diff --git a/newsfragments/119.feature b/newsfragments/119.feature
new file mode 100644
index 00000000..3227254a
--- /dev/null
+++ b/newsfragments/119.feature
@@ -0,0 +1 @@
+Ensure the setuptools ``compat`` editable mode is used when installing in PEP 660 mode.
diff --git a/setup.py b/setup.py
index 16556e1d..97159d27 100644
--- a/setup.py
+++ b/setup.py
@@ -48,5 +48,8 @@
             "odoo_addon = setuptools_odoo.setup_keywords:odoo_addon",
             "odoo_addons = setuptools_odoo.setup_keywords:odoo_addons",
         ],
+        "distutils.commands": [
+            "editable_wheel = setuptools_odoo.commands:compat_editable_wheel",
+        ],
     },
 )
diff --git a/setuptools_odoo/commands.py b/setuptools_odoo/commands.py
new file mode 100644
index 00000000..a327ba2b
--- /dev/null
+++ b/setuptools_odoo/commands.py
@@ -0,0 +1,14 @@
+# -*- coding: utf-8 -*-
+try:
+    from setuptools.command.editable_wheel import editable_wheel
+except ImportError:
+    compat_editable_wheel = None
+else:
+
+    class compat_editable_wheel(editable_wheel):
+        def initialize_options(self):
+            super().initialize_options()
+            # Enforce the "compat" editable mode which simply adds the project
+            # directory to sys.path with a .pth file, so Odoo will detect the addon
+            # in the odoo/addons directory/namespace package.
+            self.mode = "compat"
diff --git a/setuptools_odoo/setup_keywords.py b/setuptools_odoo/setup_keywords.py
index 9b5c2139..33b2e111 100644
--- a/setuptools_odoo/setup_keywords.py
+++ b/setuptools_odoo/setup_keywords.py
@@ -5,6 +5,7 @@
 import os
 import warnings
 
+from .commands import compat_editable_wheel
 from .core import prepare_odoo_addon, prepare_odoo_addons
 
 
@@ -70,6 +71,8 @@ def odoo_addon(dist, attr, value):
         post_version_strategy_override=post_version_strategy_override,
     )
     _set_dist_keywords(dist, setup_keywords)
+    if compat_editable_wheel is not None:
+        dist.cmdclass["editable_wheel"] = compat_editable_wheel
 
 
 def odoo_addons(dist, attr, value):