diff --git a/cms/djangoapps/contentstore/views/item.py b/cms/djangoapps/contentstore/views/item.py
index f9244860e3..cd924868cc 100644
--- a/cms/djangoapps/contentstore/views/item.py
+++ b/cms/djangoapps/contentstore/views/item.py
@@ -67,6 +67,7 @@ from util.milestones_helpers import is_entrance_exams_enabled
 from xblock_config.models import CourseEditLTIFieldsEnabledFlag
 from xblock_django.user_service import DjangoXBlockUserService
 from xmodule.course_module import DEFAULT_START_DATE
+from xmodule.library_tools import LibraryToolsService
 from xmodule.modulestore import EdxJSONEncoder, ModuleStoreEnum
 from xmodule.modulestore.django import modulestore
 from xmodule.modulestore.draft_and_published import DIRECT_ONLY_CATEGORIES
@@ -319,6 +320,8 @@ class StudioEditModuleRuntime(object):
                 return ConfigurationService(CourseEditLTIFieldsEnabledFlag)
             if service_name == "teams_configuration":
                 return TeamsConfigurationService()
+            if service_name == "library_tools":
+                return LibraryToolsService(modulestore(), self._user.id)
         return None
 
 
diff --git a/common/lib/xmodule/setup.py b/common/lib/xmodule/setup.py
index 76ac5f2dfe..1247955ac6 100644
--- a/common/lib/xmodule/setup.py
+++ b/common/lib/xmodule/setup.py
@@ -33,6 +33,7 @@ XBLOCKS = [
     "course_info = xmodule.html_module:CourseInfoBlock",
     "html = xmodule.html_module:HtmlBlock",
     "library = xmodule.library_root_xblock:LibraryRoot",
+    "library_sourced = xmodule.library_sourced_block:LibrarySourcedBlock",
     "problem = xmodule.capa_module:ProblemBlock",
     "static_tab = xmodule.html_module:StaticTabBlock",
     "unit = xmodule.unit_block:UnitBlock",
diff --git a/common/lib/xmodule/xmodule/assets/library_source_block/public/js/library_source_block.js b/common/lib/xmodule/xmodule/assets/library_source_block/public/js/library_source_block.js
new file mode 100644
index 0000000000..cbbe6c0790
--- /dev/null
+++ b/common/lib/xmodule/xmodule/assets/library_source_block/public/js/library_source_block.js
@@ -0,0 +1,45 @@
+/* JavaScript for allowing editing options on LibrarySourceBlock's author view */
+window.LibrarySourceBlockAuthorView = function(runtime, element) {
+    'use strict';
+    var $element = $(element);
+
+    $element.on('click', '.save-btn', function(e) {
+        var url = $(e.target).data('submit-url');
+        var data = {
+            values: {
+                source_block_id: $element.find('input').val()
+            },
+            defaults: ['display_name']
+        };
+        e.preventDefault();
+
+        runtime.notify('save', {
+            state: 'start',
+            message: gettext('Saving'),
+            element: element
+        });
+        $.ajax({
+            type: 'POST',
+            url: url,
+            data: JSON.stringify(data),
+            global: false // Disable error handling that conflicts with studio's notify('save') and notify('cancel')
+        }).done(function() {
+            runtime.notify('save', {
+                state: 'end',
+                element: element
+            });
+        }).fail(function(jqXHR) {
+            var message = gettext('This may be happening because of an error with our server or your internet connection. Try refreshing the page or making sure you are online.');  // eslint-disable-line max-len
+            if (jqXHR.responseText) { // Is there a more specific error message we can show?
+                try {
+                    message = JSON.parse(jqXHR.responseText).error;
+                    if (typeof message === 'object' && message.messages) {
+                        // e.g. {"error": {"messages": [{"text": "Unknown user 'bob'!", "type": "error"}, ...]}} etc.
+                        message = $.map(message.messages, function(msg) { return msg.text; }).join(', ');
+                    }
+                } catch (error) { message = jqXHR.responseText.substr(0, 300); }
+            }
+            runtime.notify('error', {title: gettext('Unable to update settings'), message: message});
+        });
+    });
+};
diff --git a/common/lib/xmodule/xmodule/library_content_module.py b/common/lib/xmodule/xmodule/library_content_module.py
index a8bd13a4a8..9c204a0c9b 100644
--- a/common/lib/xmodule/xmodule/library_content_module.py
+++ b/common/lib/xmodule/xmodule/library_content_module.py
@@ -434,10 +434,9 @@ class LibraryContentDescriptor(LibraryContentFields, MakoModuleDescriptor, XmlDe
         this block is up to date or not.
         """
         user_perms = self.runtime.service(self, 'studio_user_permissions')
-        user_id = self.get_user_id()
         if not self.tools:
             return Response("Library Tools unavailable in current runtime.", status=400)
-        self.tools.update_children(self, user_id, user_perms)
+        self.tools.update_children(self, user_perms)
         return Response()
 
