diff --git a/src/compiler/commandLineParser.ts b/src/compiler/commandLineParser.ts
index 058c6ac44fe..8ae88d49438 100644
--- a/src/compiler/commandLineParser.ts
+++ b/src/compiler/commandLineParser.ts
@@ -321,6 +321,10 @@ namespace ts {
                 isFilePath: true
             }
         },
+        {
+            name: "typesRoot",
+            type: "string"
+        },
         {
             name: "traceResolution",
             type: "boolean",
diff --git a/src/compiler/diagnosticMessages.json b/src/compiler/diagnosticMessages.json
index 26f213cca25..bceca5d8809 100644
--- a/src/compiler/diagnosticMessages.json
+++ b/src/compiler/diagnosticMessages.json
@@ -2637,7 +2637,7 @@
         "category": "Error",
         "code": 6114
     },
-    "======== Resolving type reference directive '{0}' from '{1}' with compilation root dir '{2}'. ========": {
+    "======== Resolving type reference directive '{0}' from '{1}', root dir '{2}'. ========": {
         "category": "Message",
         "code": 6115
     },
@@ -2661,7 +2661,14 @@
         "category": "Message",
         "code": 6120
     },
-
+    "Root directory cannot be determined, skipping primary search paths.": {
+        "category": "Message",
+        "code": 6121
+    },
+    "======== Resolving type reference directive '{0}' from '{1}', root dir not set. ========": {
+        "category": "Message",
+        "code": 6122
+    },
     "Variable '{0}' implicitly has an '{1}' type.": {
         "category": "Error",
         "code": 7005
diff --git a/src/compiler/program.ts b/src/compiler/program.ts
index 283e2802288..0c1c987541c 100644
--- a/src/compiler/program.ts
+++ b/src/compiler/program.ts
@@ -41,14 +41,8 @@ namespace ts {
         return normalizePath(referencedFileName);
     }
 
-    export function computeCompilationRoot(rootFileNames: string[], currentDirectory: string, options: CompilerOptions, getCanonicalFileName: (fileName: string) => string): string {
-        const rootDirOrConfigFilePath = options.rootDir || (options.configFilePath && getDirectoryPath(options.configFilePath));
-        return rootDirOrConfigFilePath
-            ? getNormalizedAbsolutePath(rootDirOrConfigFilePath, currentDirectory)
-            : computeCommonSourceDirectoryOfFilenames(rootFileNames, currentDirectory, getCanonicalFileName);
-    }
-
-    function computeCommonSourceDirectoryOfFilenames(fileNames: string[], currentDirectory: string, getCanonicalFileName: (fileName: string) => string): string {
+    /* @internal */
+    export function computeCommonSourceDirectoryOfFilenames(fileNames: string[], currentDirectory: string, getCanonicalFileName: (fileName: string) => string): string {
         let commonPathComponents: string[];
         const failed = forEach(fileNames, sourceFile => {
             // Each file contributes into common source file path
@@ -196,7 +190,8 @@ namespace ts {
     }
 
     const typeReferenceExtensions = [".d.ts"];
-    export function resolveTypeReferenceDirective(typeReferenceDirectiveName: string, containingFile: string, compilationRoot: string, options: CompilerOptions, host: ModuleResolutionHost): ResolvedTypeReferenceDirectiveWithFailedLookupLocations {
+
+    export function resolveTypeReferenceDirective(typeReferenceDirectiveName: string, containingFile: string, options: CompilerOptions, host: ModuleResolutionHost): ResolvedTypeReferenceDirectiveWithFailedLookupLocations {
         const traceEnabled = isTraceEnabled(options, host);
         const moduleResolutionState: ModuleResolutionState = {
             compilerOptions: options,
@@ -205,30 +200,47 @@ namespace ts {
             traceEnabled
         };
 
-        if (traceEnabled) {
-            trace(host, Diagnostics.Resolving_type_reference_directive_0_from_1_with_compilation_root_dir_2, typeReferenceDirectiveName, containingFile, compilationRoot);
-        }
-        const failedLookupLocations: string[] = [];
-        // Check primary library paths
-        const effectivePrimarySearchPaths = options.typesSearchPaths || defaultLibrarySearchPaths;
-        for (const searchPath of effectivePrimarySearchPaths) {
-            const primaryPath = combinePaths(compilationRoot, searchPath);
-            if (traceEnabled) {
-                trace(host, Diagnostics.Resolving_with_primary_search_path_0, primaryPath);
-            }
-            const candidate = combinePaths(primaryPath, typeReferenceDirectiveName);
-            const candidateDirectory = getDirectoryPath(candidate);
-            const resolvedFile = loadNodeModuleFromDirectory(typeReferenceExtensions, candidate, failedLookupLocations,
-                !directoryProbablyExists(candidateDirectory, host), moduleResolutionState);
+        // use typesRoot and fallback to directory that contains tsconfig if typesRoot is not set
+        const rootDir = options.typesRoot || (options.configFilePath ? getDirectoryPath(options.configFilePath) : undefined);
 
