diff --git a/doc/release-notes/rl-2511.section.md b/doc/release-notes/rl-2511.section.md
index 202ee003ead1..145185bdf26e 100644
--- a/doc/release-notes/rl-2511.section.md
+++ b/doc/release-notes/rl-2511.section.md
@@ -52,6 +52,8 @@
 
 - `fetchtorrent`, when using the "rqbit" backend, erroneously started fetching files into a subdirectory in Nixpkgs 24.11.  The original behaviour – which matches the behaviour using the "transmission" backend – has now been restored.  Users reliant on the erroneous behaviour can temporarily maintain it by adding `flatten = false` to the `fetchtorrent` arguments; Nix will produce an evaluation warning for anyone using `backend = "rqbit"` without `flatten = true`.
 
+- `linux` and all other Linux kernel packages have moved all in-tree kernel modules into a new `modules` output.
+
 - `webfontkitgenerator` has been renamed to `webfont-bundler`, following the rename of the upstream project.
   The binary name remains `webfontkitgenerator`.
   The `webfontkitgenerator` package is an alias to `webfont-bundler`.
diff --git a/pkgs/os-specific/linux/kernel/manual-config.nix b/pkgs/os-specific/linux/kernel/manual-config.nix
index 2bc2004a22e6..02a9c3f78f7c 100644
--- a/pkgs/os-specific/linux/kernel/manual-config.nix
+++ b/pkgs/os-specific/linux/kernel/manual-config.nix
@@ -178,6 +178,7 @@ lib.makeOverridable (
         outputs = [
           "out"
           "dev"
+          "modules"
         ];
       })
       // {
@@ -336,12 +337,12 @@ lib.makeOverridable (
         ++ extraMakeFlags;
 
         installFlags = [
-          "INSTALL_PATH=$(out)"
+          "INSTALL_PATH=${placeholder "out"}"
         ]
-        ++ (optional isModular "INSTALL_MOD_PATH=$(out)")
+        ++ (optional isModular "INSTALL_MOD_PATH=${placeholder "modules"}")
         ++ optionals buildDTBs [
           "dtbs_install"
-          "INSTALL_DTBS_PATH=$(out)/dtbs"
+          "INSTALL_DTBS_PATH=${placeholder "out"}/dtbs"
         ];
 
         preInstall =
@@ -438,8 +439,7 @@ lib.makeOverridable (
             installFlags+=("INSTALL_MOD_STRIP=1")
           fi
           make modules_install "''${makeFlags[@]}" "''${installFlags[@]}"
-          unlink $out/lib/modules/${modDirVersion}/build
-          rm -f $out/lib/modules/${modDirVersion}/source
+          unlink $modules/lib/modules/${modDirVersion}/build
 
           mkdir -p $dev/lib/modules/${modDirVersion}/{build,source}
 
@@ -567,6 +567,20 @@ lib.makeOverridable (
 
         makeFlags = [
           "O=$(buildRoot)"
+
+          # We have a `modules` variable in the environment for our
+          # split output, but the kernel Makefiles also define their
+          # own `modules` variable. Their definition wins, but Make
+          # remembers that the variable was originally from the
+          # environment and exports it to all the build recipes. This
+          # breaks the build with an “Argument list too long” error due
+          # to passing the huge list of every module object file in the
+          # environment of every process invoked by every build recipe.
+          #
+          # We use `--eval` here to undefine the inherited environment
+          # variable before any Makefiles are read, ensuring that the
+          # kernel’s definition creates a new, unexported variable.
+          "--eval=undefine modules"
         ]
         ++ commonMakeFlags;