diff --git a/v2/build/targets.jam b/v2/build/targets.jam
index 3d491100b..779f43146 100644
--- a/v2/build/targets.jam
+++ b/v2/build/targets.jam
@@ -1008,9 +1008,9 @@ class basic-target : abstract-target
                   $(usage-requirements) ] ;
                 usage-requirements = [ property-set.create $(usage-requirements) ] ;
                 
-                local libs = [ $(rproperties).get <library> ] ;
-                libs += [ $(rproperties).get <source> ] ;
-                source-targets += $(libs:G=) ;
+                local extra = [ $(rproperties).get <source> ] ;                
+                extra += [ extra-sources $(rproperties) ] ;                
+                source-targets += $(extra:G=) ;
                 # We might get duplicate sources, for example if
                 # we link to two library which have the same <library> in
                 # usage requirements.
@@ -1125,6 +1125,13 @@ class basic-target : abstract-target
     {
         errors.error "method should be defined in derived classes" ;
     }
+    
+    # Returns extra targets which must be added to the list of sources
+    # used for building. Mainly, a hook for <library> property.
+    rule extra-sources ( property-set )
+    {        
+    }
+    
 }
 
 class typed-target : basic-target
diff --git a/v2/test/library_property.py b/v2/test/library_property.py
new file mode 100644
index 000000000..1b95f7415
--- /dev/null
+++ b/v2/test/library_property.py
@@ -0,0 +1,63 @@
+#!/usr/bin/python
+
+#  Copyright (C) Vladimir Prus 2004. Permission to copy, use, modify, sell and
+#  distribute this software is granted provided this copyright notice appears in
+#  all copies. This software is provided "as is" without express or implied
+#  warranty, and with no claim as to its suitability for any purpose.
+
+#  Test that the <library> property has no effect on "obj" targets.
+#  Previously, it affected all targets, so
+#
+#     project : requirements <library>foo ;
+#     exe a : a.cpp helper ;
+#     obj helper : helper.cpp : <optimization>off ;
+#
+#  caused 'foo' to be built with with and without optimization.
+from BoostBuild import Tester, List
+
+# Create a temporary working directory
+t = Tester()
+
+t.write("Jamfile", """ 
+project
+   : requirements <library>lib//x
+   ;
+exe a : a.cpp foo ;
+obj foo : foo.cpp : <variant>release ; 
+""")
+
+t.write("a.cpp", """
+void aux();
+int main() { aux(); }
+""")
+
+t.write("foo.cpp", """
+void gee();
+void aux() { gee(); }
+""")
+
+t.write("project-root.jam", """ 
+""")
+
+t.write("lib/x.cpp", """
+void
+#if defined(_WIN32)
+__declspec(dllexport)
+#endif
+gee() {}
+""")
+
+t.write("lib/Jamfile", """ 
+lib x : x.cpp ;
+""")
+
+t.write("lib/project-root.jam", """ 
+""")
+
+
+t.run_build_system()
+t.expect_addition("bin/$toolset/debug/a.exe")
+t.expect_nothing("lib/bin/$toolset/release/x.obj")
+t.cleanup()
+
+
diff --git a/v2/test/test_all.py b/v2/test/test_all.py
index aad17e491..5b33e56f8 100644
--- a/v2/test/test_all.py
+++ b/v2/test/test_all.py
@@ -123,6 +123,7 @@ tests = [ "project_test1",
           "expansion",
           "wrapper",
           "duplicate",
+          "library_property",
           #"ordered_properties",
           ]
 
diff --git a/v2/tools/builtin.jam b/v2/tools/builtin.jam
index d6f47e0ed..a88263a79 100644
--- a/v2/tools/builtin.jam
+++ b/v2/tools/builtin.jam
@@ -429,6 +429,12 @@ class lib-target-class : basic-target
                                         
         return $(result) ;
     }            
+    
+    rule extra-sources ( property-set )
+    {
+        return [ $(property-set).get <library>  ] ;
+    }
+    
 }
 
 rule lib ( names + : sources * : requirements * : default-build * 
@@ -521,7 +527,10 @@ class exe-target-class : typed-target
         basic-target.check-for-unused-sources $(result) : $(sources-to-check) ;
     }
     
-    
+    rule extra-sources ( property-set )
+    {
+        return [ $(property-set).get <library>  ] ;
+    }    
 }
 
 rule exe ( name : sources * : requirements * : default-build *