diff --git a/src/compiler/commandLineParser.ts b/src/compiler/commandLineParser.ts
index f648bddefe9a7..8b963409ab6ad 100644
--- a/src/compiler/commandLineParser.ts
+++ b/src/compiler/commandLineParser.ts
@@ -1607,10 +1607,12 @@ namespace ts {
                     createCompilerDiagnosticOnlyIfJson(Diagnostics.Compiler_option_0_requires_a_value_of_type_1, "exclude", "Array");
                 }
             }
-            else {
-                const outDir = raw.compilerOptions && raw.compilerOptions.outDir;
-                if (outDir) {
-                    excludeSpecs = [outDir];
+            else if (raw.compilerOptions) {
+                const outDir = raw.compilerOptions.outDir;
+                const declarationDir = raw.compilerOptions.declarationDir;
+
+                if (outDir || declarationDir) {
+                    excludeSpecs = [outDir, declarationDir].filter(d => !!d);
                 }
             }
 
diff --git a/src/harness/unittests/tsconfigParsing.ts b/src/harness/unittests/tsconfigParsing.ts
index f1b4d5265816b..7a47481b88d3f 100644
--- a/src/harness/unittests/tsconfigParsing.ts
+++ b/src/harness/unittests/tsconfigParsing.ts
@@ -217,6 +217,29 @@ namespace ts {
             assertParseFileList(tsconfigWithExclude, "tsconfig.json", rootDir, allFiles, allFiles);
         });
 
+        it("exclude declarationDir unless overridden", () => {
+            const tsconfigWithoutExclude =
+            `{
+                "compilerOptions": {
+                    "declarationDir": "declarations"
+                }
+            }`;
+            const tsconfigWithExclude =
+            `{
+                "compilerOptions": {
+                    "declarationDir": "declarations"
+                },
+                "exclude": [ "types" ]
+            }`;
+
+            const rootDir = "/";
+            const allFiles = ["/declarations/a.d.ts", "/a.ts"];
+            const expectedFiles = ["/a.ts"];
+
+            assertParseFileList(tsconfigWithoutExclude, "tsconfig.json", rootDir, allFiles, expectedFiles);
+            assertParseFileList(tsconfigWithExclude, "tsconfig.json", rootDir, allFiles, allFiles);
+        });
+
         it("implicitly exclude common package folders", () => {
             assertParseFileList(
                 `{}`,