-            if (resolvedFile) {
+        if (traceEnabled) {
+            if (rootDir !== undefined) {
+                trace(host, Diagnostics.Resolving_type_reference_directive_0_from_1_root_dir_2, typeReferenceDirectiveName, containingFile, rootDir);
+            }
+            else {
+                trace(host, Diagnostics.Resolving_type_reference_directive_0_from_1_root_dir_not_set, typeReferenceDirectiveName, containingFile);
+            }
+        }
+
+        const failedLookupLocations: string[] = [];
+
+        // Check primary library paths
+        if (rootDir !== undefined) {
+            const effectivePrimarySearchPaths = options.typesSearchPaths || defaultLibrarySearchPaths;
+            for (const searchPath of effectivePrimarySearchPaths) {
+                const primaryPath = combinePaths(rootDir, searchPath);
                 if (traceEnabled) {
-                    trace(host, Diagnostics.Type_reference_directive_0_was_successfully_resolved_to_1_primary_Colon_2, typeReferenceDirectiveName, resolvedFile, true);
+                    trace(host, Diagnostics.Resolving_with_primary_search_path_0, primaryPath);
                 }
-                return {
-                    resolvedTypeReferenceDirective: { primary: true, resolvedFileName: resolvedFile },
-                    failedLookupLocations
-                };
+                const candidate = combinePaths(primaryPath, typeReferenceDirectiveName);
+                const candidateDirectory = getDirectoryPath(candidate);
+                const resolvedFile = loadNodeModuleFromDirectory(typeReferenceExtensions, candidate, failedLookupLocations,
+                    !directoryProbablyExists(candidateDirectory, host), moduleResolutionState);
+
+                if (resolvedFile) {
+                    if (traceEnabled) {
+                        trace(host, Diagnostics.Type_reference_directive_0_was_successfully_resolved_to_1_primary_Colon_2, typeReferenceDirectiveName, resolvedFile, true);
+                    }
+                    return {
+                        resolvedTypeReferenceDirective: { primary: true, resolvedFileName: resolvedFile },
+                        failedLookupLocations
+                    };
+                }
+            }
+        }
+        else {
+            if (traceEnabled) {
+                trace(host, Diagnostics.Root_directory_cannot_be_determined_skipping_primary_search_paths);
             }
         }
 
@@ -889,8 +901,6 @@ namespace ts {
 
         host = host || createCompilerHost(options);
 
-        const compilationRoot = computeCompilationRoot(rootNames, currentDirectory, options, getCanonicalFileName);
-
         // Map storing if there is emit blocking diagnostics for given input
         const hasEmitBlockingDiagnostics = createFileMap<boolean>(getCanonicalFileName);
 
@@ -908,7 +918,7 @@ namespace ts {
             resolveTypeReferenceDirectiveNamesWorker = (typeDirectiveNames, containingFile) => host.resolveTypeReferenceDirectives(typeDirectiveNames, containingFile);
         }
         else {
-            const loader = (typesRef: string, containingFile: string) => resolveTypeReferenceDirective(typesRef, containingFile, compilationRoot, options, host).resolvedTypeReferenceDirective;
+            const loader = (typesRef: string, containingFile: string) => resolveTypeReferenceDirective(typesRef, containingFile, options, host).resolvedTypeReferenceDirective;
             resolveTypeReferenceDirectiveNamesWorker = (typeReferenceDirectiveNames, containingFile) => loadWithLocalCache(typeReferenceDirectiveNames, containingFile, loader);
         }
 
@@ -1690,7 +1700,7 @@ namespace ts {
                 const basePath = getDirectoryPath(fileName);
                 if (!options.noResolve) {
                     processReferencedFiles(file, basePath, isDefaultLib);
-                    processTypeReferenceDirectives(file, compilationRoot);
+                    processTypeReferenceDirectives(file);
                 }
 
                 // always process imported modules to record module name resolutions
@@ -1714,7 +1724,7 @@ namespace ts {
             });
         }
 
-        function processTypeReferenceDirectives(file: SourceFile, compilationRoot: string) {
+        function processTypeReferenceDirectives(file: SourceFile) {
             const typeDirectives = map(file.typeReferenceDirectives, l => l.fileName);
             const resolutions = resolveTypeReferenceDirectiveNamesWorker(typeDirectives, file.fileName);
 
diff --git a/src/compiler/types.ts b/src/compiler/types.ts
index 144a21b8c0d..9497a7ebfe6 100644
--- a/src/compiler/types.ts
+++ b/src/compiler/types.ts
@@ -2473,6 +2473,9 @@ namespace ts {
         /* @internal */
         // When options come from a config file, its path is recorded here
         configFilePath?: string;
+        /* @internal */
+        // Path used to used to compute primary search locations 
+        typesRoot?: string;
 
