diff --git a/main-command/src/main/scala/sbt/internal/client/NetworkClient.scala b/main-command/src/main/scala/sbt/internal/client/NetworkClient.scala
index d6b376dac..3ae676893 100644
--- a/main-command/src/main/scala/sbt/internal/client/NetworkClient.scala
+++ b/main-command/src/main/scala/sbt/internal/client/NetworkClient.scala
@@ -330,6 +330,18 @@ class NetworkClient(
 
         val cmd = arguments.sbtLaunchJar match {
           case Some(lj) =>
+            if (log) {
+              val sbtScript = if (Properties.isWin) "sbt.bat" else "sbt"
+              console.appendLog(Level.Warn, s"server is started using sbt-launch jar directly")
+              console.appendLog(
+                Level.Warn,
+                "this is not the recommended way: .sbtopts and .jvmopts files are not loaded and SBT_OPTS is ignored"
+              )
+              console.appendLog(
+                Level.Warn,
+                s"either upgrade $sbtScript to its latest version or make sure it is accessible from $$PATH, and run 'sbt bspConfig'"
+              )
+            }
             List("java") ++ arguments.sbtArguments ++
               List("-jar", lj, DashDashDetachStdio, DashDashServer)
           case _ =>
@@ -1045,7 +1057,8 @@ object NetworkClient {
   private[client] val noStdErr = "--no-stderr"
   private[client] val sbtBase = "--sbt-base-directory"
   private[client] def parseArgs(args: Array[String]): Arguments = {
-    var sbtScript = if (Properties.isWin) "sbt.bat" else "sbt"
+    val defaultSbtScript = if (Properties.isWin) "sbt.bat" else "sbt"
+    var sbtScript = Properties.propOrNone("sbt.script")
     var launchJar: Option[String] = None
     var bsp = false
     val commandArgs = new mutable.ArrayBuffer[String]
@@ -1067,11 +1080,10 @@ object NetworkClient {
           sbtScript = a
             .split("--sbt-script=")
             .lastOption
-            .map(_.replaceAllLiterally("%20", " "))
-            .getOrElse(sbtScript)
+            .orElse(sbtScript)
         case "--sbt-script" if i + 1 < sanitized.length =>
           i += 1
-          sbtScript = sanitized(i).replaceAllLiterally("%20", " ")
+          sbtScript = Some(sanitized(i))
         case a if a.startsWith("--sbt-launch-jar=") =>
           launchJar = a
             .split("--sbt-launch-jar=")
@@ -1091,12 +1103,17 @@ object NetworkClient {
     }
     val base = new File("").getCanonicalFile
     if (!sbtArguments.contains("-Dsbt.io.virtual=true")) sbtArguments += "-Dsbt.io.virtual=true"
+    if (!sbtArguments.exists(_.startsWith("-Dsbt.script"))) {
+      sbtScript.foreach { sbtScript =>
+        sbtArguments += s"-Dsbt.script=$sbtScript"
+      }
+    }
     new Arguments(
       base,
       sbtArguments.toSeq,
       commandArgs.toSeq,
       completionArguments.toSeq,
-      sbtScript,
+      sbtScript.getOrElse(defaultSbtScript).replaceAllLiterally("%20", " "),
       bsp,
       launchJar
     )
diff --git a/protocol/src/main/scala/sbt/internal/bsp/BuildServerConnection.scala b/protocol/src/main/scala/sbt/internal/bsp/BuildServerConnection.scala
index 9b21dd31e..85c2bd3cb 100644
--- a/protocol/src/main/scala/sbt/internal/bsp/BuildServerConnection.scala
+++ b/protocol/src/main/scala/sbt/internal/bsp/BuildServerConnection.scala
@@ -7,12 +7,14 @@
 
 package sbt.internal.bsp
 
-import java.io.File
-
-import sbt.internal.bsp
+import sbt.internal.bsp.codec.JsonProtocol.BspConnectionDetailsFormat
 import sbt.io.IO
 import sjsonnew.support.scalajson.unsafe.{ CompactPrinter, Converter }
 
+import java.io.File
+import java.nio.file.{ Files, Paths }
+import scala.util.Properties
+
 object BuildServerConnection {
   final val name = "sbt"
   final val bspVersion = "2.0.0-M5"
@@ -21,14 +23,25 @@ object BuildServerConnection {
   private final val SbtLaunchJar = "sbt-launch(-.*)?\\.jar".r
 
   private[sbt] def writeConnectionFile(sbtVersion: String, baseDir: File): Unit = {
-    import bsp.codec.JsonProtocol._
     val bspConnectionFile = new File(baseDir, ".bsp/sbt.json")
     val javaHome = System.getProperty("java.home")
     val classPath = System.getProperty("java.class.path")
+
+    val sbtScript = Option(System.getProperty("sbt.script"))
+      .orElse(sbtScriptInPath)
+      .map(script => s"-Dsbt.script=$script")
+
+    // IntelliJ can start sbt even if the sbt script is not accessible from $PATH.
+    // To do so it uses its own bundled sbt-launch.jar.
+    // In that case, we must pass the path of the sbt-launch.jar to the BSP connection
+    // so that the server can be started.
+    // A known problem in that situation is that the .sbtopts and .jvmopts are not loaded.
     val sbtLaunchJar = classPath
       .split(File.pathSeparator)
       .find(jar => SbtLaunchJar.findFirstIn(jar).nonEmpty)
       .map(_.replaceAllLiterally(" ", "%20"))
+      .map(jar => s"--sbt-launch-jar=$jar")
+
     val argv =
       Vector(
         s"$javaHome/bin/java",
@@ -38,9 +51,21 @@ object BuildServerConnection {
         classPath,
         "xsbt.boot.Boot",
         "-bsp"
-      ) ++ sbtLaunchJar.map(jar => s"--sbt-launch-jar=$jar")
+      ) ++ sbtScript.orElse(sbtLaunchJar)
     val details = BspConnectionDetails(name, sbtVersion, bspVersion, languages, argv)
     val json = Converter.toJson(details).get
     IO.write(bspConnectionFile, CompactPrinter(json), append = false)
   }
+
+  private def sbtScriptInPath: Option[String] = {
+    // For those who use an old sbt script, the -Dsbt.script is not set
+    // As a fallback we try to find the sbt script in $PATH
+    val fileName = if (Properties.isWin) "sbt.bat" else "sbt"
+    val envPath = Option(System.getenv("PATH")).getOrElse("")
+    val allPaths = envPath.split(File.pathSeparator).map(Paths.get(_))
+    allPaths
+      .map(_.resolve(fileName))
+      .find(file => Files.exists(file) && Files.isExecutable(file))
+      .map(_.toString.replaceAllLiterally(" ", "%20"))
+  }
 }
diff --git a/sbt b/sbt
index 8adff2117..7fb865514 100755
--- a/sbt
+++ b/sbt
@@ -299,6 +299,16 @@ addDefaultMemory() {
   fi
 }
 
+addSbtScriptProperty () {
+  if [[ "${java_args[@]}" == *-Dsbt.script=* ]]; then
+    :
+  else
+    sbt_script=$0
+    sbt_script=${sbt_script/ /%20}
+    addJava "-Dsbt.script=$sbt_script"
+  fi
+}
+
 require_arg () {
   local type="$1"
   local opt="$2"
@@ -769,6 +779,7 @@ else
   java_version="$(jdk_version)"
   vlog "[process_args] java_version = '$java_version'"
   addDefaultMemory
+  addSbtScriptProperty
   set -- "${residual_args[@]}"
   argumentCount=$#
   run