files = HashSet::new();
+    let mut files = BTreeSet::new();
     for entry in archive.entries()? {
         let entry = entry?;
         files.insert(format!("{}", entry.path()?.display()));
     }
     assert_eq!(
         files,
-        HashSet::from_iter(expected_files.into_iter().map(ToString::to_string))
+        BTreeSet::from_iter(expected_files.into_iter().map(ToString::to_string))
     );
     Ok(())
 }