diff --git a/reactos/subsys/system/directory.xml b/reactos/subsys/system/directory.xml
index 968fcabd1af..686a6523135 100644
--- a/reactos/subsys/system/directory.xml
+++ b/reactos/subsys/system/directory.xml
@@ -46,6 +46,9 @@
 <directory name="setup">
 	<xi:include href="setup/setup.xml" />
 </directory>
+<directory name="sm">
+	<xi:include href="sm/sm.xml" />
+</directory>
 <directory name="taskmgr">
 	<xi:include href="taskmgr/taskmgr.xml" />
 </directory>
diff --git a/reactos/subsys/system/sm/makefile b/reactos/subsys/system/sm/makefile
deleted file mode 100644
index 5a35b960927..00000000000
--- a/reactos/subsys/system/sm/makefile
+++ /dev/null
@@ -1,28 +0,0 @@
-# $Id$
-# 
-#  ReactOS Win32 SM Query Tool
-# 
-PATH_TO_TOP = ../../..
-TOOLS_PATH = $(PATH_TO_TOP)/tools
-
-TARGET_TYPE = program
-
-TARGET_APPTYPE = console
-
-TARGET_NAME = sm
-
-TARGET_INSTALLDIR = system32
-
-TARGET_CFLAGS = -D__USE_W32API -DANONYMOUSUNIONS -Wall -Werror
-
-TARGET_OBJECTS = $(TARGET_NAME).o
-
-TARGET_SDKLIBS = smdll.a ntdll.a
-
-include $(PATH_TO_TOP)/rules.mak
-
-include $(TOOLS_PATH)/helper.mk
-
-include $(TOOLS_PATH)/depend.mk
-
-# EOF
diff --git a/reactos/subsys/system/sm/sm.xml b/reactos/subsys/system/sm/sm.xml
new file mode 100644
index 00000000000..34a5fc4d4f2
--- /dev/null
+++ b/reactos/subsys/system/sm/sm.xml
@@ -0,0 +1,10 @@
+<module name="sm" type="win32cui" installbase="system32" installname="sm.exe">
+	<include base="sm">.</include>
+	<define name="__USE_W32API" />
+	<define name="ANONYMOUSUNIONS" />
+	<library>smdll</library>
+	<library>ntdll</library>
+	<library>kernel32</library>
+	<file>sm.c</file>
+	<file>sm.rc</file>
+</module>