diff --git a/src/compiler/commandLineParser.ts b/src/compiler/commandLineParser.ts
index 1cf4b9724d7ae..7e8ad40577c10 100644
--- a/src/compiler/commandLineParser.ts
+++ b/src/compiler/commandLineParser.ts
@@ -838,6 +838,14 @@ namespace ts {
             category: Diagnostics.Modules,
             description: Diagnostics.Specify_multiple_folders_that_act_like_Slashnode_modules_Slash_types
         },
+        {
+            name: "resolveFromOutDir",
+            type: "boolean",
+            affectsModuleResolution: true,
+            category: Diagnostics.Modules,
+            description: Diagnostics.Allow_resolving_files_relative_to_the_output_directory,
+            defaultValueDescription: false
+        },
         {
             name: "types",
             type: "list",
diff --git a/src/compiler/diagnosticMessages.json b/src/compiler/diagnosticMessages.json
index f211d7aeb20fc..20abb0830f6a0 100644
--- a/src/compiler/diagnosticMessages.json
+++ b/src/compiler/diagnosticMessages.json
@@ -4433,6 +4433,10 @@
         "category": "Message",
         "code": 6107
     },
+    "'resolveFromOutDir' option is set, using it to resolve relative module name '{0}'.": {
+        "category": "Message",
+        "code": 16107
+    },
     "Longest matching prefix for '{0}' is '{1}'.": {
         "category": "Message",
         "code": 6108
@@ -4441,6 +4445,10 @@
         "category": "Message",
         "code": 6109
     },
+    "Loading '{0}' from the out dir '{1}', candidate location '{2}'.": {
+        "category": "Message",
+        "code": 16109
+    },
     "Trying other entries in 'rootDirs'.": {
         "category": "Message",
         "code": 6110
@@ -4449,6 +4457,10 @@
         "category": "Message",
         "code": 6111
     },
+    "Module resolution using 'outDir' has failed.": {
+        "category": "Message",
+        "code": 16111
+    },
     "Do not emit 'use strict' directives in module output.": {
         "category": "Message",
         "code": 6112
@@ -5721,6 +5733,11 @@
         "category": "Message",
         "code": 6718
     },
+    "Allow resolving files relative to the output directory.": {
+        "category": "Message",
+        "code": 6719
+    },
+
     "Default catch clause variables as 'unknown' instead of 'any'.": {
         "category": "Message",
         "code": 6803
diff --git a/src/compiler/moduleNameResolver.ts b/src/compiler/moduleNameResolver.ts
index da2324cc74ecb..aefea65b54e92 100644
--- a/src/compiler/moduleNameResolver.ts
+++ b/src/compiler/moduleNameResolver.ts
@@ -1026,12 +1026,13 @@ namespace ts {
     type ResolutionKindSpecificLoader = (extensions: Extensions, candidate: string, onlyRecordFailures: boolean, state: ModuleResolutionState) => Resolved | undefined;
 
     /**
-     * Any module resolution kind can be augmented with optional settings: 'baseUrl', 'paths' and 'rootDirs' - they are used to
+     * Any module resolution kind can be augmented with optional settings: 'baseUrl', 'resolveFromOutDir', 'paths' and 'rootDirs' - they are used to
      * mitigate differences between design time structure of the project and its runtime counterpart so the same import name
      * can be resolved successfully by TypeScript compiler and runtime module loader.
      * If these settings are set then loading procedure will try to use them to resolve module name and it can of failure it will
      * fallback to standard resolution routine.
      *
+     * 'resolveFromOutDir': TODO document the semantics
      * - baseUrl - this setting controls how non-relative module names are resolved. If this setting is specified then non-relative
      * names will be resolved relative to baseUrl: i.e. if baseUrl is '/a/b' then candidate location to resolve module name 'c/d' will
      * be '/a/b/c/d'
@@ -1088,6 +1089,9 @@ namespace ts {
     function tryLoadModuleUsingOptionalResolutionSettings(extensions: Extensions, moduleName: string, containingDirectory: string, loader: ResolutionKindSpecificLoader,
         state: ModuleResolutionState): Resolved | undefined {
 
+        const resolvedFromOutDir = tryLoadModuleUsingOutDirIfEligible(extensions, moduleName, containingDirectory, loader, state);
+        if (resolvedFromOutDir) return resolvedFromOutDir;
+
         const resolved = tryLoadModuleUsingPathsIfEligible(extensions, moduleName, loader, state);
         if (resolved) return resolved.value;
 
@@ -1114,6 +1118,51 @@ namespace ts {
         }
     }
 
+    function tryLoadModuleUsingOutDirIfEligible(extensions: Extensions, moduleName: string, containingDirectory: string, loader: ResolutionKindSpecificLoader, state: ModuleResolutionState): Resolved | undefined {
+        const { baseUrl, resolveFromOutDir, outDir, rootDir } = state.compilerOptions;
+        if (!resolveFromOutDir) {
+            return undefined;
+        }
+        if (!outDir) {
+            return undefined;
+        }
+        if (state.traceEnabled) {
+            trace(state.host, Diagnostics.resolveFromOutDir_option_is_set_using_it_to_resolve_relative_module_name_0, moduleName);
+        }
+
+        // COMMENT FOR REVIEWER: Is there a more robust way to determine the base directory here?
+        var baseDirectory = baseUrl;
+        if (!baseDirectory && state.host.getCurrentDirectory) {
+            baseDirectory = state.host.getCurrentDirectory();
+        }
+        if (!baseDirectory) {
+            return undefined;
+        }
+
+        // COMMENT FOR REVIEWER: I've seen rootDir be relative path and and absolute path so
+        // handling both cases here to come up with an absolute normalizedPrefix path
+        var normalizedPrefix = rootDir && ts.startsWith(rootDir, ts.directorySeparator) ?
+            ts.normalizePath(rootDir) :
+            ts.normalizePath(ts.combinePaths(baseDirectory, rootDir));
+        var candidate = ts.normalizePath(ts.combinePaths(containingDirectory, moduleName));
+
+        // COMMENT FOR REVIEWER: No ts.relativePath() function that I could find. Is there one
+        // somewhere that I'm not aware of?
+        var suffix = require("path").relative(normalizedPrefix, candidate);
+        candidate = ts.normalizePath(ts.combinePaths(baseDirectory, outDir, suffix))
+        if (state.traceEnabled) {
+            trace(state.host, Diagnostics.Loading_0_from_the_out_dir_1_candidate_location_2, suffix, outDir, candidate);
+        }
+        const resolvedFileName = loader(extensions, candidate, !directoryProbablyExists(containingDirectory, state.host), state);
+        if (resolvedFileName) {
+            return resolvedFileName;
+        }
+        if (state.traceEnabled) {
+            trace(state.host, Diagnostics.Module_resolution_using_outDir_has_failed);
+        }
+        return undefined;
+    }
+
     function tryLoadModuleUsingRootDirs(extensions: Extensions, moduleName: string, containingDirectory: string, loader: ResolutionKindSpecificLoader,
         state: ModuleResolutionState): Resolved | undefined {
 
diff --git a/src/compiler/types.ts b/src/compiler/types.ts
index 5ce2842fa8995..88ea91dcb95a6 100644
--- a/src/compiler/types.ts
+++ b/src/compiler/types.ts
@@ -6156,6 +6156,7 @@ namespace ts {
         project?: string;
         /* @internal */ pretty?: boolean;
         reactNamespace?: string;
+        resolveFromOutDir?: boolean;
         jsxFactory?: string;
         jsxFragmentFactory?: string;
         jsxImportSource?: string;