         list?: string[];
         [option: string]: CompilerOptionsValue;
diff --git a/src/harness/fourslash.ts b/src/harness/fourslash.ts
index 3dad49d24b3..304b6bcc455 100644
--- a/src/harness/fourslash.ts
+++ b/src/harness/fourslash.ts
@@ -247,6 +247,10 @@ namespace FourSlash {
             // Create a new Services Adapter
             this.cancellationToken = new TestCancellationToken();
             const compilationOptions = convertGlobalOptionsToCompilerOptions(this.testData.globalOptions);
+            if (compilationOptions.typesRoot) {
+                compilationOptions.typesRoot = ts.getNormalizedAbsolutePath(compilationOptions.typesRoot, this.basePath);
+            }
+
             const languageServiceAdapter = this.getLanguageServiceAdapter(testType, this.cancellationToken, compilationOptions);
             this.languageServiceAdapterHost = languageServiceAdapter.getHost();
             this.languageService = languageServiceAdapter.getLanguageService();
diff --git a/src/harness/harnessLanguageService.ts b/src/harness/harnessLanguageService.ts
index 5bcbb174676..b27d746390b 100644
--- a/src/harness/harnessLanguageService.ts
+++ b/src/harness/harnessLanguageService.ts
@@ -247,12 +247,9 @@ namespace Harness.LanguageService {
                     const scriptInfo = this.getScriptInfo(fileName);
                     const preprocessInfo = ts.preProcessFile(scriptInfo.content, /*readImportFiles*/ false);
                     const resolutions: ts.Map<ts.ResolvedTypeReferenceDirective> = {};
-                    const rootFiles = this.getFilenames();
-                    const currentDirectory = this.getCurrentDirectory();
                     const settings = this.nativeHost.getCompilationSettings();
-                    const compilationRoot = ts.computeCompilationRoot(rootFiles, currentDirectory, settings, ts.createGetCanonicalFileName(false));
                     for (const typeReferenceDirective of preprocessInfo.typeReferenceDirectives) {
-                        const resolutionInfo = ts.resolveTypeReferenceDirective(typeReferenceDirective.fileName, fileName, compilationRoot, settings, moduleResolutionHost);
+                        const resolutionInfo = ts.resolveTypeReferenceDirective(typeReferenceDirective.fileName, fileName, settings, moduleResolutionHost);
                         if (resolutionInfo.resolvedTypeReferenceDirective.resolvedFileName) {
                             resolutions[typeReferenceDirective.fileName] = resolutionInfo.resolvedTypeReferenceDirective;
                         }
diff --git a/src/server/editorServices.ts b/src/server/editorServices.ts
index 9b57c1687aa..4c054664a18 100644
--- a/src/server/editorServices.ts
+++ b/src/server/editorServices.ts
@@ -96,7 +96,6 @@ namespace ts.server {
         compilationSettings: ts.CompilerOptions;
         filenameToScript: ts.FileMap<ScriptInfo>;
         roots: ScriptInfo[] = [];
-        compilationRoot: string;
 
         private resolvedModuleNames: ts.FileMap<Map<TimestampedResolvedModule>>;
         private resolvedTypeReferenceDirectives: ts.FileMap<Map<TimestampedResolvedTypeReferenceDirective>>;
@@ -172,13 +171,7 @@ namespace ts.server {
         }
 
         resolveTypeReferenceDirectives(typeDirectiveNames: string[], containingFile: string): ResolvedTypeReferenceDirective[] {
-            if (this.compilationRoot === undefined) {
-                this.compilationRoot = computeCompilationRoot(this.getScriptFileNames(), this.getCurrentDirectory(), this.getCompilationSettings(), this.getCanonicalFileName);
-            }
-            const loader = (name: string, containingFile: string, options: CompilerOptions, host: ModuleResolutionHost) => {
-                return resolveTypeReferenceDirective(name, containingFile, this.compilationRoot, options, this.moduleResolutionHost);
-            };
-            return this.resolveNamesWithLocalCache(typeDirectiveNames, containingFile, this.resolvedTypeReferenceDirectives, loader, m => m.resolvedTypeReferenceDirective);
+            return this.resolveNamesWithLocalCache(typeDirectiveNames, containingFile, this.resolvedTypeReferenceDirectives, resolveTypeReferenceDirective, m => m.resolvedTypeReferenceDirective);
         }
 
         resolveModuleNames(moduleNames: string[], containingFile: string): ResolvedModule[] {
@@ -262,8 +255,6 @@ namespace ts.server {
             if (!this.filenameToScript.contains(info.path)) {
                 this.filenameToScript.set(info.path, info);
                 this.roots.push(info);
-                // reset compilation root
-                this.compilationRoot = undefined;
             }
         }
 
@@ -273,8 +264,6 @@ namespace ts.server {
                 this.roots = copyListRemovingItem(info, this.roots);
                 this.resolvedModuleNames.remove(info.path);
                 this.resolvedTypeReferenceDirectives.remove(info.path);
-                // reset compilation root
-                this.compilationRoot = undefined;
             }
         }
 
diff --git a/src/services/shims.ts b/src/services/shims.ts
index c99a16ca0cd..9155c057ef2 100644
--- a/src/services/shims.ts
+++ b/src/services/shims.ts
@@ -907,7 +907,6 @@ namespace ts {
 
     class CoreServicesShimObject extends ShimBase implements CoreServicesShim {
         private logPerformance = false;
-        private getCanonicalFileName = createGetCanonicalFileName(false);
 
         constructor(factory: ShimFactory, public logger: Logger, private host: CoreServicesShimHostAdapter) {
             super(factory);
@@ -928,18 +927,10 @@ namespace ts {
             });
         }
 