     # Copy over any overridden settings the course author may have applied to the blocks.
@@ -469,7 +468,7 @@ class LibraryContentDescriptor(LibraryContentFields, MakoModuleDescriptor, XmlDe
         user_perms = self.runtime.service(self, 'studio_user_permissions')
         if not self.tools:
             raise RuntimeError("Library tools unavailable, duplication will not be sane!")
-        self.tools.update_children(self, user_id, user_perms, version=self.source_library_version)
+        self.tools.update_children(self, user_perms, version=self.source_library_version)
 
         self._copy_overrides(store, user_id, source_block, self)
 
diff --git a/common/lib/xmodule/xmodule/library_sourced_block.py b/common/lib/xmodule/xmodule/library_sourced_block.py
new file mode 100644
index 0000000000..205bb7f4a0
--- /dev/null
+++ b/common/lib/xmodule/xmodule/library_sourced_block.py
@@ -0,0 +1,127 @@
+"""
+Library Sourced Content XBlock
+"""
+import logging
+
+from copy import copy
+from web_fragments.fragment import Fragment
+from xblock.core import XBlock
+from xblock.fields import Scope, String
+from xblockutils.resources import ResourceLoader
+from xblockutils.studio_editable import StudioEditableXBlockMixin
+from webob import Response
+
+from cms.lib.xblock.runtime import handler_url
+from xmodule.studio_editable import StudioEditableBlock as EditableChildrenMixin
+from xmodule.validation import StudioValidation, StudioValidationMessage
+
+log = logging.getLogger(__name__)
+loader = ResourceLoader(__name__)
+
+# Make '_' a no-op so we can scrape strings. Using lambda instead of
+#  `django.utils.translation.ugettext_noop` because Django cannot be imported in this file
+_ = lambda text: text
+
+
+@XBlock.wants('library_tools')  # Only needed in studio
+class LibrarySourcedBlock(StudioEditableXBlockMixin, EditableChildrenMixin, XBlock):
+    """
+    Library Sourced Content XBlock
+
+    Allows copying specific XBlocks from a Blockstore-based content library into
+    a modulestore-based course. The selected blocks are copied and become
+    children of this block.
+
+    When we implement support for Blockstore-based courses, it's expected we'll
+    use a different mechanism for importing library content into a course.
+    """
+    display_name = String(
+        help=_("The display name for this component."),
+        default="Library Sourced Content",
+        display_name=_("Display Name"),
+        scope=Scope.content,
+    )
+    source_block_id = String(
+        display_name=_("Library Block"),
+        help=_("Enter the IDs of the library XBlock that you wish to use."),
+        scope=Scope.content,
+    )
+    editable_fields = ("display_name", "source_block_id")
+    has_children = True
+    has_author_view = True
+    resources_dir = 'assets/library_source_block'
+
+    def __str__(self):
+        return "LibrarySourcedBlock: {}".format(self.display_name)
+
+    def author_view(self, context):
+        """
+        Renders the Studio preview view.
+        """
+        fragment = Fragment()
+        root_xblock = context.get('root_xblock')
+        is_root = root_xblock and root_xblock.location == self.location  # pylint: disable=no-member
+        # If block ID is not defined, ask user for the component ID in the author_view itself.
+        # We don't display the editor if is_root as that page should represent the student_view without any ambiguity
+        if not self.source_block_id and not is_root:
+            fragment.add_content(
+                loader.render_django_template('templates/library-sourced-block-author-view.html', {
+                    'save_url': handler_url(self, 'submit_studio_edits')
+                })
+            )
+            fragment.add_javascript_url(self.runtime.local_resource_url(self, 'public/js/library_source_block.js'))
+            fragment.initialize_js('LibrarySourceBlockAuthorView')
+            return fragment
+
+        context = {} if not context else copy(context)  # Isolate context - without this there are weird bugs in Studio
+        # EditableChildrenMixin.render_children will render HTML that allows instructors to make edits to the children
+        context['can_move'] = False
+        self.render_children(context, fragment, can_reorder=False, can_add=False)
+        return fragment
+
+    def student_view(self, context):
+        """
+        Renders the view that learners see.
+        """
+        result = Fragment()
+        child_frags = self.runtime.render_children(self, context=context)
+        result.add_resources(child_frags)
+        result.add_content('<div class="library-sourced-content">')
+        for frag in child_frags:
+            result.add_content(frag.content)
+        result.add_content('</div>')
+        return result
+
+    def validate(self):
+        """
+        Validates the state of this library_sourced_xblock Instance. This is the override of the general XBlock method,
+        and it will also ask its superclass to validate.
+        """
+        validation = super().validate()
+        validation = StudioValidation.copy(validation)
+
+        if not self.source_block_id:
+            validation.set_summary(
+                StudioValidationMessage(
+                    StudioValidationMessage.NOT_CONFIGURED,
+                    _(u"No XBlock has been configured for this component. Enter the target ID below or in the editor"),
+                    action_class='edit-button',
+                    action_label=_(u"Open Editor")
+                )
+            )
+        return validation
+
+    @XBlock.handler
+    def submit_studio_edits(self, data, suffix=''):
+        """
+        Save changes to this block, applying edits made in Studio.
+        """
+        response = super().submit_studio_edits(data, suffix)
+        # Replace our current children with the latest ones from the libraries.
+        lib_tools = self.runtime.service(self, 'library_tools')
+        try:
+            lib_tools.import_from_blockstore(self, self.source_block_id)
+        except Exception as err:  # pylint: disable=broad-except
+            log.exception(err)
+            return Response(_(u"Importing Library Block failed - are the IDs valid and readable?"), status=400)
+        return response
diff --git a/common/lib/xmodule/xmodule/library_tools.py b/common/lib/xmodule/xmodule/library_tools.py
index cda300be0f..ef754be232 100644
--- a/common/lib/xmodule/xmodule/library_tools.py
+++ b/common/lib/xmodule/xmodule/library_tools.py
@@ -1,12 +1,19 @@
 """
 XBlock runtime services for LibraryContentModule
 """
-
+import hashlib
 
