diff --git a/harbour/ChangeLog b/harbour/ChangeLog
index d9a40046db..bb6fe44c97 100644
--- a/harbour/ChangeLog
+++ b/harbour/ChangeLog
@@ -16,6 +16,16 @@
    The license applies to all entries newer than 2009-04-28.
 */
 
+2010-11-23 19:05 UTC+0100 Viktor Szakats (harbour.01 syenar.hu)
+  * utils/hbrun/hbrun.prg
+    ! Do not process HB_INSTALL_INC to find external headers.
+      This envvar is no longer supported and it only makes
+      things more difficult now that hbrun has embedded headers.
+      Also removed adding the host dir of input .hbs/.prg file
+      as -I option (it's processed automatically by compiler).
+      So now hbrun uses exactly the same rules as harbour
+      compiler to find headers.
+
 2010-11-23 18:10 UTC+0100 Viktor Szakats (harbour.01 syenar.hu)
   * contrib/hbplist
   + contrib/hbposix
diff --git a/harbour/utils/hbrun/hbrun.prg b/harbour/utils/hbrun/hbrun.prg
index 411f0bba84..d868e67603 100644
--- a/harbour/utils/hbrun/hbrun.prg
+++ b/harbour/utils/hbrun/hbrun.prg
@@ -82,7 +82,7 @@ REQUEST HB_GT_STD
 
 STATIC s_nRow := 2
 STATIC s_nCol := 0
-STATIC s_aIncDir := {}
+STATIC s_aCompOptions := {}
 STATIC s_aHistory := {}
 STATIC s_lPreserveHistory := .T.
 STATIC s_lWasLoad := .F.
@@ -92,15 +92,10 @@ STATIC s_cDirBase
 /* ********************************************************************** */
 
 PROCEDURE _APPMAIN( cFile, ... )
-   LOCAL cPath, cExt
+   LOCAL cExt
    LOCAL hHeaders
    LOCAL lHeadersDisable := ! Empty( getenv( "HBRUN_NOHEAD" ) )
 
-   cPath := getenv( "HB_INSTALL_INC" )
-   IF !EMPTY( cPath )
-      AADD( s_aIncDir, "-I" + cPath )
-   ENDIF
-
    IF PCount() > 0
       SWITCH Lower( cFile )
          CASE "-?"
@@ -166,7 +161,7 @@ PROCEDURE _APPMAIN( cFile, ... )
                      ENDIF
 
                      cFile := HB_COMPILEBUF( hHeaders, HB_ARGV( 0 ), "-n2", "-w", "-es2", "-q0", ;
-                                             s_aIncDir, "-I" + FNameDirGet( cFile ), "-D" + "__HBSCRIPT__HBRUN", cFile )
+                                             s_aCompOptions, "-D" + "__HBSCRIPT__HBRUN", cFile )
                      IF cFile == NIL
                         ERRORLEVEL( 1 )
                         EXIT
@@ -185,13 +180,6 @@ PROCEDURE _APPMAIN( cFile, ... )
 
    RETURN
 
-STATIC FUNCTION FNameDirGet( cFileName )
-   LOCAL cDir
-
-   hb_FNameSplit( cFileName, @cDir )
-
-   RETURN cDir
-
 STATIC FUNCTION hbrun_CoreHeaderFiles()
    LOCAL hHeaders
 
@@ -491,7 +479,7 @@ STATIC PROCEDURE hbrun_Exec( cCommand )
 
    BEGIN SEQUENCE WITH {|oErr| hbrun_Err( oErr, cCommand ) }
 
-      cHRB := HB_COMPILEFROMBUF( cFunc, HB_ARGV( 0 ), "-n2", "-q2", s_aIncDir )
+      cHRB := HB_COMPILEFROMBUF( cFunc, HB_ARGV( 0 ), "-n2", "-q2", s_aCompOptions )
       IF cHRB == NIL
          EVAL( ErrorBlock(), "Syntax error." )
       ELSE