-        public computeCompilationRoot(filesJson: string, currentDirectory: string, compilerOptionsJson: string): string {
-            return this.forwardJSONCall("computeCompilationRoot", () => {
-                const files = <string[]>JSON.parse(filesJson);
-                const compilerOptions = <CompilerOptions>JSON.parse(compilerOptionsJson);
-                return computeCompilationRoot(files, currentDirectory, compilerOptions, this.getCanonicalFileName);
-            });
-        }
-
-        public resolveTypeReferenceDirective(fileName: string, typeReferenceDirective: string, compilationRoot: string, compilerOptionsJson: string): string {
+        public resolveTypeReferenceDirective(fileName: string, typeReferenceDirective: string, compilerOptionsJson: string): string {
             return this.forwardJSONCall(`resolveTypeReferenceDirective(${fileName})`, () => {
                 const compilerOptions = <CompilerOptions>JSON.parse(compilerOptionsJson);
-                const result = resolveTypeReferenceDirective(typeReferenceDirective, normalizeSlashes(fileName), compilationRoot, compilerOptions, this.host);
+                const result = resolveTypeReferenceDirective(typeReferenceDirective, normalizeSlashes(fileName), compilerOptions, this.host);
                 return {
                     resolvedFileName: result.resolvedTypeReferenceDirective ? result.resolvedTypeReferenceDirective.resolvedFileName : undefined,
                     primary: result.resolvedTypeReferenceDirective ? result.resolvedTypeReferenceDirective.primary : true,
diff --git a/tests/baselines/reference/library-reference-1.trace.json b/tests/baselines/reference/library-reference-1.trace.json
index a5ce5985525..be96aa1d852 100644
--- a/tests/baselines/reference/library-reference-1.trace.json
+++ b/tests/baselines/reference/library-reference-1.trace.json
@@ -1,5 +1,5 @@
 [
-    "======== Resolving type reference directive 'jquery' from '/consumer.ts' with compilation root dir '/'. ========",
+    "======== Resolving type reference directive 'jquery' from '/consumer.ts', root dir '/'. ========",
     "Resolving with primary search path '/types/'",
     "File '/types/jquery/package.json' does not exist.",
     "File '/types/jquery/index.d.ts' exist - use it as a name resolution result.",
diff --git a/tests/baselines/reference/library-reference-10.trace.json b/tests/baselines/reference/library-reference-10.trace.json
index 44ed04a2e57..1645195146d 100644
--- a/tests/baselines/reference/library-reference-10.trace.json
+++ b/tests/baselines/reference/library-reference-10.trace.json
@@ -1,5 +1,5 @@
 [
-    "======== Resolving type reference directive 'jquery' from '/consumer.ts' with compilation root dir '/'. ========",
+    "======== Resolving type reference directive 'jquery' from '/consumer.ts', root dir '/'. ========",
     "Resolving with primary search path '/types/'",
     "Found 'package.json' at '/types/jquery/package.json'.",
     "'package.json' has 'typings' field 'jquery.d.ts' that references '/types/jquery/jquery.d.ts'.",
diff --git a/tests/baselines/reference/library-reference-11.trace.json b/tests/baselines/reference/library-reference-11.trace.json
index aea446fcd78..912ff1d2114 100644
--- a/tests/baselines/reference/library-reference-11.trace.json
+++ b/tests/baselines/reference/library-reference-11.trace.json
@@ -1,14 +1,6 @@
 [
-    "======== Resolving type reference directive 'jquery' from '/a/b/consumer.ts' with compilation root dir '/a/b'. ========",
-    "Resolving with primary search path '/a/b/types/'",
-    "File '/a/b/types/jquery/package.json' does not exist.",
-    "File '/a/b/types/jquery/index.d.ts' does not exist.",
-    "Resolving with primary search path '/a/b/node_modules/'",
-    "File '/a/b/node_modules/jquery/package.json' does not exist.",
-    "File '/a/b/node_modules/jquery/index.d.ts' does not exist.",
-    "Resolving with primary search path '/a/b/node_modules/@types/'",
-    "File '/a/b/node_modules/@types/jquery/package.json' does not exist.",
-    "File '/a/b/node_modules/@types/jquery/index.d.ts' does not exist.",
+    "======== Resolving type reference directive 'jquery' from '/a/b/consumer.ts', root dir not set. ========",
+    "Root directory cannot be determined, skipping primary search paths.",
     "Resolving from node_modules folder...",
     "File '/a/b/node_modules/jquery.ts' does not exist.",
     "File '/a/b/node_modules/jquery.d.ts' does not exist.",
diff --git a/tests/baselines/reference/library-reference-12.trace.json b/tests/baselines/reference/library-reference-12.trace.json
index 2bf990d7c66..47a4d7f0220 100644
--- a/tests/baselines/reference/library-reference-12.trace.json
+++ b/tests/baselines/reference/library-reference-12.trace.json
@@ -1,14 +1,6 @@
 [
-    "======== Resolving type reference directive 'jquery' from '/a/b/consumer.ts' with compilation root dir '/a/b'. ========",
-    "Resolving with primary search path '/a/b/types/'",
-    "File '/a/b/types/jquery/package.json' does not exist.",
-    "File '/a/b/types/jquery/index.d.ts' does not exist.",
-    "Resolving with primary search path '/a/b/node_modules/'",
-    "File '/a/b/node_modules/jquery/package.json' does not exist.",
-    "File '/a/b/node_modules/jquery/index.d.ts' does not exist.",
-    "Resolving with primary search path '/a/b/node_modules/@types/'",
-    "File '/a/b/node_modules/@types/jquery/package.json' does not exist.",
-    "File '/a/b/node_modules/@types/jquery/index.d.ts' does not exist.",
+    "======== Resolving type reference directive 'jquery' from '/a/b/consumer.ts', root dir not set. ========",
