diff --git a/.changes/unreleased/Features-20230613-151917.yaml b/.changes/unreleased/Features-20230613-151917.yaml
new file mode 100644
index 00000000000..9aa0259966c
--- /dev/null
+++ b/.changes/unreleased/Features-20230613-151917.yaml
@@ -0,0 +1,6 @@
+kind: Features
+body: Enable setting packages in dependencies.yml
+time: 2023-06-13T15:19:17.199297-04:00
+custom:
+  Author: gshank
+  Issue: 7372 7736
diff --git a/core/dbt/config/project.py b/core/dbt/config/project.py
index f3723e41eb7..12c002ea665 100644
--- a/core/dbt/config/project.py
+++ b/core/dbt/config/project.py
@@ -38,6 +38,7 @@
     SemverString,
 )
 from dbt.contracts.project import PackageConfig, ProjectPackageMetadata
+from dbt.contracts.publication import ProjectDependencies
 from dbt.dataclass_schema import ValidationError
 from .renderer import DbtProjectYamlRenderer, PackageRenderer
 from .selectors import (
@@ -93,17 +94,37 @@ def _load_yaml(path):
     return load_yaml_text(contents)
 
 
-def package_data_from_root(project_root):
+def package_and_project_data_from_root(project_root):
     package_filepath = resolve_path_from_base("packages.yml", project_root)
+    dependencies_filepath = resolve_path_from_base("dependencies.yml", project_root)
 
+    packages_yml_dict = {}
+    dependencies_yml_dict = {}
     if path_exists(package_filepath):
-        packages_dict = _load_yaml(package_filepath)
-    else:
-        packages_dict = None
-    return packages_dict
+        packages_yml_dict = _load_yaml(package_filepath)
+    if path_exists(dependencies_filepath):
+        dependencies_yml_dict = _load_yaml(dependencies_filepath)
+
+    if "packages" in packages_yml_dict and "packages" in dependencies_yml_dict:
+        msg = "The 'packages' key cannot be specified in both packages.yml and dependencies.yml"
+        raise DbtProjectError(msg)
+    if "projects" in packages_yml_dict:
+        msg = "The 'projects' key cannot be specified in packages.yml"
+        raise DbtProjectError(msg)
 
+    packages_dict = {}
+    dependent_projects_dict = {}
+    if "packages" in dependencies_yml_dict:
+        packages_dict["packages"] = dependencies_yml_dict["packages"]
+    else:  # don't check for "packages" here so we capture invalid keys in packages.yml
+        packages_dict = packages_yml_dict
+    if "projects" in dependencies_yml_dict:
+        dependent_projects_dict["projects"] = dependencies_yml_dict["projects"]
 
-def package_config_from_data(packages_data: Dict[str, Any]):
+    return packages_dict, dependent_projects_dict
+
+
+def package_config_from_data(packages_data: Dict[str, Any]) -> PackageConfig:
     if not packages_data:
         packages_data = {"packages": []}
 
@@ -115,6 +136,21 @@ def package_config_from_data(packages_data: Dict[str, Any]):
     return packages
 
 
+def dependent_project_config_from_data(
+    dependent_projects_data: Dict[str, Any]
+) -> ProjectDependencies:
+    if not dependent_projects_data:
+        dependent_projects_data = {"projects": []}
+
+    try:
+        ProjectDependencies.validate(dependent_projects_data)
+        dependent_projects = ProjectDependencies.from_dict(dependent_projects_data)
+    except ValidationError as e:
+        msg = f"Malformed dependencies.yml: {e}"
+        raise DbtProjectError(msg)
+    return dependent_projects
+
+
 def _parse_versions(versions: Union[List[str], str]) -> List[VersionSpecifier]:
     """Parse multiple versions as read from disk. The versions value may be any
     one of:
@@ -239,6 +275,9 @@ def _get_required_version(
 class RenderComponents:
     project_dict: Dict[str, Any] = field(metadata=dict(description="The project dictionary"))
     packages_dict: Dict[str, Any] = field(metadata=dict(description="The packages dictionary"))
+    dependent_projects_dict: Dict[str, Any] = field(
+        metadata=dict(description="The dependent projects dictionary")
+    )
     selectors_dict: Dict[str, Any] = field(metadata=dict(description="The selectors dictionary"))
 
 
@@ -273,11 +312,15 @@ def get_rendered(
 
         rendered_project = renderer.render_project(self.project_dict, self.project_root)
         rendered_packages = renderer.render_packages(self.packages_dict)
+        rendered_dependent_projects = renderer.render_dependent_projects(
+            self.dependent_projects_dict
+        )
         rendered_selectors = renderer.render_selectors(self.selectors_dict)
 
         return RenderComponents(
             project_dict=rendered_project,
             packages_dict=rendered_packages,
+            dependent_projects_dict=rendered_dependent_projects,
             selectors_dict=rendered_selectors,
         )
 
