diff --git a/src/testRunner/unittests/tsserverProjectSystem.ts b/src/testRunner/unittests/tsserverProjectSystem.ts
index 04720fe42af..262ccdce645 100644
--- a/src/testRunner/unittests/tsserverProjectSystem.ts
+++ b/src/testRunner/unittests/tsserverProjectSystem.ts
@@ -8506,6 +8506,66 @@ new C();`
                 }
             });
         });
+
+        it("when watching directories for failed lookup locations in amd resolution", () => {
+            const projectRoot = "/user/username/projects/project";
+            const nodeFile: File = {
+                path: `${projectRoot}/src/typings/node.d.ts`,
+                content: `
+declare module "fs" {
+    export interface something {
+    }
+}`
+            };
+            const electronFile: File = {
+                path: `${projectRoot}/src/typings/electron.d.ts`,
+                content: `
+declare module 'original-fs' {
+    import * as fs from 'fs';
+    export = fs;
+}`
+            };
+            const srcFile: File = {
+                path: `${projectRoot}/src/somefolder/srcfile.ts`,
+                content: `
+import { x } from "somefolder/module1";
+import { x } from "somefolder/module2";
+const y = x;`
+            };
+            const moduleFile: File = {
+                path: `${projectRoot}/src/somefolder/module1.ts`,
+                content: `
+export const x = 10;`
+            };
+            const configFile: File = {
+                path: `${projectRoot}/src/tsconfig.json`,
+                content: JSON.stringify({
+                    compilerOptions: {
+                        module: "amd",
+                        moduleResolution: "classic",
+                        target: "es5",
+                        outDir: "../out",
+                        baseUrl: "./",
+                        typeRoots: ["typings"]
+
+                    }
+                })
+            };
+            const files = [nodeFile, electronFile, srcFile, moduleFile, configFile, libFile];
+            const host = createServerHost(files);
+            const service = createProjectService(host);
+            service.openClientFile(srcFile.path, srcFile.content, ScriptKind.TS, projectRoot);
+            checkProjectActualFiles(service.configuredProjects.get(configFile.path)!, files.map(f => f.path));
+            checkWatchedFilesDetailed(host, mapDefined(files, f => f === srcFile ? undefined : f.path), 1);
+            checkWatchedDirectories(host, emptyArray, /*recursive*/ false);
+            const expectedWatchedDirectories = createMap<number>();
+            expectedWatchedDirectories.set(`${projectRoot}/src`, 2); // Wild card and failed lookup
+            expectedWatchedDirectories.set(`${projectRoot}/somefolder`, 1); // failed lookup for somefolder/module2
+            expectedWatchedDirectories.set(`${projectRoot}`, 1); // failed lookup for fs
+            expectedWatchedDirectories.set(`${projectRoot}/node_modules`, 1); // failed lookup for with node_modules/@types/fs
+            expectedWatchedDirectories.set(`${projectRoot}/src/typings`, 1); // typeroot directory
+            checkWatchedDirectoriesDetailed(host, expectedWatchedDirectories, /*recursive*/ true);
+        });
     });
 
     describe("tsserverProjectSystem watchDirectories implementation", () => {