diff --git a/src/server/g3ServerHostProxy.ts b/src/server/g3ServerHostProxy.ts
new file mode 100644
index 0000000000000..ff89251edd577
--- /dev/null
+++ b/src/server/g3ServerHostProxy.ts
@@ -0,0 +1,123 @@
+/// <reference path="./types.ts"/>
+
+namespace ts.server {
+    function isGenerated(path: string) {
+        const GEN_EXT = ['ngsummary', 'ngstyle', 'ngfactory'];
+        const TS_EXT = ['ts', 'tsx', 'd.ts'];
+
+        for (const gen of GEN_EXT) {
+            for (const ext of TS_EXT) {
+                if (fileExtensionIs(path, gen + '.' + ext)) {
+                    return true;
+                }
+            }
+        }
+        return false;
+    }
+
+    export function getG3ServerHostProxy(
+      tsconfigPath: string,
+      host: ServerHost,
+      logger: Logger): ServerHost {
+
+        let proxyHost:ServerHost = (<any>Object).assign({}, host);
+
+        const {config, error} = readConfigFile(tsconfigPath, proxyHost.readFile);
+        if (error) {
+            return host;
+        }
+        const projectDir = getDirectoryPath(tsconfigPath);
+
+        // Get the files list from the tsconfig.
+        let {options, errors, fileNames} =
+            parseJsonConfigFileContent(config, proxyHost, projectDir);
+
+        if (errors && errors.length !== 0) {
+            return host;
+        }
+
+        // All google3 projects have rootDits set. Don't proxy if rootDirs is
+        // not set.
+        if (!options.rootDirs) {
+            return host;
+        }
+
+        // Get the list of files into a map.
+        let fileMap: {[k: string]: boolean} = {};
+
+        // Just put the directory of the files in the known directories list.
+        // We don't rely on the behavior of walking up the directories to find
+        // the node_modules. (This part may not work for opensource)
+        let directoryMap: {[k: string]: boolean} = {};
+        let rootDirs = options.rootDirs;
+
+        // Add all the rootDirs to the known directories list.
+        rootDirs.forEach(d => {
+            logger.info('Adding rootdir: ' + d);
+            directoryMap[d] = true;
+        });
+
+        // Add the tsconfig.json as a valid project file.
+        fileMap[tsconfigPath] = true;
+
+        // For each file add to the filesMap and add their directory
+        // (and few directories above them) to the directoryMap.
+        fileNames.forEach(f => {
+            f = proxyHost.resolvePath(f);
+            logger.info('Adding file: ' + f);
+            fileMap[f] = true;
+            // TODO(viks): How deep should we go? Is 2 enough?
+            for (let i = 0; i < 2; i++) {
+                f = getDirectoryPath(f);
+                if (f) {
+                    logger.info('Adding dir: ' + getDirectoryPath(f));
+                    directoryMap[f] = true;
+                } else {
+                    break;
+                }
+            }
+        });
+
+        // Override the fileExists in the ServerHost to reply using the fileMap
+        // instead of hitting the (network) file system.
+        proxyHost.fileExists = (path: string) => {
+            path = proxyHost.resolvePath(path);
+            if (path in fileMap) {
+                // File found in map!
+                logger.info('Found: ' + path);
+                return true;
+            } else {
+                // Only ever allow looking in the filesystem for files inside
+                // the project dir. Allows for discovery of new source files
+                // in the project without having to rebuild tsconfig.
+                // Skip generated files since the tsconfig would have to generated anyways
+                // while regenerating these.
+                if (!isGenerated(path)) {
+                    for (const rootDir of rootDirs) {
+                        if (path.indexOf(rootDir) === 0) {
+                            logger.info('Search: ' + path);
+                            return host.fileExists(path);
+                        }
+                    }
+                }
+            }
+            // File not in map. Just return false without hitting file system.
+            logger.info('Did not find: ' + path);
+            return false;
+        }
+
+        // Override the directoryExists in the ServerHost to reply using the
+        // directoryMap without hitting the file system.
+        proxyHost.directoryExists = (path: string) => {
+            path = proxyHost.resolvePath(path);
+            if (path in directoryMap) {
+                logger.info('Dir Found: ' + path);
+                return true;
+            }
+            logger.info('Dir NOT Found: ' + path);
+            return false;
+        }
+
+        return proxyHost;
+    }
+}
diff --git a/src/server/project.ts b/src/server/project.ts
index ac56a6e3b9802..a8b7570abcb21 100644
--- a/src/server/project.ts
+++ b/src/server/project.ts
@@ -4,6 +4,7 @@
 /// <reference path="lsHost.ts"/>
 /// <reference path="typingsCache.ts"/>
 /// <reference path="builder.ts"/>
+/// <reference path="g3ServerHostProxy.ts"/>
 
 namespace ts.server {
 
@@ -119,6 +120,8 @@ namespace ts.server {
         // wrapper over the real language service that will suppress all semantic operations
         protected languageService: LanguageService;
 
+        public readonly proxyHost: ServerHost;
+
         public languageServiceEnabled = true;
 
         protected readonly lsHost: LSHost;
@@ -202,7 +205,18 @@ namespace ts.server {
 
             this.setInternalCompilerOptionsForEmittingJsFiles();
 
-            this.lsHost = new LSHost(this.projectService.host, this, this.projectService.cancellationToken);
+            // Create a proxy server host that uses the files list to respond to
+            // fileExists and directoryExists so as to avoid going to the
+            // file system every time.
+            this.proxyHost = this.projectService.host;
+            if (projectKind === ProjectKind.Configured && hasExplicitListOfFiles) {
+                this.proxyHost = getG3ServerHostProxy(
+                    projectName,
+                    this.projectService.host,
+                    this.projectService.logger);
+            }
+
+            this.lsHost = new LSHost(this.proxyHost, this, this.projectService.cancellationToken);
             this.lsHost.setCompilationSettings(this.compilerOptions);
 
             this.languageService = ts.createLanguageService(this.lsHost, this.documentRegistry);
@@ -727,7 +741,7 @@ namespace ts.server {
             }
 
             const allFileNames = arrayFrom(referencedFiles.keys()) as Path[];
-            return filter(allFileNames, file => this.projectService.host.fileExists(file));
+            return filter(allFileNames, file => this.proxyHost.fileExists(file));
         }
 
         // remove a root file from project
diff --git a/src/server/tsconfig.json b/src/server/tsconfig.json
index b0eb4965ea687..14a2a58da16ff 100644
--- a/src/server/tsconfig.json
+++ b/src/server/tsconfig.json
@@ -17,6 +17,7 @@
         "scriptInfo.ts",
         "lsHost.ts",
         "typingsCache.ts",
+        "g3ServerHostProxy.ts",
         "project.ts",
         "editorServices.ts",
         "protocol.ts",