diff --git a/src/compiler/resolutionCache.ts b/src/compiler/resolutionCache.ts
index 0b6b676f7f6..0946948f43d 100644
--- a/src/compiler/resolutionCache.ts
+++ b/src/compiler/resolutionCache.ts
@@ -361,9 +361,13 @@ namespace ts {
                 return { dir: rootDir, dirPath: rootPath };
             }
 
-            let dir = getDirectoryPath(getNormalizedAbsolutePath(failedLookupLocation, getCurrentDirectory()));
-            let dirPath = getDirectoryPath(failedLookupLocationPath);
+            return getDirectoryToWatchFromFailedLookupLocationDirectory(
+                getDirectoryPath(getNormalizedAbsolutePath(failedLookupLocation, getCurrentDirectory())),
+                getDirectoryPath(failedLookupLocationPath)
+            );
+        }
 
+        function getDirectoryToWatchFromFailedLookupLocationDirectory(dir: string, dirPath: Path) {
             // If directory path contains node module, get the most parent node_modules directory for watching
             while (stringContains(dirPath, "/node_modules/")) {
                 dir = getDirectoryPath(dir);
@@ -621,7 +625,19 @@ namespace ts {
             clearMap(typeRootsWatches, closeFileWatcher);
         }
 
-        function createTypeRootsWatch(_typeRootPath: string, typeRoot: string): FileWatcher {
+        function getDirectoryToWatchFailedLookupLocationFromTypeRoot(typeRoot: string, typeRootPath: Path): Path | undefined {
+            if (allFilesHaveInvalidatedResolution) {
+                return undefined;
+            }
+
+            if (isInDirectoryPath(rootPath, typeRootPath)) {
+                return rootPath;
+            }
+            const { dirPath, ignore } = getDirectoryToWatchFromFailedLookupLocationDirectory(typeRoot, typeRootPath);
+            return !ignore && directoryWatchesOfFailedLookups.has(dirPath) && dirPath;
+        }
+
+        function createTypeRootsWatch(typeRootPath: Path, typeRoot: string): FileWatcher {
             // Create new watch and recursive info
             return resolutionHost.watchTypeRootsDirectory(typeRoot, fileOrDirectory => {
                 const fileOrDirectoryPath = resolutionHost.toPath(fileOrDirectory);
@@ -634,6 +650,13 @@ namespace ts {
                 // We could potentially store more data here about whether it was/would be really be used or not
                 // and with that determine to trigger compilation but for now this is enough
                 resolutionHost.onChangedAutomaticTypeDirectiveNames();
+
+                // Since directory watchers invoked are flaky, the failed lookup location events might not be triggered
+                // So handle to failed lookup locations here as well to ensure we are invalidating resolutions
+                const dirPath = getDirectoryToWatchFailedLookupLocationFromTypeRoot(typeRoot, typeRootPath);
+                if (dirPath && invalidateResolutionOfFailedLookupLocation(fileOrDirectoryPath, dirPath === fileOrDirectoryPath)) {
+                    resolutionHost.onInvalidatedResolution();
+                }
             }, WatchDirectoryFlags.Recursive);
         }
 
diff --git a/src/harness/unittests/tsserverProjectSystem.ts b/src/harness/unittests/tsserverProjectSystem.ts
index b32bd8d4113..f4e9087643e 100644
--- a/src/harness/unittests/tsserverProjectSystem.ts
+++ b/src/harness/unittests/tsserverProjectSystem.ts
@@ -6294,6 +6294,44 @@ namespace ts.projectSystem {
                 verifyNpmInstall(/*timeoutDuringPartialInstallation*/ false);
             });
         });
+
+        it("when node_modules dont receive event for the @types file addition", () => {
+            const projectLocation = "/user/username/folder/myproject";
+            const app: FileOrFolder = {
+                path: `${projectLocation}/app.ts`,
+                content: `import * as debug from "debug"`
+            };
+            const tsconfig: FileOrFolder = {
+                path: `${projectLocation}/tsconfig.json`,
+                content: ""
+            };
+
+            const files = [app, tsconfig, libFile];
+            const host = createServerHost(files);
+            const service = createProjectService(host);
+            service.openClientFile(app.path);
+
+            const project = service.configuredProjects.get(tsconfig.path);
+            checkProjectActualFiles(project, files.map(f => f.path));
+            assert.deepEqual(project.getLanguageService().getSemanticDiagnostics(app.path).map(diag => diag.messageText), ["Cannot find module 'debug'."]);
+
+            const debugTypesFile: FileOrFolder = {
+                path: `${projectLocation}/node_modules/@types/debug/index.d.ts`,
+                content: "export {}"
+            };
+            files.push(debugTypesFile);
+            // Do not invoke recursive directory watcher for anything other than node_module/@types
+            const invoker = host.invokeWatchedDirectoriesRecursiveCallback;
+            host.invokeWatchedDirectoriesRecursiveCallback = (fullPath, relativePath) => {
+                if (fullPath.endsWith("@types")) {
+                    invoker.call(host, fullPath, relativePath);
+                }
+            };
+            host.reloadFS(files);
+            host.runQueuedTimeoutCallbacks();
+            checkProjectActualFiles(project, files.map(f => f.path));
+            assert.deepEqual(project.getLanguageService().getSemanticDiagnostics(app.path).map(diag => diag.messageText), []);
+        });
     });
 