+    "Root directory cannot be determined, skipping primary search paths.",
     "Resolving from node_modules folder...",
     "File '/a/b/node_modules/jquery.ts' does not exist.",
     "File '/a/b/node_modules/jquery.d.ts' does not exist.",
diff --git a/tests/baselines/reference/library-reference-2.trace.json b/tests/baselines/reference/library-reference-2.trace.json
index 82eddf3c7dc..f18c6548b7e 100644
--- a/tests/baselines/reference/library-reference-2.trace.json
+++ b/tests/baselines/reference/library-reference-2.trace.json
@@ -1,5 +1,5 @@
 [
-    "======== Resolving type reference directive 'jquery' from '/consumer.ts' with compilation root dir '/'. ========",
+    "======== Resolving type reference directive 'jquery' from '/consumer.ts', root dir '/'. ========",
     "Resolving with primary search path '/types/'",
     "Found 'package.json' at '/types/jquery/package.json'.",
     "'package.json' has 'types' field 'jquery.d.ts' that references '/types/jquery/jquery.d.ts'.",
diff --git a/tests/baselines/reference/library-reference-3.trace.json b/tests/baselines/reference/library-reference-3.trace.json
index 9bbedd4a22b..b1bd279e16c 100644
--- a/tests/baselines/reference/library-reference-3.trace.json
+++ b/tests/baselines/reference/library-reference-3.trace.json
@@ -1,5 +1,5 @@
 [
-    "======== Resolving type reference directive 'jquery' from '/src/consumer.ts' with compilation root dir '/src'. ========",
+    "======== Resolving type reference directive 'jquery' from '/src/consumer.ts', root dir '/src'. ========",
     "Resolving with primary search path '/src/types/'",
     "File '/src/types/jquery/package.json' does not exist.",
     "File '/src/types/jquery/index.d.ts' does not exist.",
diff --git a/tests/baselines/reference/library-reference-4.trace.json b/tests/baselines/reference/library-reference-4.trace.json
index c0ac8c39512..363eb020afb 100644
--- a/tests/baselines/reference/library-reference-4.trace.json
+++ b/tests/baselines/reference/library-reference-4.trace.json
@@ -1,5 +1,5 @@
 [
-    "======== Resolving type reference directive 'foo' from '/src/root.ts' with compilation root dir '/src'. ========",
+    "======== Resolving type reference directive 'foo' from '/src/root.ts', root dir '/src'. ========",
     "Resolving with primary search path '/src/types/'",
     "File '/src/types/foo/package.json' does not exist.",
     "File '/src/types/foo/index.d.ts' does not exist.",
@@ -26,7 +26,7 @@
     "File '/node_modules/foo/index.ts' does not exist.",
     "File '/node_modules/foo/index.d.ts' exist - use it as a name resolution result.",
     "======== Type reference directive 'foo' was successfully resolved to '/node_modules/foo/index.d.ts', primary: false. ========",
-    "======== Resolving type reference directive 'bar' from '/src/root.ts' with compilation root dir '/src'. ========",
+    "======== Resolving type reference directive 'bar' from '/src/root.ts', root dir '/src'. ========",
     "Resolving with primary search path '/src/types/'",
     "File '/src/types/bar/package.json' does not exist.",
     "File '/src/types/bar/index.d.ts' does not exist.",
@@ -53,7 +53,7 @@
     "File '/node_modules/bar/index.ts' does not exist.",
     "File '/node_modules/bar/index.d.ts' exist - use it as a name resolution result.",
     "======== Type reference directive 'bar' was successfully resolved to '/node_modules/bar/index.d.ts', primary: false. ========",
-    "======== Resolving type reference directive 'alpha' from '/node_modules/foo/index.d.ts' with compilation root dir '/src'. ========",
+    "======== Resolving type reference directive 'alpha' from '/node_modules/foo/index.d.ts', root dir '/src'. ========",
     "Resolving with primary search path '/src/types/'",
     "File '/src/types/alpha/package.json' does not exist.",
     "File '/src/types/alpha/index.d.ts' does not exist.",
@@ -70,7 +70,7 @@
     "File '/node_modules/foo/node_modules/alpha/index.ts' does not exist.",
     "File '/node_modules/foo/node_modules/alpha/index.d.ts' exist - use it as a name resolution result.",
     "======== Type reference directive 'alpha' was successfully resolved to '/node_modules/foo/node_modules/alpha/index.d.ts', primary: false. ========",
-    "======== Resolving type reference directive 'alpha' from '/node_modules/bar/index.d.ts' with compilation root dir '/src'. ========",
+    "======== Resolving type reference directive 'alpha' from '/node_modules/bar/index.d.ts', root dir '/src'. ========",
     "Resolving with primary search path '/src/types/'",
     "File '/src/types/alpha/package.json' does not exist.",
     "File '/src/types/alpha/index.d.ts' does not exist.",
diff --git a/tests/baselines/reference/library-reference-5.trace.json b/tests/baselines/reference/library-reference-5.trace.json
index c0ac8c39512..718ccfc37e4 100644
--- a/tests/baselines/reference/library-reference-5.trace.json
+++ b/tests/baselines/reference/library-reference-5.trace.json
@@ -1,14 +1,6 @@
 [
-    "======== Resolving type reference directive 'foo' from '/src/root.ts' with compilation root dir '/src'. ========",
-    "Resolving with primary search path '/src/types/'",
-    "File '/src/types/foo/package.json' does not exist.",
-    "File '/src/types/foo/index.d.ts' does not exist.",
-    "Resolving with primary search path '/src/node_modules/'",
-    "File '/src/node_modules/foo/package.json' does not exist.",
-    "File '/src/node_modules/foo/index.d.ts' does not exist.",
-    "Resolving with primary search path '/src/node_modules/@types/'",
-    "File '/src/node_modules/@types/foo/package.json' does not exist.",
