diff --git a/src/compiler/commandLineParser.ts b/src/compiler/commandLineParser.ts
index 76d806fa13c39..1f4657bcbcea3 100644
--- a/src/compiler/commandLineParser.ts
+++ b/src/compiler/commandLineParser.ts
@@ -77,6 +77,14 @@ namespace ts {
             shortName: "?",
             type: "boolean"
         },
+        {
+            name: "watch",
+            shortName: "w",
+            type: "boolean",
+            showInSimplifiedHelpView: true,
+            category: Diagnostics.Command_line_Options,
+            description: Diagnostics.Watch_input_files,
+        },
         {
             name: "preserveWatchOutput",
             type: "boolean",
@@ -96,13 +104,12 @@ namespace ts {
             category: Diagnostics.Advanced_Options,
             description: Diagnostics.Print_names_of_generated_files_part_of_the_compilation
         },
+
         {
-            name: "watch",
-            shortName: "w",
+            name: "traceResolution",
             type: "boolean",
-            showInSimplifiedHelpView: true,
-            category: Diagnostics.Command_line_Options,
-            description: Diagnostics.Watch_input_files,
+            category: Diagnostics.Advanced_Options,
+            description: Diagnostics.Enable_tracing_of_the_name_resolution_process
         },
     ];
 
@@ -581,12 +588,6 @@ namespace ts {
             category: Diagnostics.Advanced_Options,
             description: Diagnostics.Show_verbose_diagnostic_information
         },
-        {
-            name: "traceResolution",
-            type: "boolean",
-            category: Diagnostics.Advanced_Options,
-            description: Diagnostics.Enable_tracing_of_the_name_resolution_process
-        },
         {
             name: "resolveJsonModule",
             type: "boolean",
diff --git a/src/compiler/transformers/declarations.ts b/src/compiler/transformers/declarations.ts
index 5312efb5aac03..9d9da9a93f4e4 100644
--- a/src/compiler/transformers/declarations.ts
+++ b/src/compiler/transformers/declarations.ts
@@ -530,6 +530,17 @@ namespace ts {
                     if (symbol) {
                         (exportedModulesFromDeclarationEmit || (exportedModulesFromDeclarationEmit = [])).push(symbol);
                     }
+                    if ((options.outDir || options.declarationDir) && pathIsRelative(input.text) && currentSourceFile.redirectedReferences) {
+                        const normalizedTargetPath = getNormalizedAbsolutePath(input.text, getDirectoryPath(currentSourceFile.fileName));
+                        for (const ext of [Extension.Ts, Extension.Tsx]) {
+                            const probePath = normalizedTargetPath + ext;
+                            if (currentSourceFile.redirectedReferences.indexOf(probePath) >= 0) {
+                                const outputDir = getDirectoryPath(getOutputPathsFor(currentSourceFile, host, /*forceDtsPaths*/ true).declarationFilePath!);
+                                const relativePath = getRelativePathFromDirectory(outputDir, normalizedTargetPath, host.getCanonicalFileName);
+                                return createLiteral(relativePath);
+                            }
+                        }
+                    }
                 }
             }
             return input;
diff --git a/src/testRunner/unittests/tsbuild.ts b/src/testRunner/unittests/tsbuild.ts
index f54e3c93215f9..f173f2fb85eca 100644
--- a/src/testRunner/unittests/tsbuild.ts
+++ b/src/testRunner/unittests/tsbuild.ts
@@ -3,7 +3,7 @@ namespace ts {
     export namespace Sample1 {
         tick();
         const projFs = loadProjectFromDisk("tests/projects/sample1");
-
+        const sample1ProjectOutput = loadOutputProjectFromDisk("sample1");
         const allExpectedOutputs = ["/src/tests/index.js",
             "/src/core/index.js", "/src/core/index.d.ts", "/src/core/index.d.ts.map",
             "/src/logic/index.js", "/src/logic/index.js.map", "/src/logic/index.d.ts"];
@@ -17,11 +17,34 @@ namespace ts {
                 host.clearDiagnostics();
                 builder.buildAllProjects();
                 host.assertDiagnosticMessages(/*empty*/);
+                // Check for outputs
+                verifyOutputsFs(fs, sample1ProjectOutput, "/src");