 import six
+from django.contrib.auth.models import User
 from django.core.exceptions import PermissionDenied
-from opaque_keys.edx.locator import LibraryLocator, LibraryUsageLocator
+from opaque_keys.edx.keys import UsageKey
+from opaque_keys.edx.locator import LibraryLocator, LibraryUsageLocator, LibraryUsageLocatorV2, BlockUsageLocator
 from search.search_engine_base import SearchEngine
+from xblock.fields import Scope
+
+from openedx.core.djangoapps.content_libraries import api as library_api
+from openedx.core.djangoapps.xblock.api import load_block
+from student.auth import has_studio_write_access
 from xmodule.capa_module import ProblemBlock
 from xmodule.library_content_module import ANY_CAPA_TYPE_VALUE
 from xmodule.modulestore import ModuleStoreEnum
@@ -23,8 +30,9 @@ class LibraryToolsService(object):
     Service that allows LibraryContentModule to interact with libraries in the
     modulestore.
     """
-    def __init__(self, modulestore):
+    def __init__(self, modulestore, user_id):
         self.store = modulestore
+        self.user_id = user_id
 
     def _get_library(self, library_key):
         """
@@ -127,7 +135,7 @@ class LibraryToolsService(object):
         """
         return self.store.check_supports(block.location.course_key, 'copy_from_template')
 
