diff --git a/cabal-install/src/Distribution/Client/ProjectPlanning.hs b/cabal-install/src/Distribution/Client/ProjectPlanning.hs
index 336411c9158..51d33856334 100644
--- a/cabal-install/src/Distribution/Client/ProjectPlanning.hs
+++ b/cabal-install/src/Distribution/Client/ProjectPlanning.hs
@@ -4647,6 +4647,11 @@ determineCoverageFor configuredPkg plan =
 
 -- | Look up and merge the options from the project config that apply to all
 -- packages, all project local packages, and to specific named packages.
+--
+-- Options are combined as @all-packages <> specific-package <> local@ so
+-- that, for local packages, the top-level (and @program-options@) options
+-- take precedence over the @package@ stanza, as documented. See
+-- <https://github.com/haskell/cabal/issues/8900>.
 lookupPerPkgOption
   :: (Package pkg, Monoid m)
   => (pkg -> Bool)
@@ -4657,10 +4662,10 @@ lookupPerPkgOption
   -> (PackageConfig -> m)
   -> m
 lookupPerPkgOption isLocalPkg allPackagesConfig localPackagesConfig perPackageConfig pkg f =
-  global `mappend` local `mappend` perpkg
+  global `mappend` perpkg `mappend` local
   where
     global = f allPackagesConfig
+    perpkg = maybe mempty f (Map.lookup (packageName pkg) perPackageConfig)
     local
       | isLocalPkg pkg = f localPackagesConfig
       | otherwise = mempty
-    perpkg = maybe mempty f (Map.lookup (packageName pkg) perPackageConfig)
diff --git a/cabal-install/tests/IntegrationTests2.hs b/cabal-install/tests/IntegrationTests2.hs
index 1381b66642c..083ee7e6b91 100644
--- a/cabal-install/tests/IntegrationTests2.hs
+++ b/cabal-install/tests/IntegrationTests2.hs
@@ -193,6 +193,7 @@ tests config =
       , testCase "program options scope all" (testProgramOptionsAll config)
       , testCase "program options scope local" (testProgramOptionsLocal config)
       , testCase "program options scope specific" (testProgramOptionsSpecific config)
+      , testCase "program options scope combined" (testProgramOptionsCombined config)
       ]
   , dependentTestGroup
       "Flag tests"
@@ -2112,6 +2113,45 @@ testProgramOptionsSpecific config0 = do
         { packageConfigProgramArgs = programArgs
         }
 