-    "File '/src/node_modules/@types/foo/index.d.ts' does not exist.",
+    "======== Resolving type reference directive 'foo' from '/src/root.ts', root dir not set. ========",
+    "Root directory cannot be determined, skipping primary search paths.",
     "Resolving from node_modules folder...",
     "File '/src/node_modules/foo.ts' does not exist.",
     "File '/src/node_modules/foo.d.ts' does not exist.",
@@ -26,16 +18,8 @@
     "File '/node_modules/foo/index.ts' does not exist.",
     "File '/node_modules/foo/index.d.ts' exist - use it as a name resolution result.",
     "======== Type reference directive 'foo' was successfully resolved to '/node_modules/foo/index.d.ts', primary: false. ========",
-    "======== Resolving type reference directive 'bar' from '/src/root.ts' with compilation root dir '/src'. ========",
-    "Resolving with primary search path '/src/types/'",
-    "File '/src/types/bar/package.json' does not exist.",
-    "File '/src/types/bar/index.d.ts' does not exist.",
-    "Resolving with primary search path '/src/node_modules/'",
-    "File '/src/node_modules/bar/package.json' does not exist.",
-    "File '/src/node_modules/bar/index.d.ts' does not exist.",
-    "Resolving with primary search path '/src/node_modules/@types/'",
-    "File '/src/node_modules/@types/bar/package.json' does not exist.",
-    "File '/src/node_modules/@types/bar/index.d.ts' does not exist.",
+    "======== Resolving type reference directive 'bar' from '/src/root.ts', root dir not set. ========",
+    "Root directory cannot be determined, skipping primary search paths.",
     "Resolving from node_modules folder...",
     "File '/src/node_modules/bar.ts' does not exist.",
     "File '/src/node_modules/bar.d.ts' does not exist.",
@@ -53,16 +37,8 @@
     "File '/node_modules/bar/index.ts' does not exist.",
     "File '/node_modules/bar/index.d.ts' exist - use it as a name resolution result.",
     "======== Type reference directive 'bar' was successfully resolved to '/node_modules/bar/index.d.ts', primary: false. ========",
-    "======== Resolving type reference directive 'alpha' from '/node_modules/foo/index.d.ts' with compilation root dir '/src'. ========",
-    "Resolving with primary search path '/src/types/'",
-    "File '/src/types/alpha/package.json' does not exist.",
-    "File '/src/types/alpha/index.d.ts' does not exist.",
-    "Resolving with primary search path '/src/node_modules/'",
-    "File '/src/node_modules/alpha/package.json' does not exist.",
-    "File '/src/node_modules/alpha/index.d.ts' does not exist.",
-    "Resolving with primary search path '/src/node_modules/@types/'",
-    "File '/src/node_modules/@types/alpha/package.json' does not exist.",
-    "File '/src/node_modules/@types/alpha/index.d.ts' does not exist.",
+    "======== Resolving type reference directive 'alpha' from '/node_modules/foo/index.d.ts', root dir not set. ========",
+    "Root directory cannot be determined, skipping primary search paths.",
     "Resolving from node_modules folder...",
     "File '/node_modules/foo/node_modules/alpha.ts' does not exist.",
     "File '/node_modules/foo/node_modules/alpha.d.ts' does not exist.",
@@ -70,16 +46,8 @@
     "File '/node_modules/foo/node_modules/alpha/index.ts' does not exist.",
     "File '/node_modules/foo/node_modules/alpha/index.d.ts' exist - use it as a name resolution result.",
     "======== Type reference directive 'alpha' was successfully resolved to '/node_modules/foo/node_modules/alpha/index.d.ts', primary: false. ========",
-    "======== Resolving type reference directive 'alpha' from '/node_modules/bar/index.d.ts' with compilation root dir '/src'. ========",
-    "Resolving with primary search path '/src/types/'",
-    "File '/src/types/alpha/package.json' does not exist.",
-    "File '/src/types/alpha/index.d.ts' does not exist.",
-    "Resolving with primary search path '/src/node_modules/'",
-    "File '/src/node_modules/alpha/package.json' does not exist.",
-    "File '/src/node_modules/alpha/index.d.ts' does not exist.",
-    "Resolving with primary search path '/src/node_modules/@types/'",
-    "File '/src/node_modules/@types/alpha/package.json' does not exist.",
-    "File '/src/node_modules/@types/alpha/index.d.ts' does not exist.",
+    "======== Resolving type reference directive 'alpha' from '/node_modules/bar/index.d.ts', root dir not set. ========",
+    "Root directory cannot be determined, skipping primary search paths.",
     "Resolving from node_modules folder...",
     "File '/node_modules/bar/node_modules/alpha.ts' does not exist.",
     "File '/node_modules/bar/node_modules/alpha.d.ts' does not exist.",
diff --git a/tests/baselines/reference/library-reference-6.trace.json b/tests/baselines/reference/library-reference-6.trace.json
index 0442a008dfb..7009af6b853 100644
--- a/tests/baselines/reference/library-reference-6.trace.json
+++ b/tests/baselines/reference/library-reference-6.trace.json
@@ -1,5 +1,5 @@
 [
-    "======== Resolving type reference directive 'alpha' from '/src/foo.ts' with compilation root dir '/'. ========",
+    "======== Resolving type reference directive 'alpha' from '/src/foo.ts', root dir '/'. ========",
     "Resolving with primary search path '/types/'",
     "File '/types/alpha/package.json' does not exist.",
     "File '/types/alpha/index.d.ts' exist - use it as a name resolution result.",
diff --git a/tests/baselines/reference/library-reference-7.js b/tests/baselines/reference/library-reference-7.js
index fce1598b2fd..f1ef6ca4eab 100644
--- a/tests/baselines/reference/library-reference-7.js
+++ b/tests/baselines/reference/library-reference-7.js
@@ -2,15 +2,15 @@
 