-    def update_children(self, dest_block, user_id, user_perms=None, version=None):
+    def update_children(self, dest_block, user_perms=None, version=None):
         """
         This method is to be used when the library that a LibraryContentModule
         references has been updated. It will re-fetch all matching blocks from
@@ -163,11 +171,11 @@ class LibraryToolsService(object):
             source_blocks.extend(library.children)
 
         with self.store.bulk_operations(dest_block.location.course_key):
-            dest_block.source_library_version = six.text_type(library.location.library_key.version_guid)
-            self.store.update_item(dest_block, user_id)
+            dest_block.source_library_version = str(library.location.library_key.version_guid)
+            self.store.update_item(dest_block, self.user_id)
             head_validation = not version
             dest_block.children = self.store.copy_from_template(
-                source_blocks, dest_block.location, user_id, head_validation=head_validation
+                source_blocks, dest_block.location, self.user_id, head_validation=head_validation
             )
             # ^-- copy_from_template updates the children in the DB
             # but we must also set .children here to avoid overwriting the DB again
@@ -181,3 +189,101 @@ class LibraryToolsService(object):
             (lib.location.library_key.replace(version_guid=None, branch=None), lib.display_name)
             for lib in self.store.get_library_summaries()
         ]
+
+    def import_from_blockstore(self, dest_block, blockstore_block_id):
+        """
+        Imports a block from a blockstore-based learning context (usually a
+        content library) into modulestore, as a new child of dest_block.
+        Any existing children of dest_block are replaced.
+
+        This is only used by LibrarySourcedBlock. It should verify first that
+        the number of block IDs is reasonable.
+        """
+        dest_key = dest_block.scope_ids.usage_id
+        if not isinstance(dest_key, BlockUsageLocator):
+            raise TypeError("Destination {} should be a modulestore course.".format(dest_key))
+        if self.user_id is None:
+            raise ValueError("Cannot check user permissions - LibraryTools user_id is None")
+
+        dest_course_key = dest_key.context_key
+        user = User.objects.get(id=self.user_id)
+        if not has_studio_write_access(user, dest_course_key):
+            raise PermissionDenied()
+
+        # Read the source block; this will also confirm that user has permission to read it.
+        orig_block = load_block(UsageKey.from_string(blockstore_block_id), user)
+
+        with self.store.bulk_operations(dest_course_key):
+            new_block_id = self._import_block(orig_block, dest_key)
+            # Remove any existing children that are no longer used
+            for old_child_id in set(dest_block.children) - set([new_block_id]):
+                self.store.delete_item(old_child_id, self.user_id)
+            # If this was called from a handler, it will save dest_block at the end, so we must update
+            # dest_block.children to avoid it saving the old value of children and deleting the new ones.
+            dest_block.children = self.store.get_item(dest_key).children
+
+    def _import_block(self, source_block, dest_parent_key):
+        """
+        Recursively import a blockstore block and its children. See import_from_blockstore above.
+        """
+        def generate_block_key(source_key, dest_parent_key):
+            """
+            Deterministically generate an ID for the new block and return the key
+            """
+            block_id = (
+                dest_parent_key.block_id[:10] +
+                '-' +
+                hashlib.sha1(str(source_key).encode('utf-8')).hexdigest()[:10]
+            )
+            return dest_parent_key.context_key.make_usage_key(source_key.block_type, block_id)
+
+        source_key = source_block.scope_ids.usage_id
+        new_block_key = generate_block_key(source_key, dest_parent_key)
+        try:
+            new_block = self.store.get_item(new_block_key)
+            if new_block.parent != dest_parent_key:
+                raise ValueError(
+                    "Expected existing block {} to be a child of {} but instead it's a child of {}".format(
+                        new_block_key, dest_parent_key, new_block.parent,
+                    )
+                )
+        except ItemNotFoundError:
+            new_block = self.store.create_child(
+                user_id=self.user_id,
+                parent_usage_key=dest_parent_key,
+                block_type=source_key.block_type,
+                block_id=new_block_key.block_id,
+            )
+
+        # Prepare a list of this block's static assets; any assets that are referenced as /static/{path} (the
+        # recommended way for referencing them) will stop working, and so we rewrite the url when importing.
+        # Copying assets not advised because modulestore doesn't namespace assets to each block like blockstore, which
+        # might cause conflicts when the same filename is used across imported blocks.
+        if isinstance(source_key, LibraryUsageLocatorV2):
+            all_assets = library_api.get_library_block_static_asset_files(source_key)
+        else:
+            all_assets = []
+
+        for field_name, field in source_block.fields.items():
+            if field.scope not in (Scope.settings, Scope.content):
+                continue  # Only copy authored field data
+            if field.is_set_on(source_block) or field.is_set_on(new_block):
+                field_value = getattr(source_block, field_name)
+                if isinstance(field_value, str):
+                    # If string field (which may also be JSON/XML data), rewrite /static/... URLs to point to blockstore
+                    for asset in all_assets:
+                        field_value = field_value.replace('/static/{}'.format(asset.path), asset.url)
+                setattr(new_block, field_name, field_value)
+        new_block.save()
+        self.store.update_item(new_block, self.user_id)
+
+        if new_block.has_children:
+            # Delete existing children in the new block, which can be reimported again if they still exist in the
+            # source library
+            for existing_child_key in new_block.children:
+                self.store.delete_item(existing_child_key, self.user_id)
+            # Now import the children
+            for child in source_block.get_children():
+                self._import_block(child, new_block_key)
+
+        return new_block_key
diff --git a/common/lib/xmodule/xmodule/modulestore/split_mongo/caching_descriptor_system.py b/common/lib/xmodule/xmodule/modulestore/split_mongo/caching_descriptor_system.py
index 5f43fef5eb..e0a06cb082 100644
--- a/common/lib/xmodule/xmodule/modulestore/split_mongo/caching_descriptor_system.py
+++ b/common/lib/xmodule/xmodule/modulestore/split_mongo/caching_descriptor_system.py
@@ -85,7 +85,7 @@ class CachingDescriptorSystem(MakoDescriptorSystem, EditInfoRuntimeMixin):
         self.module_data = module_data
         self.default_class = default_class
         self.local_modules = {}
-        self._services['library_tools'] = LibraryToolsService(modulestore)
+        self._services['library_tools'] = LibraryToolsService(modulestore, user_id=None)
 