+            });
 
-                // Check for outputs. Not an exhaustive list
-                for (const output of allExpectedOutputs) {
-                    assert(fs.existsSync(output), `Expect file ${output} to exist`);
-                }
+            it("builds correctly when outDir is specified", () => {
+                const fs = projFs.shadow();
+                fs.writeFileSync("/src/logic/tsconfig.json", JSON.stringify({
+                    compilerOptions: { composite: true, declaration: true, outDir: "outDir" },
+                    references: [{ path: "../core" }]
+                }));
+                const host = new fakes.SolutionBuilderHost(fs);
+                const builder = createSolutionBuilder(host, ["/src/tests"], { });
+                builder.buildAllProjects();
+                host.assertDiagnosticMessages(/*empty*/);
+                verifyOutputs(fs, "sample1WithLogicOutDir");
+            });
+
+            it("builds correctly when declarationDir is specified", () => {
+                const fs = projFs.shadow();
+                fs.writeFileSync("/src/logic/tsconfig.json", JSON.stringify({
+                    compilerOptions: { composite: true, declaration: true, declarationDir: "out/decls" },
+                    references: [{ path: "../core" }]
+                }));
+                const host = new fakes.SolutionBuilderHost(fs);
+                const builder = createSolutionBuilder(host, ["/src/tests"], {});
+                builder.buildAllProjects();
+                host.assertDiagnosticMessages(/*empty*/);
+                verifyOutputs(fs, "sample1WithLogicDeclarationDir");
             });
         });
 
@@ -34,9 +57,7 @@ namespace ts {
                 host.assertDiagnosticMessages(Diagnostics.A_non_dry_build_would_build_project_0, Diagnostics.A_non_dry_build_would_build_project_0, Diagnostics.A_non_dry_build_would_build_project_0);
 
                 // Check for outputs to not be written. Not an exhaustive list
-                for (const output of allExpectedOutputs) {
-                    assert(!fs.existsSync(output), `Expect file ${output} to not exist`);
-                }
+                verifyOutputsNotExistOnFs(fs, sample1ProjectOutput, "/src");
             });
 
             it("indicates that it would skip builds during a dry build", () => {
@@ -62,14 +83,10 @@ namespace ts {
                 const builder = createSolutionBuilder(host, ["/src/tests"], { dry: false, force: false, verbose: false });
                 builder.buildAllProjects();
                 // Verify they exist
-                for (const output of allExpectedOutputs) {
-                    assert(fs.existsSync(output), `Expect file ${output} to exist`);
-                }
+                verifyOutputsFs(fs, sample1ProjectOutput, "/src");
                 builder.cleanAllProjects();
                 // Verify they are gone
-                for (const output of allExpectedOutputs) {
-                    assert(!fs.existsSync(output), `Expect file ${output} to not exist`);
-                }
+                verifyOutputsNotExistOnFs(fs, sample1ProjectOutput, "/src");
                 // Subsequent clean shouldn't throw / etc
                 builder.cleanAllProjects();
             });
@@ -529,4 +546,50 @@ export class cNew {}`);
         fs.makeReadonly();
         return fs;
     }
+
+    function loadOutputProjectFromDisk(project: string): vfs.FileSystem {
+        const resolver = vfs.createResolver(Harness.IO);
+        const fs = new vfs.FileSystem(/*ignoreCase*/ true, {
+            files: {
+                ["/src"]: new vfs.Mount(vpath.resolve(Harness.IO.getWorkspaceRoot(), `tests/baselines/reference/projects/${project}`), resolver)
+            },
+            cwd: "/",
+            time,
+        });
+        fs.makeReadonly();
+        return fs;
+    }
+
+    function verifyOutputs(buildFs: vfs.FileSystem, expectedOutputProject: string) {
+        const fs = loadOutputProjectFromDisk(expectedOutputProject);
+        verifyOutputsFs(buildFs, fs, "/src");
+    }
+
+    function verifyOutputsFs(buildFs: vfs.FileSystem, expectedOutputFs: vfs.FileSystem, directory: string) {
+        withOutputFs(expectedOutputFs, directory, outputFile => {
