diff --git a/src/harness/harness.ts b/src/harness/harness.ts
index 90ffcef07ff..90ca94b4ab6 100644
--- a/src/harness/harness.ts
+++ b/src/harness/harness.ts
@@ -1703,6 +1703,14 @@ module Harness {
         return (Path.getFileName(filePath) === 'lib.d.ts') || (Path.getFileName(filePath) === 'lib.core.d.ts');
     }
 
+    export function getDefaultLibraryFile(): { unitName: string, content: string } {
+        var libFile = Harness.userSpecifiedroot + Harness.libFolder + "/" + "lib.d.ts";
+        return {
+            unitName: libFile,
+            content: IO.readFile(libFile)
+        }
+    }
+
     if (Error) (<any>Error).stackTraceLimit = 1;
 }
 
diff --git a/src/harness/loggedIO.ts b/src/harness/loggedIO.ts
index d9418c0e6ae..8ba38043e78 100644
--- a/src/harness/loggedIO.ts
+++ b/src/harness/loggedIO.ts
@@ -15,6 +15,7 @@ interface IOLog {
     arguments: string[];
     executingPath: string;
     currentDirectory: string;
+    useCustomLibraryFile?: boolean;
     filesRead: {
         path: string;
         codepage: number;
diff --git a/src/harness/rwcRunner.ts b/src/harness/rwcRunner.ts
index c1c3251cf02..49a15112e9f 100644
--- a/src/harness/rwcRunner.ts
+++ b/src/harness/rwcRunner.ts
@@ -32,6 +32,7 @@ module RWC {
             };
             var baseName = /(.*)\/(.*).json/.exec(ts.normalizeSlashes(jsonPath))[2];
             var currentDirectory: string;
+            var useCustomLibraryFile: boolean;
 
             after(() => {
                 // Mocha holds onto the closure environment of the describe callback even after the test is done.
@@ -43,6 +44,10 @@ module RWC {
                 baselineOpts = undefined;
                 baseName = undefined;
                 currentDirectory = undefined;
+                // useCustomLibraryFile is a flag specified in the json object to indicate whether to use built/local/lib.d.ts
+                // or to use lib.d.ts inside the json object. If the flag is true, use the lib.d.ts inside json file
+                // otherwise use the lib.d.ts from built/local
+                useCustomLibraryFile = undefined;
             });
 
             it('can compile', () => {
@@ -51,34 +56,52 @@ module RWC {
 
                 var ioLog: IOLog = JSON.parse(Harness.IO.readFile(jsonPath));
                 currentDirectory = ioLog.currentDirectory;
+                useCustomLibraryFile = ioLog.useCustomLibraryFile;
                 runWithIOLog(ioLog, () => {
                     opts = ts.parseCommandLine(ioLog.arguments);
                     assert.equal(opts.errors.length, 0);
+
+                    // To provide test coverage of output javascript file,
+                    // we will set noEmitOnError flag to be false.
+                    opts.options.noEmitOnError = false;
                 });
 
                 runWithIOLog(ioLog, () => {
                     harnessCompiler.reset();
+
                     // Load the files
                     ts.forEach(opts.fileNames, fileName => {
                         inputFiles.push(getHarnessCompilerInputUnit(fileName));
                     });
 
-                    if (!opts.options.noLib) {
-                        // Find the lib.d.ts file in the input file and add it to the input files list
-                        var libFile = ts.forEach(ioLog.filesRead, fileRead=> Harness.isLibraryFile(fileRead.path) ? fileRead.path : undefined);
-                        if (libFile) {
-                            inputFiles.push(getHarnessCompilerInputUnit(libFile));
-                        }
-                    }
-
-                    ts.forEach(ioLog.filesRead, fileRead => {
+                    // Add files to compilation
+                    for(let fileRead of ioLog.filesRead) {
+                        // Check if the file is already added into the set of input files.
                         var resolvedPath = ts.normalizeSlashes(ts.sys.resolvePath(fileRead.path));
-                        var inInputList = ts.forEach(inputFiles, inputFile=> inputFile.unitName === resolvedPath);
-                        if (!inInputList) {
-                            // Add the file to other files
+                        var inInputList = ts.forEach(inputFiles, inputFile => inputFile.unitName === resolvedPath);
+
+                        if (!Harness.isLibraryFile(fileRead.path)) {
+                            if (inInputList) {
+                                continue;
+                            }
                             otherFiles.push(getHarnessCompilerInputUnit(fileRead.path));
                         }
-                    });
+                        else if (!opts.options.noLib && Harness.isLibraryFile(fileRead.path)){
+                            if (!inInputList) {
+                                // If useCustomLibraryFile is true, we will use lib.d.ts from json object
+                                // otherwise use the lib.d.ts from built/local
+                                // Majority of RWC code will be using built/local/lib.d.ts instead of
+                                // lib.d.ts inside json file. However, some RWC cases will still use
+                                // their own version of lib.d.ts because they have customized lib.d.ts
+                                if (useCustomLibraryFile) {
+                                    inputFiles.push(getHarnessCompilerInputUnit(fileRead.path));
+                                }
+                                else {
+                                    inputFiles.push(Harness.getDefaultLibraryFile());
+                                }
+                            }
+                        }
+                    }
 
                     // do not use lib since we already read it in above
                     opts.options.noLib = true;
@@ -115,9 +138,10 @@ module RWC {
 
             it('has the expected declaration file content', () => {
                 Harness.Baseline.runBaseline('has the expected declaration file content', baseName + '.d.ts', () => {
-                    if (compilerResult.errors.length || !compilerResult.declFilesCode.length) {
+                    if (!compilerResult.declFilesCode.length) {
                         return null;
                     }
+
                     return Harness.Compiler.collateOutputs(compilerResult.declFilesCode);
                 }, false, baselineOpts);
             });