     @lazy
     @contract(returns="dict(BlockKey: BlockKey)")
diff --git a/common/lib/xmodule/xmodule/modulestore/xml_importer.py b/common/lib/xmodule/xmodule/modulestore/xml_importer.py
index ee7864e9d3..c52ef40b06 100644
--- a/common/lib/xmodule/xmodule/modulestore/xml_importer.py
+++ b/common/lib/xmodule/xmodule/modulestore/xml_importer.py
@@ -826,13 +826,11 @@ def _update_and_import_module(
         # if library exists, update source_library_version and children
         # according to this existing library and library content block.
         if store.get_library(block.source_library_key):
-
             # Update library content block's children on draft branch
             with store.branch_setting(branch_setting=ModuleStoreEnum.Branch.draft_preferred):
-                LibraryToolsService(store).update_children(
+                LibraryToolsService(store, user_id).update_children(
                     block,
-                    user_id,
-                    version=block.source_library_version
+                    version=block.source_library_version,
                 )
 
             # Publish it if importing the course for branch setting published_only.
diff --git a/common/lib/xmodule/xmodule/templates/library-sourced-block-author-view.html b/common/lib/xmodule/xmodule/templates/library-sourced-block-author-view.html
new file mode 100644
index 0000000000..003d3b6181
--- /dev/null
+++ b/common/lib/xmodule/xmodule/templates/library-sourced-block-author-view.html
@@ -0,0 +1,9 @@
+<div class="xblock-render">
+  <p>
+    <i>To display a component from a content library here, enter the component ID (XBlock ID) that you want to use:</i>
+  </p>
+  <div style="display: flex">
+    <input type="text" name="source_component_id" style="margin-right: 10px;"/>
+    <button class="btn-brand save-btn" data-submit-url="{{save_url}}">Save</button>
+  </div>
+</div>
\ No newline at end of file
diff --git a/common/lib/xmodule/xmodule/tests/test_library_content.py b/common/lib/xmodule/xmodule/tests/test_library_content.py
index cfe4ce2b5d..d885d9129f 100644
--- a/common/lib/xmodule/xmodule/tests/test_library_content.py
+++ b/common/lib/xmodule/xmodule/tests/test_library_content.py
@@ -33,7 +33,7 @@ class LibraryContentTest(MixedSplitTestCase):
     def setUp(self):
         super(LibraryContentTest, self).setUp()
 