+            const actual = buildFs.readFileSync(outputFile, "utf8");
+            const expected = expectedOutputFs.readFileSync(outputFile, "utf8");
+            assert.equal(actual, expected, `File contents of ${outputFile} expected to be:
+actual: ${actual}
+expected: ${expected}`);
+        });
+    }
+
+    function verifyOutputsNotExistOnFs(buildFs: vfs.FileSystem, expectedOutputFs: vfs.FileSystem, directory: string) {
+        withOutputFs(expectedOutputFs, directory, outputFile =>
+            assert(!buildFs.existsSync(outputFile), `Expect file ${outputFile} to not exist`));
+    }
+
+    function withOutputFs(expectedOutputFs: vfs.FileSystem, directory: string, actionOnFile: (outputFile: string) => void) {
+        const children = expectedOutputFs.readdirSync(directory);
+        for (const child of children) {
+            const fullName = `${directory}/${child}`;
+            if (expectedOutputFs.statSync(fullName).isFile()) {
+                actionOnFile(fullName);
+            }
+            else {
+                withOutputFs(expectedOutputFs, fullName, actionOnFile);
+            }
+        }
+    }
 }
diff --git a/src/testRunner/unittests/tsbuildWatchMode.ts b/src/testRunner/unittests/tsbuildWatchMode.ts
index f0745a373a023..2ffe51189d86a 100644
--- a/src/testRunner/unittests/tsbuildWatchMode.ts
+++ b/src/testRunner/unittests/tsbuildWatchMode.ts
@@ -486,11 +486,7 @@ export function gfoo() {
                     solutionBuilder.buildInvalidatedProject();
 
                     host.checkTimeoutQueueLengthAndRun(1);
-                    checkOutputErrorsIncremental(host, [
-                        // TODO: #26036
-                        // The error is reported in d.ts file because it isnt resolved from ts file path, but is resolved from .d.ts file
-                        "sample1/logic/decls/index.d.ts(2,22): error TS2307: Cannot find module '../core/anotherModule'.\n"
-                    ]);
+                    checkOutputErrorsIncremental(host, emptyArray);
                     checkProgramActualFiles(watch().getProgram(), [tests[1].path, libFile.path, coreIndexDts, coreAnotherModuleDts, projectFilePath(SubProject.logic, "decls/index.d.ts")]);
                 });
             });
diff --git a/tests/baselines/reference/projects/sample1/core/anotherModule.d.ts b/tests/baselines/reference/projects/sample1/core/anotherModule.d.ts
new file mode 100644
index 0000000000000..e1ec3b8a29727
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1/core/anotherModule.d.ts
@@ -0,0 +1,2 @@
+export declare const World = "hello";
+//# sourceMappingURL=anotherModule.d.ts.map
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1/core/anotherModule.d.ts.map b/tests/baselines/reference/projects/sample1/core/anotherModule.d.ts.map
new file mode 100644
index 0000000000000..a38c4e2d4e132
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1/core/anotherModule.d.ts.map
@@ -0,0 +1 @@
+{"version":3,"file":"anotherModule.d.ts","sourceRoot":"","sources":["anotherModule.ts"],"names":[],"mappings":"AAAA,eAAO,MAAM,KAAK,UAAU,CAAC"}
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1/core/anotherModule.js b/tests/baselines/reference/projects/sample1/core/anotherModule.js
new file mode 100644
index 0000000000000..45ee93feef700
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1/core/anotherModule.js
@@ -0,0 +1,3 @@
+"use strict";
+exports.__esModule = true;
+exports.World = "hello";
diff --git a/tests/baselines/reference/projects/sample1/core/index.d.ts b/tests/baselines/reference/projects/sample1/core/index.d.ts
new file mode 100644
index 0000000000000..de0ac08cd4480
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1/core/index.d.ts
@@ -0,0 +1,4 @@
+export declare const someString: string;
+export declare function leftPad(s: string, n: number): string;
+export declare function multiply(a: number, b: number): number;
+//# sourceMappingURL=index.d.ts.map
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1/core/index.d.ts.map b/tests/baselines/reference/projects/sample1/core/index.d.ts.map
new file mode 100644
index 0000000000000..d697036103cd3
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1/core/index.d.ts.map
@@ -0,0 +1 @@