@@ -324,6 +367,7 @@ def create_project(self, rendered: RenderComponents) -> "Project":
         unrendered = RenderComponents(
             project_dict=self.project_dict,
             packages_dict=self.packages_dict,
+            dependent_projects_dict=self.dependent_projects_dict,
             selectors_dict=self.selectors_dict,
         )
         dbt_version = _get_required_version(
@@ -424,7 +468,10 @@ def create_project(self, rendered: RenderComponents) -> "Project":
 
         query_comment = _query_comment_from_cfg(cfg.query_comment)
 
-        packages = package_config_from_data(rendered.packages_dict)
+        packages: PackageConfig = package_config_from_data(rendered.packages_dict)
+        dependent_projects: ProjectDependencies = dependent_project_config_from_data(
+            rendered.dependent_projects_dict
+        )
         selectors = selector_config_from_data(rendered.selectors_dict)
         manifest_selectors: Dict[str, Any] = {}
         if rendered.selectors_dict and rendered.selectors_dict["selectors"]:
@@ -459,6 +506,7 @@ def create_project(self, rendered: RenderComponents) -> "Project":
             snapshots=snapshots,
             dbt_version=dbt_version,
             packages=packages,
+            dependent_projects=dependent_projects,
             manifest_selectors=manifest_selectors,
             selectors=selectors,
             query_comment=query_comment,
@@ -481,6 +529,7 @@ def from_dicts(
         project_root: str,
         project_dict: Dict[str, Any],
         packages_dict: Dict[str, Any],
+        dependent_projects_dict: Dict[str, Any],
         selectors_dict: Dict[str, Any],
         *,
         verify_version: bool = False,
@@ -495,6 +544,7 @@ def from_dicts(
             project_root=project_root,
             project_dict=project_dict,
             packages_dict=packages_dict,
+            dependent_projects_dict=dependent_projects_dict,
             selectors_dict=selectors_dict,
             verify_version=verify_version,
         )
@@ -505,13 +555,14 @@ def from_project_root(
     ) -> "PartialProject":
         project_root = os.path.normpath(project_root)
         project_dict = load_raw_project(project_root)
-        packages_dict = package_data_from_root(project_root)
+        packages_dict, dependent_projects_dict = package_and_project_data_from_root(project_root)
         selectors_dict = selector_data_from_root(project_root)
         return cls.from_dicts(
             project_root=project_root,
             project_dict=project_dict,
             selectors_dict=selectors_dict,
             packages_dict=packages_dict,
+            dependent_projects_dict=dependent_projects_dict,
             verify_version=verify_version,
         )
 
@@ -565,7 +616,8 @@ class Project:
     exposures: Dict[str, Any]
     vars: VarProvider
     dbt_version: List[VersionSpecifier]
-    packages: Dict[str, Any]
+    packages: PackageConfig
+    dependent_projects: ProjectDependencies
     manifest_selectors: Dict[str, Any]
     selectors: SelectorConfig
     query_comment: QueryComment
diff --git a/core/dbt/config/renderer.py b/core/dbt/config/renderer.py
index f41ac020662..3899d627b03 100644
--- a/core/dbt/config/renderer.py
+++ b/core/dbt/config/renderer.py
@@ -137,6 +137,10 @@ def render_packages(self, packages: Dict[str, Any]):
         package_renderer = self.get_package_renderer()
         return package_renderer.render_data(packages)
 
+    def render_dependent_projects(self, dependent_projects: Dict[str, Any]):
+        """This is a no-op to maintain regularity in the interfaces. We don't render dependencies.yml."""
+        return dependent_projects
+
     def render_selectors(self, selectors: Dict[str, Any]):
         return self.render_data(selectors)
 
diff --git a/core/dbt/config/runtime.py b/core/dbt/config/runtime.py
index 2f95ab6d664..2f20de2c81e 100644
--- a/core/dbt/config/runtime.py
+++ b/core/dbt/config/runtime.py
@@ -159,6 +159,7 @@ def from_parts(
             snapshots=project.snapshots,
             dbt_version=project.dbt_version,
             packages=project.packages,
+            dependent_projects=project.dependent_projects,
             manifest_selectors=project.manifest_selectors,
             selectors=project.selectors,
             query_comment=project.query_comment,
diff --git a/core/dbt/contracts/graph/manifest.py b/core/dbt/contracts/graph/manifest.py
index 617a7cf63f8..5df82b79672 100644
--- a/core/dbt/contracts/graph/manifest.py
+++ b/core/dbt/contracts/graph/manifest.py
@@ -22,7 +22,7 @@
 from typing_extensions import Protocol
 from uuid import UUID
 