-        self.tools = LibraryToolsService(self.store)
+        self.tools = LibraryToolsService(self.store, self.user_id)
         self.library = LibraryFactory.create(modulestore=self.store)
         self.lib_blocks = [
             self.make_block("html", self.library, data="Hello world from block {}".format(i))
diff --git a/common/lib/xmodule/xmodule/tests/test_library_sourced_block.py b/common/lib/xmodule/xmodule/tests/test_library_sourced_block.py
new file mode 100644
index 0000000000..c3b58a726d
--- /dev/null
+++ b/common/lib/xmodule/xmodule/tests/test_library_sourced_block.py
@@ -0,0 +1,76 @@
+"""
+Tests for Source from Library XBlock
+"""
+from xblockutils.resources import ResourceLoader
+
+from openedx.core.djangoapps.content_libraries.tests.base import ContentLibrariesRestApiTest
+from student.roles import CourseInstructorRole
+from cms.lib.xblock.runtime import handler_url
+from xmodule.modulestore.django import modulestore
+from xmodule.modulestore.tests.factories import CourseFactory, ItemFactory
+from xmodule.tests import get_test_system
+from xmodule.x_module import AUTHOR_VIEW, STUDENT_VIEW
+
+
+class LibrarySourcedBlockTestCase(ContentLibrariesRestApiTest):
+    """
+    Tests for LibraryToolsService which interact with blockstore-based content libraries
+    """
+    def setUp(self):
+        super().setUp()
+        self.store = modulestore()
+
+    def test_block_views(self):
+        # Create a blockstore content library
+        library = self._create_library(slug="testlib1_preview", title="Test Library 1", description="Testing XBlocks")
+        # Add content to the library
+        html_block_id = self._add_block_to_library(library["id"], "html", "html_student_preview")["id"]
+        self._set_library_block_olx(html_block_id, '<html>Student Preview Test</html>')
+
+        # Create a modulestore course
+        course = CourseFactory.create(modulestore=self.store, user_id=self.user.id)
+        CourseInstructorRole(course.id).add_users(self.user)
+        # Add a "Source from Library" block to the course
+        source_block = ItemFactory.create(
+            category="library_sourced",
+            parent=course,
+            parent_location=course.location,
+            user_id=self.user.id,
+            modulestore=self.store
+        )
+
+        # Check if author_view for empty block renders using the editor template
+        html = source_block.render(AUTHOR_VIEW).content
+        loader = ResourceLoader('xmodule.library_sourced_block')
+        expected_html = loader.render_django_template('templates/library-sourced-block-author-view.html', {
+            'save_url': handler_url(source_block, 'submit_studio_edits')
+        })
+        self.assertEqual(expected_html, html)
+
+        submit_studio_edits_url = '/xblock/{0}/handler/submit_studio_edits'.format(source_block.scope_ids.usage_id)
+        post_data = {"values": {"source_block_id": html_block_id}, "defaults": ["display_name"]}
+        # Import the html block from the library to the course
+        self.client.post(submit_studio_edits_url, data=post_data, format='json')
+
+        # Check if author_view for a configured block renders the children correctly
+        # Use self.get_block_view for rendering these as mako templates are mocked to return repr of the template
+        # instead of the rendered html
+        res = self.get_block_view(source_block, AUTHOR_VIEW)
+        self.assertNotIn('library-sourced-block-author-view.html', res)
+        self.assertIn('studio_render_children_view.html', res)
+        self.assertIn('Student Preview Test', res)
+
+        # Check if student_view renders the children correctly
+        res = self.get_block_view(source_block, STUDENT_VIEW)
+        self.assertIn('Student Preview Test', res)
+
+    def get_block_view(self, block, view, context=None):
+        """
+        Renders the specified view for a given XBlock
+        """
+        context = context or {}
+        block = self.store.get_item(block.location)
+        module_system = get_test_system(block)
+        module_system.descriptor_runtime = block._runtime  # pylint: disable=protected-access
+        block.bind_for_student(module_system, self.user.id)
+        return module_system.render(block, view, context).content
diff --git a/common/lib/xmodule/xmodule/tests/test_library_tools.py b/common/lib/xmodule/xmodule/tests/test_library_tools.py
index e9f3c925b0..188dbf180b 100644
--- a/common/lib/xmodule/xmodule/tests/test_library_tools.py
+++ b/common/lib/xmodule/xmodule/tests/test_library_tools.py
@@ -1,12 +1,15 @@
 """
 Tests for library tools service.
 """
+from unittest.mock import patch
 
