diff --git a/depends/funcs.mk b/depends/funcs.mk
index f7a98b424ec..b499b6a78fe 100644
--- a/depends/funcs.mk
+++ b/depends/funcs.mk
@@ -39,9 +39,33 @@ define fetch_file
       $(call fetch_file_inner,$(1),$(FALLBACK_DOWNLOAD_PATH),$(3),$(4),$(5))))
 endef
 
+# Shell script to create a source tarball in $(1)_source from local directory
+# $(1)_local_dir instead of downloading remote sources. Tarball is recreated if
+# any paths in the local directory have a newer mtime, and checksum of the
+# tarball is saved to $(1)_fetched and returned as output.
+define fetch_local_dir_sha256
+    if ! [ -f $($(1)_source) ] || [ -n "$$(find $($(1)_local_dir) -newer $($(1)_source) | head -n1)" ]; then \
+        mkdir -p $(dir $($(1)_source)) && \
+        $(build_TAR) -c -f $($(1)_source) -C $($(1)_local_dir) . && \
+        rm -f $($(1)_fetched); \
+    fi && \
+    if ! [ -f $($(1)_fetched) ] || [ -n "$$(find $($(1)_source) -newer $($(1)_fetched))" ]; then \
+        mkdir -p $(dir $($(1)_fetched)) && \
+        cd $($(1)_source_dir) && \
+        $(build_SHA256SUM) $($(1)_all_sources) > $($(1)_fetched); \
+    fi && \
+    cut -d" " -f1 $($(1)_fetched)
+endef
+
 define int_get_build_recipe_hash
 $(eval $(1)_patches_path?=$(PATCHES_PATH)/$(1))
 $(eval $(1)_all_file_checksums:=$(shell $(build_SHA256SUM) $(meta_depends) packages/$(1).mk $(addprefix $($(1)_patches_path)/,$($(1)_patches)) | cut -d" " -f1))
+# If $(1)_local_dir is set, create a tarball of the local directory contents to
+# use as the source of the package, and include a hash of the tarball in the
+# package id, so if directory contents change, the package and packages
+# depending on it will be rebuilt.
+$(if $($(1)_local_dir),$(eval $(1)_sha256_hash:=$(shell $(call fetch_local_dir_sha256,$(1)))))
+$(if $($(1)_local_dir),$(eval $(1)_all_file_checksums+=$($(1)_sha256_hash)))
 $(eval $(1)_recipe_hash:=$(shell echo -n "$($(1)_all_file_checksums)" | $(build_SHA256SUM) | cut -d" " -f1))
 endef
 
@@ -64,10 +88,19 @@ $(1)_cached:=$(BASE_CACHE)/$(host)/$(1)/$(1)-$($(1)_version)-$($(1)_build_id).ta
 $(1)_build_log:=$(BASEDIR)/$(1)-$($(1)_version)-$($(1)_build_id).log
 endef
 
+# Convert a string to a human-readable filename, replacing dot, slash, and space
+# characters that could cause problems with dashes and collapsing them.
+define int_friendly_file_name
+$(subst $(null) $(null),-,$(strip $(subst ., ,$(subst /, ,$(1)))))
+endef
+
 define int_get_build_properties
 $(1)_build_subdir?=.
 $(1)_download_file?=$($(1)_file_name)
 $(1)_source_dir:=$(SOURCES_PATH)
+# If $(1)_file_name is empty and $(1)_local_dir is nonempty, set file name to a
+# .tar file with a friendly filename named after the directory path.
+$(if $($(1)_file_name),,$(if $($(1)_local_dir),$(eval $(1)_file_name:=$(call int_friendly_file_name,$($(1)_local_dir)).tar)))
 $(1)_source:=$$($(1)_source_dir)/$($(1)_file_name)
 $(1)_download_dir:=$(base_download_dir)/$(1)-$($(1)_version)
 $(1)_prefixbin:=$($($(1)_type)_prefix)/bin/
diff --git a/depends/packages.md b/depends/packages.md
index 6b458f22dd4..f304f7e028a 100644
--- a/depends/packages.md
+++ b/depends/packages.md
@@ -11,7 +11,8 @@ General tips:
   [below](#secondary-dependencies) for more details.
 
 ## Identifiers
-Each package is required to define at least these variables:
+If package does not define a `$(package)_local_dir` variable, it is required to
+define these variables:
 
     $(package)_version:
     Version of the upstream library or program. If there is no version, a
@@ -28,6 +29,9 @@ Each package is required to define at least these variables:
     $(package)_sha256_hash:
     The sha256 hash of the upstream file
 
+If a package does define a `$(package)_local_dir` variable, the above variables
+are not required and will be ignored.
+
 These variables are optional:
 
     $(package)_build_subdir:
@@ -48,6 +52,18 @@ These variables are optional:
     Any extra files that will be fetched via $(package)_fetch_cmds. These are
     specified so that they can be fetched and verified via 'make download'.
 
+## Local packages
+
+If a package defines a `$(package)_local_dir` variable, the specified directory
+will be treated as a download source, and a tarball of its contents will be
+saved to `sources/`. A hash of the tarball will also become part of the package
+build id, so if the directory contents change, the package and everything
+depending on it will be rebuilt. For efficiency, the tarball is cached once it
+has been created, but if the local directory is touched, it will be rebuilt.
+
+Local packages can be useful for using git submodules or subtrees to manage
+package sources, or for testing local changes that are not available to
+download from an external source.
 
 ## Build Variables:
 After defining the main identifiers, build variables may be added or customized
diff --git a/depends/packages/libmultiprocess.mk b/depends/packages/libmultiprocess.mk
index 47064a9bb6c..158f57b3c68 100644
--- a/depends/packages/libmultiprocess.mk
+++ b/depends/packages/libmultiprocess.mk
@@ -1,5 +1,6 @@
 package=libmultiprocess
 $(package)_version=$(native_$(package)_version)
+$(package)_local_dir=$(native_$(package)_local_dir)
 $(package)_download_path=$(native_$(package)_download_path)
 $(package)_file_name=$(native_$(package)_file_name)
 $(package)_sha256_hash=$(native_$(package)_sha256_hash)
diff --git a/depends/packages/native_libmultiprocess.mk b/depends/packages/native_libmultiprocess.mk
index d0db7ba6a2c..f494f6e8a58 100644
--- a/depends/packages/native_libmultiprocess.mk
+++ b/depends/packages/native_libmultiprocess.mk
@@ -1,8 +1,5 @@
 package=native_libmultiprocess
-$(package)_version=35944ffd23fa26652b82210351d50e896ce16c8f
-$(package)_download_path=https://github.com/bitcoin-core/libmultiprocess/archive
-$(package)_file_name=$($(package)_version).tar.gz
-$(package)_sha256_hash=b542f270c076d0287c124e7f97b21ab7e32b979ff182491c157c2da9dec723c4
+$(package)_local_dir=../src/ipc/libmultiprocess
 $(package)_dependencies=native_capnp
 
 define $(package)_config_cmds