diff --git a/ChangeLog b/ChangeLog
index 5f3424b957..d575dcbb6a 100644
--- a/ChangeLog
+++ b/ChangeLog
@@ -1,4 +1,9 @@
-Sun Mar  3 01:16:16 2013  Nobuyoshi Nakada  <nobu@ruby-lang.org>
+Sun Mar  3 01:17:20 2013  Nobuyoshi Nakada  <nobu@ruby-lang.org>
+
+	* lib/rubygems/ext/ext_conf_builder.rb
+	  (Gem::Ext::ExtConfBuilder.hack_for_obsolete_sytle_gems): remove
+	  circular dependencies for old style gems which locate extconf.rb on
+	  the toplevel.  [ruby-core:53059] [ruby-trunk - Bug #7698]
 
 	* lib/rubygems/ext/ext_conf_builder.rb (Gem::Ext::ExtConfBuilder.build):
 	  use RUBYOPT instead of -r option, and revert some tests.  [Bug #7698]
diff --git a/lib/rubygems/ext/ext_conf_builder.rb b/lib/rubygems/ext/ext_conf_builder.rb
index e11a1cdfbc..f3fc5d8e30 100644
--- a/lib/rubygems/ext/ext_conf_builder.rb
+++ b/lib/rubygems/ext/ext_conf_builder.rb
@@ -11,6 +11,18 @@ require 'tempfile'
 
 class Gem::Ext::ExtConfBuilder < Gem::Ext::Builder
 
+  def self.hack_for_obsolete_sytle_gems(directory)
+    return unless directory and File.identical?(directory, ".")
+    mf = Gem.read_binary 'Makefile'
+    changed = false
+    changed |= mf.gsub!(/^(install-rb-default:)(.*)/) {
+      "#$1#{$2.gsub(/(?:^|\s+)\$\(RUBY(?:ARCH|LIB)DIR\)\/\S+(?=\s|$)/, '')}"
+    }
+    if changed
+      File.open('Makefile', 'wb') {|f| f.print mf}
+    end
+  end
+
   def self.build(extension, directory, dest_path, results, args=[])
     siteconf = Tempfile.open(%w"siteconf .rb", ".") do |f|
       f.puts "require 'rbconfig'"
@@ -28,6 +40,8 @@ class Gem::Ext::ExtConfBuilder < Gem::Ext::Builder
 
     run cmd, results
 
+    hack_for_obsolete_sytle_gems directory
+
     make dest_path, results
 
     results
diff --git a/test/rubygems/test_gem_installer.rb b/test/rubygems/test_gem_installer.rb
index d9a4a82418..acbc0447df 100644
--- a/test/rubygems/test_gem_installer.rb
+++ b/test/rubygems/test_gem_installer.rb
@@ -1038,6 +1038,9 @@ gem 'other', version
       RUBY
     end
 
+    # make sure timestamp file will become newer than the script file.
+    sleep 2
+
     assert !File.exist?(File.join(@spec.gem_dir, rb))
     use_ui @ui do
       path = Gem::Package.build @spec