diff --git a/bin/compute-classpath.sh b/bin/compute-classpath.sh
index c7819d493..c16afd6b3 100755
--- a/bin/compute-classpath.sh
+++ b/bin/compute-classpath.sh
@@ -32,12 +32,26 @@ fi
 
 # Build up classpath
 CLASSPATH="$SPARK_CLASSPATH:$FWDIR/conf"
-if [ -f "$FWDIR/RELEASE" ]; then
-  ASSEMBLY_JAR=`ls "$FWDIR"/jars/spark-assembly*.jar`
+
+# First check if we have a dependencies jar. If so, include binary classes with the deps jar
+if [ -f "$FWDIR"/assembly/target/scala-$SCALA_VERSION/spark-assembly*hadoop*-deps.jar ]; then
+  CLASSPATH="$CLASSPATH:$FWDIR/core/target/scala-$SCALA_VERSION/classes"
+  CLASSPATH="$CLASSPATH:$FWDIR/repl/target/scala-$SCALA_VERSION/classes"
+  CLASSPATH="$CLASSPATH:$FWDIR/mllib/target/scala-$SCALA_VERSION/classes"
+  CLASSPATH="$CLASSPATH:$FWDIR/bagel/target/scala-$SCALA_VERSION/classes"
+  CLASSPATH="$CLASSPATH:$FWDIR/streaming/target/scala-$SCALA_VERSION/classes"
+
+  DEPS_ASSEMBLY_JAR=`ls "$FWDIR"/assembly/target/scala-$SCALA_VERSION/spark-assembly*hadoop*-deps.jar`
+  CLASSPATH="$CLASSPATH:$DEPS_ASSEMBLY_JAR"
 else
-  ASSEMBLY_JAR=`ls "$FWDIR"/assembly/target/scala-$SCALA_VERSION/spark-assembly*hadoop*.jar`
+  # Else use spark-assembly jar from either RELEASE or assembly directory
+  if [ -f "$FWDIR/RELEASE" ]; then
+    ASSEMBLY_JAR=`ls "$FWDIR"/jars/spark-assembly*.jar`
+  else
+    ASSEMBLY_JAR=`ls "$FWDIR"/assembly/target/scala-$SCALA_VERSION/spark-assembly*hadoop*.jar`
+  fi
+  CLASSPATH="$CLASSPATH:$ASSEMBLY_JAR"
 fi
-CLASSPATH="$CLASSPATH:$ASSEMBLY_JAR"
 
 # Add test classes if we're running from SBT or Maven with SPARK_TESTING set to 1
 if [[ $SPARK_TESTING == 1 ]]; then
diff --git a/project/SparkBuild.scala b/project/SparkBuild.scala
index f2bbe5358..965c4f3a6 100644
--- a/project/SparkBuild.scala
+++ b/project/SparkBuild.scala
@@ -60,6 +60,8 @@ object SparkBuild extends Build {
   lazy val assemblyProj = Project("assembly", file("assembly"), settings = assemblyProjSettings)
     .dependsOn(core, bagel, mllib, repl, streaming) dependsOn(maybeYarn: _*)
 
+  lazy val assembleDeps = TaskKey[Unit]("assemble-deps", "Build assembly of dependencies and packages Spark projects")
+
   // A configuration to set an alternative publishLocalConfiguration
   lazy val MavenCompile = config("m2r") extend(Compile)
   lazy val publishLocalBoth = TaskKey[Unit]("publish-local", "publish local for m2 and ivy")
@@ -74,8 +76,11 @@ object SparkBuild extends Build {
   // Conditionally include the yarn sub-project
   lazy val maybeYarn = if(isYarnEnabled) Seq[ClasspathDependency](yarn) else Seq[ClasspathDependency]()
   lazy val maybeYarnRef = if(isYarnEnabled) Seq[ProjectReference](yarn) else Seq[ProjectReference]()
-  lazy val allProjects = Seq[ProjectReference](
-    core, repl, examples, bagel, streaming, mllib, tools, assemblyProj) ++ maybeYarnRef
+
+  // Everything except assembly, tools and examples belong to packageProjects
+  lazy val packageProjects = Seq[ProjectReference](core, repl, bagel, streaming, mllib) ++ maybeYarnRef
+
+  lazy val allProjects = packageProjects ++ Seq[ProjectReference](examples, tools, assemblyProj)
 
   def sharedSettings = Defaults.defaultSettings ++ Seq(
     organization := "org.apache.spark",
@@ -303,7 +308,9 @@ object SparkBuild extends Build {
 
   def assemblyProjSettings = sharedSettings ++ Seq(
     name := "spark-assembly",
-    jarName in assembly <<= version map { v => "spark-assembly-" + v + "-hadoop" + hadoopVersion + ".jar" }
+    assembleDeps in Compile <<= (packageProjects.map(packageBin in Compile in _) ++ Seq(packageDependency in Compile)).dependOn,
+    jarName in assembly <<= version map { v => "spark-assembly-" + v + "-hadoop" + hadoopVersion + ".jar" },
+    jarName in packageDependency <<= version map { v => "spark-assembly-" + v + "-hadoop" + hadoopVersion + "-deps.jar" }
   ) ++ assemblySettings ++ extraAssemblySettings
 
   def extraAssemblySettings() = Seq(