 //// [index.d.ts]
 
-// The primary lookup folder is relative to tsconfig.json's 'root', if present
+// Secondary references are possible
 
-declare var alpha: { a: string };
+declare var $: { foo(): void };
 
-//// [foo.ts]
-/// <reference types="alpha" />
-var x: string = alpha.a;
+//// [consumer.ts]
+/// <reference types="jquery" />
+$.foo();
 
 
-//// [foo.js]
-/// <reference types="alpha" />
-var x = alpha.a;
+//// [consumer.js]
+/// <reference types="jquery" />
+$.foo();
diff --git a/tests/baselines/reference/library-reference-7.symbols b/tests/baselines/reference/library-reference-7.symbols
index ec8c2f014ac..a1785fd77c9 100644
--- a/tests/baselines/reference/library-reference-7.symbols
+++ b/tests/baselines/reference/library-reference-7.symbols
@@ -1,16 +1,15 @@
-=== /base/src/foo.ts ===
-/// <reference types="alpha" />
-var x: string = alpha.a;
->x : Symbol(x, Decl(foo.ts, 1, 3))
->alpha.a : Symbol(a, Decl(index.d.ts, 3, 20))
->alpha : Symbol(alpha, Decl(index.d.ts, 3, 11))
->a : Symbol(a, Decl(index.d.ts, 3, 20))
+=== /src/consumer.ts ===
+/// <reference types="jquery" />
+$.foo();
+>$.foo : Symbol(foo, Decl(index.d.ts, 3, 16))
+>$ : Symbol($, Decl(index.d.ts, 3, 11))
+>foo : Symbol(foo, Decl(index.d.ts, 3, 16))
 
-=== /base/types/alpha/index.d.ts ===
+=== /src/node_modules/jquery/index.d.ts ===
 
-// The primary lookup folder is relative to tsconfig.json's 'root', if present
+// Secondary references are possible
 
-declare var alpha: { a: string };
->alpha : Symbol(alpha, Decl(index.d.ts, 3, 11))
->a : Symbol(a, Decl(index.d.ts, 3, 20))
+declare var $: { foo(): void };
+>$ : Symbol($, Decl(index.d.ts, 3, 11))
+>foo : Symbol(foo, Decl(index.d.ts, 3, 16))
 
diff --git a/tests/baselines/reference/library-reference-7.trace.json b/tests/baselines/reference/library-reference-7.trace.json
index d495e27cdc5..5d3e23564c7 100644
--- a/tests/baselines/reference/library-reference-7.trace.json
+++ b/tests/baselines/reference/library-reference-7.trace.json
@@ -1,7 +1,11 @@
 [
-    "======== Resolving type reference directive 'alpha' from '/base/src/foo.ts' with compilation root dir '/base'. ========",
-    "Resolving with primary search path '/base/types/'",
-    "File '/base/types/alpha/package.json' does not exist.",
-    "File '/base/types/alpha/index.d.ts' exist - use it as a name resolution result.",
-    "======== Type reference directive 'alpha' was successfully resolved to '/base/types/alpha/index.d.ts', primary: true. ========"
+    "======== Resolving type reference directive 'jquery' from '/src/consumer.ts', root dir not set. ========",
+    "Root directory cannot be determined, skipping primary search paths.",
+    "Resolving from node_modules folder...",
+    "File '/src/node_modules/jquery.ts' does not exist.",
+    "File '/src/node_modules/jquery.d.ts' does not exist.",
+    "File '/src/node_modules/jquery/package.json' does not exist.",
+    "File '/src/node_modules/jquery/index.ts' does not exist.",
+    "File '/src/node_modules/jquery/index.d.ts' exist - use it as a name resolution result.",
+    "======== Type reference directive 'jquery' was successfully resolved to '/src/node_modules/jquery/index.d.ts', primary: false. ========"
 ]
\ No newline at end of file
diff --git a/tests/baselines/reference/library-reference-7.types b/tests/baselines/reference/library-reference-7.types
index 3f6c720c882..ed7da59525f 100644
--- a/tests/baselines/reference/library-reference-7.types
+++ b/tests/baselines/reference/library-reference-7.types
@@ -1,16 +1,16 @@
-=== /base/src/foo.ts ===
-/// <reference types="alpha" />
-var x: string = alpha.a;
->x : string
->alpha.a : string
->alpha : { a: string; }
->a : string
+=== /src/consumer.ts ===
+/// <reference types="jquery" />
+$.foo();
+>$.foo() : void
+>$.foo : () => void
+>$ : { foo(): void; }
+>foo : () => void
 
-=== /base/types/alpha/index.d.ts ===
+=== /src/node_modules/jquery/index.d.ts ===
 
-// The primary lookup folder is relative to tsconfig.json's 'root', if present
+// Secondary references are possible
 
-declare var alpha: { a: string };
->alpha : { a: string; }
->a : string
+declare var $: { foo(): void };
+>$ : { foo(): void; }
+>foo : () => void
 
