diff --git a/bsp/src/org/jetbrains/bsp/BspUtil.scala b/bsp/src/org/jetbrains/bsp/BspUtil.scala
index 8bd421fbe9e..219e99ca127 100644
--- a/bsp/src/org/jetbrains/bsp/BspUtil.scala
+++ b/bsp/src/org/jetbrains/bsp/BspUtil.scala
@@ -5,6 +5,7 @@ import java.net.URI
 import java.nio.file.{Path, Paths}
 import java.util.concurrent.CompletableFuture
 import com.intellij.build.events.impl.{FailureResultImpl, SkippedResultImpl, SuccessResultImpl}
+import com.intellij.execution.configurations.GeneralCommandLine
 import com.intellij.openapi.externalSystem.util.ExternalSystemApiUtil
 import com.intellij.openapi.module.{Module, ModuleManager}
 import com.intellij.openapi.project.{Project, ProjectUtil}
@@ -121,4 +122,20 @@ object BspUtil {
       .getOrElse(Array.empty)
       .find(x => x.getName == name && !x.isDirectory)
 
+  /**
+   * Checks whether a specified directory contains at least one file with a name from a given sequence of file names.
+   */
+  def directoryContainsFile(directory: File, fileNames: String*): Boolean =
+    Option(directory.listFiles())
+      .getOrElse(Array.empty)
+      .exists(x => !x.isDirectory && fileNames.contains(x.getName))
+
+  def checkIfToolIsInstalled(workspace: File, toolCommand: String): Boolean =
+    Try {
+      val generalCommandLine = new GeneralCommandLine(toolCommand, "version")
+        .withWorkDirectory(workspace)
+      val process = generalCommandLine.toProcessBuilder.start()
+      val exitValue = process.waitFor()
+      exitValue == 0
+    }.getOrElse(false)
 }
diff --git a/bsp/src/org/jetbrains/bsp/project/importing/MillProjectInstaller.scala b/bsp/src/org/jetbrains/bsp/project/importing/MillProjectInstaller.scala
index bd9846c2425..02847d60715 100644
--- a/bsp/src/org/jetbrains/bsp/project/importing/MillProjectInstaller.scala
+++ b/bsp/src/org/jetbrains/bsp/project/importing/MillProjectInstaller.scala
@@ -16,7 +16,10 @@ class MillProjectInstaller extends BspProjectInstallProvider {
 
   override def canImport(workspace: File): Boolean =
     Option(workspace) match {
-      case Some(directory) if directory.isDirectory => isBspCompatible(directory) || isLegacyBspCompatible(directory)
+      case Some(directory) if directory.isDirectory =>
+        BspUtil.directoryContainsFile(directory, "build.mill", "build.mill.scala") ||
+          isBspCompatible(directory) ||
+          isLegacyBspCompatible(directory)
       case _ => false
     }
 
@@ -30,14 +33,24 @@ class MillProjectInstaller extends BspProjectInstallProvider {
     val isLegacyMill = !SystemInfo.isWindows && isLegacyBspCompatible(workspace)
     val millFileOpt = getMillFile(workspace)
     millFileOpt match {
-      case Some(file) if isMillFileBspCompatible(file, workspace) =>
-        Success(Seq(file.getAbsolutePath, "-i", "mill.bsp.BSP/install"))
-      case Some(file) if isLegacyMill =>
+      case Some(file) if isLegacyMill && !isMillFileBspCompatible(file, workspace) =>
+        // run this only if we're confident this is legacy Mill
         Success(Seq(file.getAbsolutePath, "-i", "mill.contrib.BSP/install"))
-      case _ => Failure(new IllegalStateException("Unable to install BSP as this is not a Mill project"))
+      case Some(file) =>
+        // otherwise run the normal BSP install command
+        Success(Seq(file.getAbsolutePath, "-i", "mill.bsp.BSP/install"))
+      //TODO: consider verifying Mill's installation in the #canImport to prevent its
+      // display in BspSetupConfigStepUi if not installed (the same in ScalaCliProjectInstaller)
+      case _ if isMillInstalled(workspace) =>
+        // If the launcher is not found in the project root but Mill is available in the PATH, then we can use it.
+        Success(Seq("mill", "-i", "mill.bsp.BSP/install"))
+      case _ => Failure(new IllegalStateException("Installation of BSP is unable to proceed as the Mill executable is missing from both the project root and the PATH."))
     }
   }
 
+  private def isMillInstalled(workspace: File): Boolean =
+    BspUtil.checkIfToolIsInstalled(workspace, "mill")
+
   private def getMillFile(workspace: File): Option[File] =
     if (SystemInfo.isWindows) BspUtil.findFileByName(workspace, "mill.bat")
     else BspUtil.findFileByName(workspace, "mill")
diff --git a/scala-cli/src/org/jetbrains/scalaCli/ScalaCliUtils.scala b/scala-cli/src/org/jetbrains/scalaCli/ScalaCliUtils.scala
index 74599fdc17f..c063e780033 100644
--- a/scala-cli/src/org/jetbrains/scalaCli/ScalaCliUtils.scala
+++ b/scala-cli/src/org/jetbrains/scalaCli/ScalaCliUtils.scala
@@ -1,12 +1,11 @@
 package org.jetbrains.scalaCli
 
-import com.intellij.execution.configurations.GeneralCommandLine
 import com.intellij.openapi.application.ApplicationManager
 import com.intellij.openapi.project.Project
+import org.jetbrains.bsp.BspUtil
 import org.jetbrains.bsp.project.BspExternalSystemUtil
 
 import java.io.File
-import scala.util.Try
 
 object ScalaCliUtils {
 
@@ -18,13 +17,7 @@ object ScalaCliUtils {
   }
 
   def isScalaCliInstalled(workspace: File): Boolean =
-    Try {
-      val generalCommandLine = new GeneralCommandLine(getScalaCliCommand, "version")
-        .withWorkDirectory(workspace)
-      val process = generalCommandLine.toProcessBuilder.start()
-      val exitValue = process.waitFor()
-      exitValue == 0
-    }.getOrElse(false)
+    BspUtil.checkIfToolIsInstalled(workspace, getScalaCliCommand)
 
   /**
    * If these are tests, the Scala CLI is not installed globally - the script is only available in the project root directory,