+{"version":3,"file":"index.d.ts","sourceRoot":"","sources":["index.ts"],"names":[],"mappings":"AAAA,eAAO,MAAM,UAAU,EAAE,MAAsB,CAAC;AAChD,wBAAgB,OAAO,CAAC,CAAC,EAAE,MAAM,EAAE,CAAC,EAAE,MAAM,UAAmB;AAC/D,wBAAgB,QAAQ,CAAC,CAAC,EAAE,MAAM,EAAE,CAAC,EAAE,MAAM,UAAmB"}
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1/core/index.js b/tests/baselines/reference/projects/sample1/core/index.js
new file mode 100644
index 0000000000000..0487b226026fe
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1/core/index.js
@@ -0,0 +1,7 @@
+"use strict";
+exports.__esModule = true;
+exports.someString = "HELLO WORLD";
+function leftPad(s, n) { return s + n; }
+exports.leftPad = leftPad;
+function multiply(a, b) { return a * b; }
+exports.multiply = multiply;
diff --git a/tests/baselines/reference/projects/sample1/logic/index.d.ts b/tests/baselines/reference/projects/sample1/logic/index.d.ts
new file mode 100644
index 0000000000000..cbb6b701ca36f
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1/logic/index.d.ts
@@ -0,0 +1,3 @@
+export declare function getSecondsInDay(): number;
+import * as mod from '../core/anotherModule';
+export declare const m: typeof mod;
diff --git a/tests/baselines/reference/projects/sample1/logic/index.js b/tests/baselines/reference/projects/sample1/logic/index.js
new file mode 100644
index 0000000000000..d3bee3b2ed1e1
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1/logic/index.js
@@ -0,0 +1,10 @@
+"use strict";
+exports.__esModule = true;
+var c = require("../core/index");
+function getSecondsInDay() {
+    return c.multiply(10, 15);
+}
+exports.getSecondsInDay = getSecondsInDay;
+var mod = require("../core/anotherModule");
+exports.m = mod;
+//# sourceMappingURL=index.js.map
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1/logic/index.js.map b/tests/baselines/reference/projects/sample1/logic/index.js.map
new file mode 100644
index 0000000000000..5184eb9408bc3
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1/logic/index.js.map
@@ -0,0 +1 @@
+{"version":3,"file":"index.js","sourceRoot":"","sources":["index.ts"],"names":[],"mappings":";;AAAA,iCAAmC;AACnC,SAAgB,eAAe;IAC3B,OAAO,CAAC,CAAC,QAAQ,CAAC,EAAE,EAAE,EAAE,CAAC,CAAC;AAC9B,CAAC;AAFD,0CAEC;AACD,2CAA6C;AAChC,QAAA,CAAC,GAAG,GAAG,CAAC"}
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1/tests/index.d.ts b/tests/baselines/reference/projects/sample1/tests/index.d.ts
new file mode 100644
index 0000000000000..8c17a434e8a59
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1/tests/index.d.ts
@@ -0,0 +1,2 @@
+import * as mod from '../core/anotherModule';
+export declare const m: typeof mod;
diff --git a/tests/baselines/reference/projects/sample1/tests/index.js b/tests/baselines/reference/projects/sample1/tests/index.js
new file mode 100644
index 0000000000000..ab35590f144b6
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1/tests/index.js
@@ -0,0 +1,8 @@
+"use strict";
+exports.__esModule = true;
+var c = require("../core/index");
+var logic = require("../logic/index");
+c.leftPad("", 10);
+logic.getSecondsInDay();
+var mod = require("../core/anotherModule");
+exports.m = mod;
diff --git a/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/anotherModule.d.ts b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/anotherModule.d.ts
new file mode 100644
index 0000000000000..e1ec3b8a29727
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/anotherModule.d.ts
@@ -0,0 +1,2 @@
+export declare const World = "hello";
+//# sourceMappingURL=anotherModule.d.ts.map
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/anotherModule.d.ts.map b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/anotherModule.d.ts.map
new file mode 100644
index 0000000000000..a38c4e2d4e132
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/anotherModule.d.ts.map
@@ -0,0 +1 @@
+{"version":3,"file":"anotherModule.d.ts","sourceRoot":"","sources":["anotherModule.ts"],"names":[],"mappings":"AAAA,eAAO,MAAM,KAAK,UAAU,CAAC"}
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/anotherModule.js b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/anotherModule.js
new file mode 100644
index 0000000000000..45ee93feef700
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/anotherModule.js
@@ -0,0 +1,3 @@
+"use strict";