     describe("tsserverProjectSystem ProjectsChangedInBackground", () => {
diff --git a/src/harness/virtualFileSystemWithWatch.ts b/src/harness/virtualFileSystemWithWatch.ts
index c206d219e2a..cd5f5cf1b18 100644
--- a/src/harness/virtualFileSystemWithWatch.ts
+++ b/src/harness/virtualFileSystemWithWatch.ts
@@ -547,8 +547,8 @@ interface Array<T> {}`
                 // Invoke directory and recursive directory watcher for the folder
                 // Here we arent invoking recursive directory watchers for the base folders
                 // since that is something we would want to do for both file as well as folder we are deleting
-                invokeWatcherCallbacks(this.watchedDirectories.get(fileOrDirectory.path), cb => this.directoryCallback(cb, relativePath));
-                invokeWatcherCallbacks(this.watchedDirectoriesRecursive.get(fileOrDirectory.path), cb => this.directoryCallback(cb, relativePath));
+                this.invokeWatchedDirectoriesCallback(fileOrDirectory.fullPath, relativePath);
+                this.invokeWatchedDirectoriesRecursiveCallback(fileOrDirectory.fullPath, relativePath);
             }
 
             if (basePath !== fileOrDirectory.path) {
@@ -561,9 +561,17 @@ interface Array<T> {}`
             }
         }
 
-        private invokeFileWatcher(fileFullPath: string, eventKind: FileWatcherEventKind) {
-            const callbacks = this.watchedFiles.get(this.toPath(fileFullPath));
-            invokeWatcherCallbacks(callbacks, ({ cb }) => cb(fileFullPath, eventKind));
+        // For overriding the methods
+        invokeWatchedDirectoriesCallback(folderFullPath: string, relativePath: string) {
+            invokeWatcherCallbacks(this.watchedDirectories.get(this.toPath(folderFullPath)), cb => this.directoryCallback(cb, relativePath));
+        }
+
+        invokeWatchedDirectoriesRecursiveCallback(folderFullPath: string, relativePath: string) {
+            invokeWatcherCallbacks(this.watchedDirectoriesRecursive.get(this.toPath(folderFullPath)), cb => this.directoryCallback(cb, relativePath));
+        }
+
+        invokeFileWatcher(fileFullPath: string, eventKind: FileWatcherEventKind, useFileNameInCallback?: boolean) {
+            invokeWatcherCallbacks(this.watchedFiles.get(this.toPath(fileFullPath)), ({ cb, fileName }) => cb(useFileNameInCallback ? fileName : fileFullPath, eventKind));
         }
 
         private getRelativePathToDirectory(directoryFullPath: string, fileFullPath: string) {
@@ -576,8 +584,8 @@ interface Array<T> {}`
         private invokeDirectoryWatcher(folderFullPath: string, fileName: string) {
             const relativePath = this.getRelativePathToDirectory(folderFullPath, fileName);
             // Folder is changed when the directory watcher is invoked
-            invokeWatcherCallbacks(this.watchedFiles.get(this.toPath(folderFullPath)), ({ cb, fileName }) => cb(fileName, FileWatcherEventKind.Changed));
-            invokeWatcherCallbacks(this.watchedDirectories.get(this.toPath(folderFullPath)), cb => this.directoryCallback(cb, relativePath));
+            this.invokeFileWatcher(folderFullPath, FileWatcherEventKind.Changed, /*useFileNameInCallback*/ true);
+            this.invokeWatchedDirectoriesCallback(folderFullPath, relativePath);
             this.invokeRecursiveDirectoryWatcher(folderFullPath, fileName);
         }
 
@@ -590,7 +598,7 @@ interface Array<T> {}`
          */
         private invokeRecursiveDirectoryWatcher(fullPath: string, fileName: string) {
             const relativePath = this.getRelativePathToDirectory(fullPath, fileName);
-            invokeWatcherCallbacks(this.watchedDirectoriesRecursive.get(this.toPath(fullPath)), cb => this.directoryCallback(cb, relativePath));
+            this.invokeWatchedDirectoriesRecursiveCallback(fullPath, relativePath);
             const basePath = getDirectoryPath(fullPath);
             if (this.getCanonicalFileName(fullPath) !== this.getCanonicalFileName(basePath)) {
                 this.invokeRecursiveDirectoryWatcher(basePath, fileName);