+-- | Test that program options specified at the top level (via the
+-- @program-options@ stanza) are applied *after* the ones specified for a
+-- specific package, so that they can override them (see #8900).
+testProgramOptionsCombined :: ProjectConfig -> Assertion
+testProgramOptionsCombined config0 = do
+  (_, elaboratedPlan, _) <- planProject testdir config
+  let packages = filterConfiguredPackages $ InstallPlan.toList elaboratedPlan
+
+  assertEqual
+    "q"
+    (Just [ghcSpecificFlag, ghcLocalFlag])
+    (getProgArgs packages "q")
+  assertEqual
+    "p"
+    Nothing
+    (getProgArgs packages "p")
+  where
+    testdir = "regression/program-options"
+    ghcLocalFlag = "-fno-full-laziness"
+    ghcSpecificFlag = "-fno-float-in"
+
+    localArgs = MapMappend (Map.fromList [("ghc", [ghcLocalFlag])])
+    specificConfig =
+      mempty
+        { packageConfigProgramArgs = MapMappend (Map.fromList [("ghc", [ghcSpecificFlag])])
+        }
+
+    -- Insert a flag into the local config and a different one into the
+    -- specific package "q" config.
+    config =
+      config0
+        { projectConfigLocalPackages =
+            (projectConfigLocalPackages config0)
+              { packageConfigProgramArgs = localArgs
+              }
+        , projectConfigSpecificPackage =
+            MapMappend (Map.fromList [(mkPackageName "q", specificConfig)])
+        }
+
 filterConfiguredPackages :: [ElaboratedPlanPackage] -> [ElaboratedConfiguredPackage]
 filterConfiguredPackages [] = []
 filterConfiguredPackages (InstallPlan.PreExisting _ : pkgs) = filterConfiguredPackages pkgs
diff --git a/cabal-testsuite/PackageTests/ProgramOptions/Main.hs b/cabal-testsuite/PackageTests/ProgramOptions/Main.hs
new file mode 100644
index 00000000000..9c956c95541
--- /dev/null
+++ b/cabal-testsuite/PackageTests/ProgramOptions/Main.hs
@@ -0,0 +1,6 @@
+module Main where
+
+main :: IO ()
+main = do
+  let unused = 42
+  putStrLn "hello"
diff --git a/cabal-testsuite/PackageTests/ProgramOptions/T8900.cabal b/cabal-testsuite/PackageTests/ProgramOptions/T8900.cabal
new file mode 100644
index 00000000000..6f6bc5cc417
--- /dev/null
+++ b/cabal-testsuite/PackageTests/ProgramOptions/T8900.cabal
@@ -0,0 +1,10 @@
+cabal-version:      2.4
+name:               T8900
+version:            0.1.0.0
+build-type:         Simple
+
+executable T8900
+    main-is:          Main.hs
+    build-depends:    base
+    default-language: Haskell2010
+    ghc-options:      -Wall
diff --git a/cabal-testsuite/PackageTests/ProgramOptions/cabal.project b/cabal-testsuite/PackageTests/ProgramOptions/cabal.project
new file mode 100644
index 00000000000..86ea4d915d2
--- /dev/null
+++ b/cabal-testsuite/PackageTests/ProgramOptions/cabal.project
@@ -0,0 +1,4 @@
+packages: .
+
+package T8900
+  ghc-options: -Werror
diff --git a/cabal-testsuite/PackageTests/ProgramOptions/cabal.project.local b/cabal-testsuite/PackageTests/ProgramOptions/cabal.project.local
new file mode 100644
index 00000000000..29fd615b21c
--- /dev/null
+++ b/cabal-testsuite/PackageTests/ProgramOptions/cabal.project.local
@@ -0,0 +1,2 @@
+program-options
+  ghc-options: -Wwarn
diff --git a/cabal-testsuite/PackageTests/ProgramOptions/cabal.test.hs b/cabal-testsuite/PackageTests/ProgramOptions/cabal.test.hs
new file mode 100644
index 00000000000..94c19c12142
--- /dev/null
+++ b/cabal-testsuite/PackageTests/ProgramOptions/cabal.test.hs
@@ -0,0 +1,10 @@
+import Test.Cabal.Prelude
+
+-- Test for issue #8900: `ghc-options` order when combining multiple
+-- configuration files. The `program-options` stanza in `cabal.project.local`
+-- must be applied after `package <name> ghc-options` in `cabal.project`, so
+-- that `-Wwarn` can override `-Werror`.
+main = cabalTest $ recordMode DoNotRecord $ do
+  skipUnlessGhcVersion ">= 8.8"
+  r <- cabal' "v2-build" ["all"]
+  assertOutputContains "warning:" r
diff --git a/cabal-testsuite/static/Main.hs b/cabal-testsuite/static/Main.hs
index d82a4bd93b7..4210c6093c7 100644
--- a/cabal-testsuite/static/Main.hs
+++ b/cabal-testsuite/static/Main.hs
@@ -1,4 +1,24 @@
+{-# LANGUAGE CPP #-}
 module Main where
 
+import Control.Monad.Catch ()
+import Control.Monad.Trans.Class ()
+import Data.ByteString ()
+import Data.Set ()
+import Data.Time ()
+import Distribution.Simple ()
+import Distribution.Simple.SetupHooks ()
+import Distribution.Types.Version ()
+import System.Directory ()
+import System.FilePath ()
+import System.Process ()
+import Test.Cabal.Run ()
+
+#ifdef mingw32_HOST_OS
+import System.Win32 ()
+#else
+import System.Posix ()
+#endif
+
 main :: IO ()
 main = return ()
diff --git a/changelog.d/12263.md b/changelog.d/12263.md
new file mode 100644
index 00000000000..d0eb29ef197
--- /dev/null
+++ b/changelog.d/12263.md
@@ -0,0 +1,13 @@
+---
+synopsis: Fix ghc-options order when combining multiple configuration files
+packages: [cabal-install]
+prs: 12263
+issues: 8900
+---
+
+Options specified at the top level of a project (including the
+`program-options` stanza) now take precedence over options specified in a
+`package <name>` stanza for local packages, matching the documented behavior.
+Previously the `package <name>` options were applied last, so e.g.
+`program-options ghc-options: -Wwarn` in `cabal.project.local` could not
+override `-Werror` set via `package <name> ghc-options` in `cabal.project`.