+exports.__esModule = true;
+exports.World = "hello";
diff --git a/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/index.d.ts b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/index.d.ts
new file mode 100644
index 0000000000000..de0ac08cd4480
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/index.d.ts
@@ -0,0 +1,4 @@
+export declare const someString: string;
+export declare function leftPad(s: string, n: number): string;
+export declare function multiply(a: number, b: number): number;
+//# sourceMappingURL=index.d.ts.map
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/index.d.ts.map b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/index.d.ts.map
new file mode 100644
index 0000000000000..d697036103cd3
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/index.d.ts.map
@@ -0,0 +1 @@
+{"version":3,"file":"index.d.ts","sourceRoot":"","sources":["index.ts"],"names":[],"mappings":"AAAA,eAAO,MAAM,UAAU,EAAE,MAAsB,CAAC;AAChD,wBAAgB,OAAO,CAAC,CAAC,EAAE,MAAM,EAAE,CAAC,EAAE,MAAM,UAAmB;AAC/D,wBAAgB,QAAQ,CAAC,CAAC,EAAE,MAAM,EAAE,CAAC,EAAE,MAAM,UAAmB"}
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/index.js b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/index.js
new file mode 100644
index 0000000000000..0487b226026fe
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/core/index.js
@@ -0,0 +1,7 @@
+"use strict";
+exports.__esModule = true;
+exports.someString = "HELLO WORLD";
+function leftPad(s, n) { return s + n; }
+exports.leftPad = leftPad;
+function multiply(a, b) { return a * b; }
+exports.multiply = multiply;
diff --git a/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/logic/index.js b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/logic/index.js
new file mode 100644
index 0000000000000..0cada8039fddf
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/logic/index.js
@@ -0,0 +1,9 @@
+"use strict";
+exports.__esModule = true;
+var c = require("../core/index");
+function getSecondsInDay() {
+    return c.multiply(10, 15);
+}
+exports.getSecondsInDay = getSecondsInDay;
+var mod = require("../core/anotherModule");
+exports.m = mod;
diff --git a/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/logic/out/decls/index.d.ts b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/logic/out/decls/index.d.ts
new file mode 100644
index 0000000000000..18a34aaa2fc39
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/logic/out/decls/index.d.ts
@@ -0,0 +1,3 @@
+export declare function getSecondsInDay(): number;
+import * as mod from "../../../core/anotherModule";
+export declare const m: typeof mod;
diff --git a/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/tests/index.d.ts b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/tests/index.d.ts
new file mode 100644
index 0000000000000..8c17a434e8a59
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/tests/index.d.ts
@@ -0,0 +1,2 @@
+import * as mod from '../core/anotherModule';
+export declare const m: typeof mod;
diff --git a/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/tests/index.js b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/tests/index.js
new file mode 100644
index 0000000000000..ab35590f144b6
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicDeclarationDir/tests/index.js
@@ -0,0 +1,8 @@
+"use strict";
+exports.__esModule = true;
+var c = require("../core/index");
+var logic = require("../logic/index");
+c.leftPad("", 10);
+logic.getSecondsInDay();
+var mod = require("../core/anotherModule");
+exports.m = mod;
diff --git a/tests/baselines/reference/projects/sample1WithLogicOutDir/core/anotherModule.d.ts b/tests/baselines/reference/projects/sample1WithLogicOutDir/core/anotherModule.d.ts
new file mode 100644
index 0000000000000..e1ec3b8a29727
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicOutDir/core/anotherModule.d.ts
@@ -0,0 +1,2 @@
+export declare const World = "hello";
+//# sourceMappingURL=anotherModule.d.ts.map
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1WithLogicOutDir/core/anotherModule.d.ts.map b/tests/baselines/reference/projects/sample1WithLogicOutDir/core/anotherModule.d.ts.map
new file mode 100644
index 0000000000000..a38c4e2d4e132
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicOutDir/core/anotherModule.d.ts.map
