diff --git a/lib/bundler/inline.rb b/lib/bundler/inline.rb
index 8ef580f1f0..25e055fbe4 100644
--- a/lib/bundler/inline.rb
+++ b/lib/bundler/inline.rb
@@ -54,7 +54,7 @@ def gemfile(install = false, options = {}, &gemfile)
 
       Bundler.ui = install ? ui : Bundler::UI::Silent.new
       if install || definition.missing_specs?
-        Bundler.settings.temporary(:inline => true) do
+        Bundler.settings.temporary(:inline => true, :no_install => false) do
           installer = Bundler::Installer.install(Bundler.root, definition, :system => true)
           installer.post_install_messages.each do |name, message|
             Bundler.ui.info "Post-install message from #{name}:\n#{message}"
diff --git a/spec/bundler/runtime/inline_spec.rb b/spec/bundler/runtime/inline_spec.rb
index dd22c86f90..e3cf5020ec 100644
--- a/spec/bundler/runtime/inline_spec.rb
+++ b/spec/bundler/runtime/inline_spec.rb
@@ -355,6 +355,20 @@ RSpec.describe "bundler/inline#gemfile" do
     expect(err).to be_empty
   end
 
+  it "still installs if the application has `bundle package` no_install config set" do
+    bundle "config set --local no_install true"
+
+    script <<-RUBY
+      gemfile do
+        source "#{file_uri_for(gem_repo1)}"
+        gem "rack"
+      end
+    RUBY
+
+    expect(last_command).to be_success
+    expect(system_gem_path("gems/rack-1.0.0")).to exist
+  end
+
   it "preserves previous BUNDLE_GEMFILE value" do
     ENV["BUNDLE_GEMFILE"] = ""
     script <<-RUBY