-from dbt.contracts.publication import ProjectDependencies, PublicationConfig, PublicModel
+from dbt.contracts.publication import PublicationConfig, PublicModel
 
 from dbt.contracts.graph.nodes import (
     BaseNode,
@@ -708,7 +708,6 @@ class Manifest(MacroMethods, DataClassMessagePackMixin, dbtClassMixin):
     disabled: MutableMapping[str, List[GraphMemberNode]] = field(default_factory=dict)
     env_vars: MutableMapping[str, str] = field(default_factory=dict)
     public_nodes: MutableMapping[str, PublicModel] = field(default_factory=dict)
-    project_dependencies: Optional[ProjectDependencies] = None
     publications: MutableMapping[str, PublicationConfig] = field(default_factory=dict)
     semantic_nodes: MutableMapping[str, SemanticModel] = field(default_factory=dict)
 
diff --git a/core/dbt/parser/manifest.py b/core/dbt/parser/manifest.py
index 1dbf39e01ad..fc36dabdc8c 100644
--- a/core/dbt/parser/manifest.py
+++ b/core/dbt/parser/manifest.py
@@ -35,13 +35,11 @@
     get_adapter_package_names,
 )
 from dbt.constants import (
-    DEPENDENCIES_FILE_NAME,
     MANIFEST_FILE_NAME,
     PARTIAL_PARSE_FILE_NAME,
     SEMANTIC_MANIFEST_FILE_NAME,
 )
 from dbt.helper_types import PathSet
-from dbt.clients.yaml_helper import load_yaml_text
 from dbt.events.functions import fire_event, get_invocation_id, warn_or_error
 from dbt.events.helpers import datetime_to_json_string
 from dbt.events.types import (
@@ -72,8 +70,6 @@
     path_exists,
     read_json,
     write_file,
-    resolve_path_from_base,
-    load_file_contents,
 )
 from dbt.config import Project, RuntimeConfig
 from dbt.context.docs import generate_runtime_docs_context
@@ -114,7 +110,6 @@
     PublicationArtifact,
     PublicationMetadata,
     PublicModel,
-    ProjectDependencies,
 )
 from dbt.exceptions import (
     TargetNotFoundError,
@@ -767,33 +762,27 @@ def build_public_nodes(self) -> bool:
         public nodes have been rebuilt."""
         public_nodes_changed = False
 
-        # Load the dependencies from the dependencies.yml file
-        # TODO: dependencies might be better in the RuntimeConfig and
-        # loaded somewhere earlier, but leaving this here for later refactoring.
-        # Loading it elsewhere would make it harder to detect that there were
-        # no dependencies previously and still are none, though that could be
-        # inferred from the manifest publication configs.
-        dependencies_filepath = resolve_path_from_base(
-            DEPENDENCIES_FILE_NAME, self.root_project.project_root
-        )
-        saved_manifest_dependencies = self.manifest.project_dependencies
-        if path_exists(dependencies_filepath):
-            contents = load_file_contents(dependencies_filepath)
-            dependencies_dict = load_yaml_text(contents)
-            dependencies = ProjectDependencies.from_dict(dependencies_dict)
-            self.manifest.project_dependencies = dependencies
-        else:
-            self.manifest.project_dependencies = None
+        # Construct a dictionary of project_names to generated_at timestamps in
+        # order to determine what has changed. The dependent_projects in the RuntimeConfig
+        # are new for this run.
+        saved_dependent_projects = {}
+        for pub in self.manifest.publications.values():
+            saved_dependent_projects[pub.project_name] = pub.metadata.generated_at
 
         # Return False if there weren't any dependencies before and aren't any now.
-        if saved_manifest_dependencies is None and self.manifest.project_dependencies is None:
+        if (
+            len(saved_dependent_projects) == 0
+            and len(self.root_project.dependent_projects.projects) == 0
+        ):
             return False
 
-        # collect the names of the projects for later use
-        project_dependency_names = []
-        if self.manifest.project_dependencies:
-            for project in self.manifest.project_dependencies.projects:
-                project_dependency_names.append(project.name)
+        # Collect current dependent projects
+        current_dependent_projects = []
+        if (
+            self.root_project.dependent_projects
+        ):  # ManifestLoader has been passed some publication artifacts
+            for project in self.root_project.dependent_projects.projects:
+                current_dependent_projects.append(project.name)
 