-
-from mock import patch
-
+from opaque_keys.edx.keys import UsageKey
+from openedx.core.djangoapps.content_libraries import api as library_api
+from openedx.core.djangoapps.content_libraries.tests.base import ContentLibrariesRestApiTest
+from openedx.core.djangoapps.xblock.api import load_block
+from student.roles import CourseInstructorRole
 from xmodule.library_tools import LibraryToolsService
-from xmodule.modulestore.tests.factories import LibraryFactory
+from xmodule.modulestore.tests.factories import CourseFactory, LibraryFactory
 from xmodule.modulestore.tests.utils import MixedSplitTestCase
 
 
@@ -16,9 +19,8 @@ class LibraryToolsServiceTest(MixedSplitTestCase):
     """
 
     def setUp(self):
-        super(LibraryToolsServiceTest, self).setUp()
-
-        self.tools = LibraryToolsService(self.store)
+        super().setUp()
+        self.tools = LibraryToolsService(self.store, self.user_id)
 
     def test_list_available_libraries(self):
         """
@@ -36,3 +38,59 @@ class LibraryToolsServiceTest(MixedSplitTestCase):
         """
         _ = self.tools.list_available_libraries()
         self.assertTrue(mock_get_library_summaries.called)
+
+
+class ContentLibraryToolsTest(MixedSplitTestCase, ContentLibrariesRestApiTest):
+    """
+    Tests for LibraryToolsService which interact with blockstore-based content libraries
+    """
+    def setUp(self):
+        super().setUp()
+        self.tools = LibraryToolsService(self.store, self.user.id)
+
+    def test_import_from_blockstore(self):
+        # Create a blockstore content library
+        library = self._create_library(slug="testlib1_import", title="A Test Library", description="Testing XBlocks")
+        # Create a unit block with an HTML block in it.
+        unit_block_id = self._add_block_to_library(library["id"], "unit", "unit1")["id"]
+        html_block_id = self._add_block_to_library(library["id"], "html", "html1", parent_block=unit_block_id)["id"]
+        html_block = load_block(UsageKey.from_string(html_block_id), self.user)
+        # Add assets and content to the HTML block
+        self._set_library_block_asset(html_block_id, "test.txt", b"data", expect_response=200)
+        self._set_library_block_olx(html_block_id, '<html><a href="/static/test.txt">Hello world</a></html>')
+
+        # Create a modulestore course
+        course = CourseFactory.create(modulestore=self.store, user_id=self.user.id)
+        CourseInstructorRole(course.id).add_users(self.user)
+        # Add Source from library block to the course
+        sourced_block = self.make_block("library_sourced", course, user_id=self.user.id)
+
+        # Import the unit block from the library to the course
+        self.tools.import_from_blockstore(sourced_block, unit_block_id)
+
+        # Verify imported block with its children
+        self.assertEqual(len(sourced_block.children), 1)
+        self.assertEqual(sourced_block.children[0].category, 'unit')
+
+        imported_unit_block = self.store.get_item(sourced_block.children[0])
+        self.assertEqual(len(imported_unit_block.children), 1)
+        self.assertEqual(imported_unit_block.children[0].category, 'html')
+
+        imported_html_block = self.store.get_item(imported_unit_block.children[0])
+        self.assertIn('Hello world', imported_html_block.data)
+
+        # Check that assets were imported and static paths were modified after importing
+        assets = library_api.get_library_block_static_asset_files(html_block.scope_ids.usage_id)
+        self.assertEqual(len(assets), 1)
+        self.assertIn(assets[0].url, imported_html_block.data)
+
+        # Check that reimporting updates the target block
+        self._set_library_block_olx(html_block_id, '<html><a href="/static/test.txt">Foo bar</a></html>')
+        self.tools.import_from_blockstore(sourced_block, unit_block_id)
+
+        self.assertEqual(len(sourced_block.children), 1)
+        imported_unit_block = self.store.get_item(sourced_block.children[0])
+        self.assertEqual(len(imported_unit_block.children), 1)
+        imported_html_block = self.store.get_item(imported_unit_block.children[0])
+        self.assertNotIn('Hello world', imported_html_block.data)
+        self.assertIn('Foo bar', imported_html_block.data)
diff --git a/lms/djangoapps/lms_xblock/runtime.py b/lms/djangoapps/lms_xblock/runtime.py
index 91389800c2..d1f1b48a98 100644
--- a/lms/djangoapps/lms_xblock/runtime.py
+++ b/lms/djangoapps/lms_xblock/runtime.py
@@ -152,7 +152,7 @@ class LmsModuleSystem(ModuleSystem):  # pylint: disable=abstract-method
             services['completion'] = CompletionService(user=user, context_key=kwargs.get('course_id'))
         services['fs'] = xblock.reference.plugins.FSService()
         services['i18n'] = ModuleI18nService
-        services['library_tools'] = LibraryToolsService(store)
+        services['library_tools'] = LibraryToolsService(store, user_id=user.id if user else None)
         services['partitions'] = PartitionService(
             course_id=kwargs.get('course_id'),
             cache=request_cache_dict
diff --git a/openedx/core/djangoapps/xblock/learning_context/manager.py b/openedx/core/djangoapps/xblock/learning_context/manager.py
index 03a0837463..e1d687e72d 100644
--- a/openedx/core/djangoapps/xblock/learning_context/manager.py
+++ b/openedx/core/djangoapps/xblock/learning_context/manager.py
@@ -1,8 +1,7 @@
 """
 Helper methods for working with learning contexts
 """
-
-
+from opaque_keys import OpaqueKey
 from opaque_keys.edx.keys import LearningContextKey, UsageKeyV2
 
