diff --git a/src/compiler/commandLineParser.ts b/src/compiler/commandLineParser.ts
index 7440358709e..be72b205131 100644
--- a/src/compiler/commandLineParser.ts
+++ b/src/compiler/commandLineParser.ts
@@ -766,6 +766,7 @@ namespace ts {
         {
             name: "resolveJsonModule",
             type: "boolean",
+            affectsModuleResolution: true,
             category: Diagnostics.Advanced_Options,
             description: Diagnostics.Include_modules_imported_with_json_extension
         },
diff --git a/src/testRunner/unittests/tscWatch/programUpdates.ts b/src/testRunner/unittests/tscWatch/programUpdates.ts
index b1074c7b9a2..163ba1085ea 100644
--- a/src/testRunner/unittests/tscWatch/programUpdates.ts
+++ b/src/testRunner/unittests/tscWatch/programUpdates.ts
@@ -1228,6 +1228,34 @@ export function f(p: C) { return p; }`
             ]
         });
 
+        verifyTscWatch({
+            scenario,
+            subScenario: "updates moduleResolution when resolveJsonModule changes",
+            commandLineArgs: ["-w"],
+            sys: () => {
+                const aFile: File = {
+                    path: `${projectRoot}/a.ts`,
+                    content: `import * as data from './data.json'`
+                };
+                const jsonFile: File = {
+                    path: `${projectRoot}/data.json`,
+                    content: `{ "foo": 1 }`
+                };
+                const config: File = {
+                    path: `${projectRoot}/tsconfig.json`,
+                    content: JSON.stringify({ compilerOptions: { moduleResolution: "node" } })
+                };
+                return createWatchedSystem([aFile, jsonFile, config, libFile], { currentDirectory: projectRoot });
+            },
+            changes: [
+                sys => {
+                    sys.writeFile(`${projectRoot}/tsconfig.json`, JSON.stringify({ compilerOptions: { moduleResolution: "node", resolveJsonModule: true } }));
+                    sys.runQueuedTimeoutCallbacks();
+                    return "Enable resolveJsonModule";
+                },
+            ]
+        });
+
         verifyTscWatch({
             scenario,
             subScenario: "updates errors when ambient modules of program changes",
diff --git a/tests/baselines/reference/tscWatch/programUpdates/updates-moduleResolution-when-resolveJsonModule-changes.js b/tests/baselines/reference/tscWatch/programUpdates/updates-moduleResolution-when-resolveJsonModule-changes.js
new file mode 100644
index 00000000000..5db992857c3
--- /dev/null
+++ b/tests/baselines/reference/tscWatch/programUpdates/updates-moduleResolution-when-resolveJsonModule-changes.js
@@ -0,0 +1,123 @@
+/a/lib/tsc.js -w
+//// [/user/username/projects/myproject/a.ts]
+import * as data from './data.json'
+
+//// [/user/username/projects/myproject/data.json]
+{ "foo": 1 }
+
+//// [/user/username/projects/myproject/tsconfig.json]
+{"compilerOptions":{"moduleResolution":"node"}}
+
+//// [/a/lib/lib.d.ts]
+/// <reference no-default-lib="true"/>
+interface Boolean {}
+interface Function {}
+interface CallableFunction {}
+interface NewableFunction {}
+interface IArguments {}
+interface Number { toExponential: any; }
+interface Object {}
+interface RegExp {}
+interface String { charAt: any; }
+interface Array<T> { length: number; [n: number]: T; }
+
+//// [/user/username/projects/myproject/a.js]
+"use strict";
+exports.__esModule = true;
+
+
+
+Output::
+>> Screen clear
+12:00:23 AM - Starting compilation in watch mode...
+
+
+a.ts(1,23): error TS2732: Cannot find module './data.json'. Consider using '--resolveJsonModule' to import module with '.json' extension
+
+
+12:00:26 AM - Found 1 error. Watching for file changes.
+
+
+Program root files: ["/user/username/projects/myproject/a.ts"]
+Program options: {"moduleResolution":2,"watch":true,"configFilePath":"/user/username/projects/myproject/tsconfig.json"}
+Program files::
+/a/lib/lib.d.ts
+/user/username/projects/myproject/a.ts
+
+Semantic diagnostics in builder refreshed for::
+/a/lib/lib.d.ts
+/user/username/projects/myproject/a.ts
+
+WatchedFiles::
+/user/username/projects/myproject/tsconfig.json:
+  {"pollingInterval":250}
+/user/username/projects/myproject/a.ts:
+  {"pollingInterval":250}
+/a/lib/lib.d.ts:
+  {"pollingInterval":250}
+
+FsWatches::
+/user/username/projects/myproject:
+  {"fallbackPollingInterval":500,"fallbackOptions":{"watchFile":"PriorityPollingInterval"}}
+
+FsWatchesRecursive::
+/user/username/projects/myproject/data.json:
+  {"fallbackPollingInterval":500,"fallbackOptions":{"watchFile":"PriorityPollingInterval"}}
+/user/username/projects/myproject/node_modules/@types:
+  {"fallbackPollingInterval":500,"fallbackOptions":{"watchFile":"PriorityPollingInterval"}}
+/user/username/projects/myproject:
+  {"fallbackPollingInterval":500,"fallbackOptions":{"watchFile":"PriorityPollingInterval"}}
+
+exitCode:: ExitStatus.undefined
+
+Change:: Enable resolveJsonModule
+
+//// [/user/username/projects/myproject/tsconfig.json]
+{"compilerOptions":{"moduleResolution":"node","resolveJsonModule":true}}
+
+//// [/user/username/projects/myproject/a.js] file written with same contents
+
+Output::
+>> Screen clear
+12:00:30 AM - File change detected. Starting incremental compilation...
+
+
+
+12:00:34 AM - Found 0 errors. Watching for file changes.
+
+
+Program root files: ["/user/username/projects/myproject/a.ts"]
+Program options: {"moduleResolution":2,"resolveJsonModule":true,"watch":true,"configFilePath":"/user/username/projects/myproject/tsconfig.json"}
+Program files::
+/a/lib/lib.d.ts
+/user/username/projects/myproject/data.json
+/user/username/projects/myproject/a.ts
+
+Semantic diagnostics in builder refreshed for::
+/a/lib/lib.d.ts
+/user/username/projects/myproject/data.json
+/user/username/projects/myproject/a.ts
+
+WatchedFiles::
+/user/username/projects/myproject/tsconfig.json:
+  {"pollingInterval":250}
+/user/username/projects/myproject/a.ts:
+  {"pollingInterval":250}
+/a/lib/lib.d.ts:
+  {"pollingInterval":250}
+/user/username/projects/myproject/data.json:
+  {"pollingInterval":250}
+
+FsWatches::
+/user/username/projects/myproject:
+  {"fallbackPollingInterval":500,"fallbackOptions":{"watchFile":"PriorityPollingInterval"}}
+
+FsWatchesRecursive::
+/user/username/projects/myproject:
+  {"fallbackPollingInterval":500,"fallbackOptions":{"watchFile":"PriorityPollingInterval"}}
+/user/username/projects/myproject/data.json:
+  {"fallbackPollingInterval":500,"fallbackOptions":{"watchFile":"PriorityPollingInterval"}}
+/user/username/projects/myproject/node_modules/@types:
+  {"fallbackPollingInterval":500,"fallbackOptions":{"watchFile":"PriorityPollingInterval"}}
+
+exitCode:: ExitStatus.undefined