         # Save previous publications, for later removal of references
         saved_manifest_publications: MutableMapping[str, PublicationConfig] = deepcopy(
@@ -801,7 +790,7 @@ def build_public_nodes(self) -> bool:
         )
         if self.manifest.publications:
             for project_name, publication in self.manifest.publications.items():
-                if project_name not in project_dependency_names:
+                if project_name not in current_dependent_projects:
                     remove_dependent_project_references(self.manifest, publication)
                     saved_manifest_publications.pop(project_name)
                     fire_event(
@@ -820,7 +809,7 @@ def build_public_nodes(self) -> bool:
             # Empty public_nodes since we're re-generating them all
             self.manifest.public_nodes = {}
 
-        if self.manifest.project_dependencies:
+        if len(self.root_project.dependent_projects.projects) > 0:
             self.load_new_public_nodes()
 
         # Now that we've loaded the current publications and public_nodes, look for
@@ -855,7 +844,7 @@ def build_public_nodes(self) -> bool:
         return public_nodes_changed
 
     def load_new_public_nodes(self):
-        for project in self.manifest.project_dependencies.projects:
+        for project in self.root_project.dependent_projects.projects:
             try:
                 publication = self.publications[project.name]
             except KeyError:
@@ -864,7 +853,7 @@ def load_new_public_nodes(self):
             publication_config = PublicationConfig.from_publication(publication)
             self.manifest.publications[project.name] = publication_config
 
-            # Add to dictionary of public_nodes and save id in PublicationConfig
+            # Add public models to dictionary of public_nodes
             for public_node in publication.public_models.values():
                 self.manifest.public_nodes[public_node.unique_id] = public_node
 
@@ -1852,8 +1841,8 @@ def log_publication_artifact(root_project: RuntimeConfig, manifest: Manifest):
 
     dependencies = []
     # Get dependencies from dependencies.yml
-    if manifest.project_dependencies:
-        for dep_project in manifest.project_dependencies.projects:
+    if root_project.dependent_projects.projects:
+        for dep_project in root_project.dependent_projects.projects:
             dependencies.append(dep_project.name)
     # Get dependencies from publication dependencies
     for pub_project in manifest.publications.values():
diff --git a/core/dbt/tests/fixtures/project.py b/core/dbt/tests/fixtures/project.py
index 23243caef58..19e418003fe 100644
--- a/core/dbt/tests/fixtures/project.py
+++ b/core/dbt/tests/fixtures/project.py
@@ -192,6 +192,24 @@ def dbt_project_yml(project_root, project_config_update):
     return project_config
 
 
+# Fixture to provide dependencies
+@pytest.fixture(scope="class")
+def dependencies():
+    return {}
+
+
+# Write out the dependencies.yml file
+# Write out the packages.yml file
+@pytest.fixture(scope="class")
+def dependencies_yml(project_root, dependencies):
+    if dependencies:
+        if isinstance(dependencies, str):
+            data = dependencies
+        else:
+            data = yaml.safe_dump(dependencies)
+        write_file(data, project_root, "dependencies.yml")
+
+
 # Fixture to provide packages as either yaml or dictionary
 @pytest.fixture(scope="class")
 def packages():
@@ -461,6 +479,7 @@ def project(
     profiles_yml,
     dbt_project_yml,
     packages_yml,
+    dependencies_yml,
     selectors_yml,
     adapter,
     project_files,
diff --git a/tests/functional/dependencies/test_simple_dependency.py b/tests/functional/dependencies/test_simple_dependency.py
index 140966e1c07..a88575ff0fb 100644
--- a/tests/functional/dependencies/test_simple_dependency.py
+++ b/tests/functional/dependencies/test_simple_dependency.py
@@ -105,6 +105,28 @@ def test_simple_dependency(self, run_deps, project, run_clean):
         check_relations_equal(project.adapter, ["seed", "incremental"])
 
 
+class TestSimpleDependencyWithDependenciesFile(SimpleDependencyBase):
+    @pytest.fixture(scope="class")
+    def packages(self):
+        return {}
+
+    @pytest.fixture(scope="class")
+    def dependencies(self):
+        return {
+            "packages": [
+                {
+                    "git": "https://github.com/dbt-labs/dbt-integration-project",
+                    "warn-unpinned": True,
+                }
+            ]
+        }
+
+    def test_dependency_with_dependencies_file(self, run_deps, project):
+        # Tests that "packages" defined in a dependencies.yml file works
+        results = run_dbt()
+        assert len(results) == 4
+
+
 class TestSimpleDependencyNoProfile(SimpleDependencyBase):
     """dbt deps and clean commands should not require a profile."""
 