@@ -0,0 +1 @@
+{"version":3,"file":"anotherModule.d.ts","sourceRoot":"","sources":["anotherModule.ts"],"names":[],"mappings":"AAAA,eAAO,MAAM,KAAK,UAAU,CAAC"}
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1WithLogicOutDir/core/anotherModule.js b/tests/baselines/reference/projects/sample1WithLogicOutDir/core/anotherModule.js
new file mode 100644
index 0000000000000..45ee93feef700
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicOutDir/core/anotherModule.js
@@ -0,0 +1,3 @@
+"use strict";
+exports.__esModule = true;
+exports.World = "hello";
diff --git a/tests/baselines/reference/projects/sample1WithLogicOutDir/core/index.d.ts b/tests/baselines/reference/projects/sample1WithLogicOutDir/core/index.d.ts
new file mode 100644
index 0000000000000..de0ac08cd4480
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicOutDir/core/index.d.ts
@@ -0,0 +1,4 @@
+export declare const someString: string;
+export declare function leftPad(s: string, n: number): string;
+export declare function multiply(a: number, b: number): number;
+//# sourceMappingURL=index.d.ts.map
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1WithLogicOutDir/core/index.d.ts.map b/tests/baselines/reference/projects/sample1WithLogicOutDir/core/index.d.ts.map
new file mode 100644
index 0000000000000..d697036103cd3
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicOutDir/core/index.d.ts.map
@@ -0,0 +1 @@
+{"version":3,"file":"index.d.ts","sourceRoot":"","sources":["index.ts"],"names":[],"mappings":"AAAA,eAAO,MAAM,UAAU,EAAE,MAAsB,CAAC;AAChD,wBAAgB,OAAO,CAAC,CAAC,EAAE,MAAM,EAAE,CAAC,EAAE,MAAM,UAAmB;AAC/D,wBAAgB,QAAQ,CAAC,CAAC,EAAE,MAAM,EAAE,CAAC,EAAE,MAAM,UAAmB"}
\ No newline at end of file
diff --git a/tests/baselines/reference/projects/sample1WithLogicOutDir/core/index.js b/tests/baselines/reference/projects/sample1WithLogicOutDir/core/index.js
new file mode 100644
index 0000000000000..0487b226026fe
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicOutDir/core/index.js
@@ -0,0 +1,7 @@
+"use strict";
+exports.__esModule = true;
+exports.someString = "HELLO WORLD";
+function leftPad(s, n) { return s + n; }
+exports.leftPad = leftPad;
+function multiply(a, b) { return a * b; }
+exports.multiply = multiply;
diff --git a/tests/baselines/reference/projects/sample1WithLogicOutDir/logic/outDir/index.d.ts b/tests/baselines/reference/projects/sample1WithLogicOutDir/logic/outDir/index.d.ts
new file mode 100644
index 0000000000000..8b8a2684b71a7
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicOutDir/logic/outDir/index.d.ts
@@ -0,0 +1,3 @@
+export declare function getSecondsInDay(): number;
+import * as mod from "../../core/anotherModule";
+export declare const m: typeof mod;
diff --git a/tests/baselines/reference/projects/sample1WithLogicOutDir/logic/outDir/index.js b/tests/baselines/reference/projects/sample1WithLogicOutDir/logic/outDir/index.js
new file mode 100644
index 0000000000000..0cada8039fddf
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicOutDir/logic/outDir/index.js
@@ -0,0 +1,9 @@
+"use strict";
+exports.__esModule = true;
+var c = require("../core/index");
+function getSecondsInDay() {
+    return c.multiply(10, 15);
+}
+exports.getSecondsInDay = getSecondsInDay;
+var mod = require("../core/anotherModule");
+exports.m = mod;
diff --git a/tests/baselines/reference/projects/sample1WithLogicOutDir/tests/index.d.ts b/tests/baselines/reference/projects/sample1WithLogicOutDir/tests/index.d.ts
new file mode 100644
index 0000000000000..8c17a434e8a59
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicOutDir/tests/index.d.ts
@@ -0,0 +1,2 @@
+import * as mod from '../core/anotherModule';
+export declare const m: typeof mod;
diff --git a/tests/baselines/reference/projects/sample1WithLogicOutDir/tests/index.js b/tests/baselines/reference/projects/sample1WithLogicOutDir/tests/index.js
new file mode 100644
index 0000000000000..ab35590f144b6
--- /dev/null
+++ b/tests/baselines/reference/projects/sample1WithLogicOutDir/tests/index.js
@@ -0,0 +1,8 @@
+"use strict";
+exports.__esModule = true;
+var c = require("../core/index");
+var logic = require("../logic/index");
+c.leftPad("", 10);
+logic.getSecondsInDay();
+var mod = require("../core/anotherModule");
+exports.m = mod;