 from openedx.core.djangoapps.xblock.apps import get_xblock_app_config
@@ -38,9 +37,11 @@ def get_learning_context_impl(key):
         context_type = key.CANONICAL_NAMESPACE  # e.g. 'lib'
     elif isinstance(key, UsageKeyV2):
         context_type = key.context_key.CANONICAL_NAMESPACE
-    else:
+    elif isinstance(key, OpaqueKey):
         # Maybe this is an older modulestore key etc.
         raise TypeError("Opaque key {} does not have a learning context.".format(key))
+    else:
+        raise TypeError("key '{}' is not an opaque key. You probably forgot [KeyType].from_string(...)".format(key))
 
     try:
         return _learning_context_cache[context_type]
diff --git a/openedx/tests/completion_integration/test_services.py b/openedx/tests/completion_integration/test_services.py
index 8e15f64f27..6dfa658afb 100644
--- a/openedx/tests/completion_integration/test_services.py
+++ b/openedx/tests/completion_integration/test_services.py
@@ -124,7 +124,7 @@ class CompletionServiceTestCase(CompletionWaffleTestMixin, SharedModuleStoreTest
         """
         module_system = get_test_system(course_id=module.location.course_key)
         module_system.descriptor_runtime = module.runtime._descriptor_system  # pylint: disable=protected-access
-        module_system._services['library_tools'] = LibraryToolsService(self.store)  # pylint: disable=protected-access
+        module_system._services['library_tools'] = LibraryToolsService(self.store, self.user.id)  # pylint: disable=protected-access
 
         def get_module(descriptor):
             """Mocks module_system get_module function"""
diff --git a/openedx/tests/settings.py b/openedx/tests/settings.py
index 6907fb4da3..a976ce4d2d 100644
--- a/openedx/tests/settings.py
+++ b/openedx/tests/settings.py
@@ -80,6 +80,7 @@ INSTALLED_APPS = (
     'openedx.core.djangoapps.user_api',
     'course_modes.apps.CourseModesConfig',
     'lms.djangoapps.verify_student.apps.VerifyStudentConfig',
+    'openedx.core.djangoapps.content_libraries',
     'openedx.core.djangoapps.dark_lang',
     'openedx.core.djangoapps.content.course_overviews.apps.CourseOverviewsConfig',
     'openedx.core.djangoapps.content.block_structure.apps.BlockStructureConfig',
@@ -103,6 +104,7 @@ INSTALLED_APPS = (
     # Django 1.11 demands to have imported models supported by installed apps.
     'completion',
     'entitlements',
+    'organizations',
 )
 
 LMS_ROOT_URL = "http://localhost:8000"
@@ -127,6 +129,8 @@ RETIRED_USERNAME_PREFIX = 'retired__user_'
 
 PROCTORING_SETTINGS = {}
 
+ROOT_URLCONF = None
+RUN_BLOCKSTORE_TESTS = False
 
 # Software Secure request retry settings
 # Time in seconds before a retry of the task should be 60 mints.