diff --git a/tests/functional/multi_project/test_publication.py b/tests/functional/multi_project/test_publication.py
index 7e2a51c0ae2..a50475b2529 100644
--- a/tests/functional/multi_project/test_publication.py
+++ b/tests/functional/multi_project/test_publication.py
@@ -7,7 +7,7 @@
     run_dbt_and_capture,
     get_logging_events,
 )
-from dbt.contracts.publication import ProjectDependency, PublicationArtifact, PublicModel
+from dbt.contracts.publication import PublicationArtifact, PublicModel
 from dbt.exceptions import (
     PublicationConfigNotFound,
     TargetNotFoundError,
@@ -130,8 +130,11 @@ def models(self):
             "models.yml": models_yml,
         }
 
+    @pytest.fixture(scope="class")
+    def dependencies(self):
+        return dependencies_yml
+
     def test_pub_artifacts(self, project):
-        write_file(dependencies_yml, "dependencies.yml")
 
         # Dependencies lists "marketing" project, but no publications provided
         with pytest.raises(PublicationConfigNotFound):
@@ -157,14 +160,6 @@ def test_pub_artifacts(self, project):
         publication = PublicationArtifact.from_dict(publication_dict)
         assert publication.dependencies == ["marketing"]
 
-        # check project_dependencies in manifest
-        project_dependencies = manifest.project_dependencies
-        assert project_dependencies
-        project_dependency = project_dependencies.projects[0]
-        assert isinstance(project_dependency, ProjectDependency)
-        assert project_dependency.name == "marketing"
-        assert "custom_field" in project_dependency._extra
-
         # source_node, target_model_name, target_model_package, target_model_version, current_project, node_package
         resolved_node = manifest.resolve_ref(None, "fct_one", "marketing", None, "test", "test")
         assert resolved_node
diff --git a/tests/functional/partial_parsing/test_partial_parsing.py b/tests/functional/partial_parsing/test_partial_parsing.py
index 6d7532edee5..2714a64cca4 100644
--- a/tests/functional/partial_parsing/test_partial_parsing.py
+++ b/tests/functional/partial_parsing/test_partial_parsing.py
@@ -822,16 +822,19 @@ def models(self):
     def marketing_publication(self):
         return PublicationArtifact.from_dict(json.loads(marketing_pub_json))
 
+    @pytest.fixture(scope="class")
+    def dependencies(self):
+        return dependencies_yml
+
     def test_dependencies(self, project, marketing_publication):
         # initial run with dependencies
-        write_file(dependencies_yml, "dependencies.yml")
         manifest = run_dbt(["parse"], publications=[marketing_publication])
-        assert len(manifest.project_dependencies.projects) == 1
+        assert len(manifest.publications) == 1
 
         # remove dependencies
         write_file(empty_dependencies_yml, "dependencies.yml")
         manifest = run_dbt(["parse"], publications=[marketing_publication])
-        assert len(manifest.project_dependencies.projects) == 0
+        assert len(manifest.publications) == 0
 
 
 class TestPublicationArtifactAvailable:
diff --git a/tests/unit/test_config.py b/tests/unit/test_config.py
index 409b0759bc0..bb7c6eb3f0e 100644
--- a/tests/unit/test_config.py
+++ b/tests/unit/test_config.py
@@ -575,6 +575,7 @@ def project_from_config_norender(
         project_dict=cfg,
         packages_dict=packages,
         selectors_dict={},
+        dependent_projects_dict={},
         verify_version=verify_version,
     )
     # no rendering
@@ -582,6 +583,7 @@ def project_from_config_norender(
         project_dict=partial.project_dict,
         packages_dict=partial.packages_dict,
         selectors_dict=partial.selectors_dict,
+        dependent_projects_dict=partial.dependent_projects_dict,
     )
     return partial.create_project(rendered)
 
@@ -596,6 +598,7 @@ def project_from_config_rendered(
         project_dict=cfg,
         packages_dict=packages,
         selectors_dict={},
+        dependent_projects_dict={},
         verify_version=verify_version,
     )
     return partial.render(empty_project_renderer())
diff --git a/tests/unit/utils.py b/tests/unit/utils.py
index 0f5c12ebbfd..48571cb0d54 100644
--- a/tests/unit/utils.py
+++ b/tests/unit/utils.py
@@ -70,6 +70,7 @@ def project_from_dict(project, profile, packages=None, selectors=None, cli_vars=
         project_root=project_root,
         project_dict=project,
         packages_dict=packages,
+        dependent_projects_dict={},
         selectors_dict=selectors,
     )
     return partial.render(renderer)