diff --git a/tests/baselines/reference/library-reference-8.trace.json b/tests/baselines/reference/library-reference-8.trace.json
index 0dec47d9375..1f0cced6c34 100644
--- a/tests/baselines/reference/library-reference-8.trace.json
+++ b/tests/baselines/reference/library-reference-8.trace.json
@@ -1,20 +1,20 @@
 [
-    "======== Resolving type reference directive 'alpha' from '/foo.ts' with compilation root dir '/'. ========",
+    "======== Resolving type reference directive 'alpha' from '/foo.ts', root dir '/'. ========",
     "Resolving with primary search path '/types/'",
     "File '/types/alpha/package.json' does not exist.",
     "File '/types/alpha/index.d.ts' exist - use it as a name resolution result.",
     "======== Type reference directive 'alpha' was successfully resolved to '/types/alpha/index.d.ts', primary: true. ========",
-    "======== Resolving type reference directive 'beta' from '/foo.ts' with compilation root dir '/'. ========",
+    "======== Resolving type reference directive 'beta' from '/foo.ts', root dir '/'. ========",
     "Resolving with primary search path '/types/'",
     "File '/types/beta/package.json' does not exist.",
     "File '/types/beta/index.d.ts' exist - use it as a name resolution result.",
     "======== Type reference directive 'beta' was successfully resolved to '/types/beta/index.d.ts', primary: true. ========",
-    "======== Resolving type reference directive 'beta' from '/types/alpha/index.d.ts' with compilation root dir '/'. ========",
+    "======== Resolving type reference directive 'beta' from '/types/alpha/index.d.ts', root dir '/'. ========",
     "Resolving with primary search path '/types/'",
     "File '/types/beta/package.json' does not exist.",
     "File '/types/beta/index.d.ts' exist - use it as a name resolution result.",
     "======== Type reference directive 'beta' was successfully resolved to '/types/beta/index.d.ts', primary: true. ========",
-    "======== Resolving type reference directive 'alpha' from '/types/beta/index.d.ts' with compilation root dir '/'. ========",
+    "======== Resolving type reference directive 'alpha' from '/types/beta/index.d.ts', root dir '/'. ========",
     "Resolving with primary search path '/types/'",
     "File '/types/alpha/package.json' does not exist.",
     "File '/types/alpha/index.d.ts' exist - use it as a name resolution result.",
diff --git a/tests/baselines/reference/library-reference-9.trace.json b/tests/baselines/reference/library-reference-9.trace.json
index 36119298d07..d44abcac839 100644
--- a/tests/baselines/reference/library-reference-9.trace.json
+++ b/tests/baselines/reference/library-reference-9.trace.json
@@ -1,5 +1,5 @@
 [
-    "======== Resolving type reference directive 'alpha' from '/base/src/foo.ts' with compilation root dir '/'. ========",
+    "======== Resolving type reference directive 'alpha' from '/base/src/foo.ts', root dir '/'. ========",
     "Resolving with primary search path '/share/typelib'",
     "File '/share/typelib/alpha/package.json' does not exist.",
     "File '/share/typelib/alpha/index.d.ts' exist - use it as a name resolution result.",
diff --git a/tests/cases/conformance/references/library-reference-1.ts b/tests/cases/conformance/references/library-reference-1.ts
index 74c748043b5..ca25441521f 100644
--- a/tests/cases/conformance/references/library-reference-1.ts
+++ b/tests/cases/conformance/references/library-reference-1.ts
@@ -1,5 +1,6 @@
 // @noImplicitReferences: true
 // @traceResolution: true
+// @typesRoot: /
 
 // We can find typings in the ./types folder
 
diff --git a/tests/cases/conformance/references/library-reference-10.ts b/tests/cases/conformance/references/library-reference-10.ts
index fcacbd556ac..11e065b0a7d 100644
--- a/tests/cases/conformance/references/library-reference-10.ts
+++ b/tests/cases/conformance/references/library-reference-10.ts
@@ -1,5 +1,6 @@
 // @noImplicitReferences: true
 // @traceResolution: true
+// @typesRoot: /
 
 // package.json in a primary reference can refer to another file
 
diff --git a/tests/cases/conformance/references/library-reference-2.ts b/tests/cases/conformance/references/library-reference-2.ts
index d0882272a08..d8975664428 100644
--- a/tests/cases/conformance/references/library-reference-2.ts
+++ b/tests/cases/conformance/references/library-reference-2.ts
@@ -1,5 +1,6 @@
 // @noImplicitReferences: true
 // @traceResolution: true
+// @typesRoot: /
 
 // package.json in a primary reference can refer to another file
 
diff --git a/tests/cases/conformance/references/library-reference-3.ts b/tests/cases/conformance/references/library-reference-3.ts
index 64b1c8ddda8..1af6df89d19 100644
--- a/tests/cases/conformance/references/library-reference-3.ts
+++ b/tests/cases/conformance/references/library-reference-3.ts
@@ -1,6 +1,6 @@
 // @noImplicitReferences: true
 // @traceResolution: true
-// @traceResolution: true
+// @typesRoot: /src
 
 // Secondary references are possible
 
diff --git a/tests/cases/conformance/references/library-reference-4.ts b/tests/cases/conformance/references/library-reference-4.ts
index a0ba4bff890..92f1b4008be 100644
--- a/tests/cases/conformance/references/library-reference-4.ts
+++ b/tests/cases/conformance/references/library-reference-4.ts
@@ -1,5 +1,6 @@
 // @noImplicitReferences: true
 // @traceResolution: true
+// @typesRoot: /src
 
 // Secondary references may be duplicated if they agree in content
 
diff --git a/tests/cases/conformance/references/library-reference-7.ts b/tests/cases/conformance/references/library-reference-7.ts
index 9d400604a63..e938aef7d3a 100644
--- a/tests/cases/conformance/references/library-reference-7.ts
+++ b/tests/cases/conformance/references/library-reference-7.ts
@@ -1,18 +1,11 @@
 // @noImplicitReferences: true
 // @traceResolution: true
 
-// The primary lookup folder is relative to tsconfig.json's 'root', if present
+// Secondary references are possible
 
-// @filename: /base/types/alpha/index.d.ts
-declare var alpha: { a: string };
+// @filename: /src/node_modules/jquery/index.d.ts
+declare var $: { foo(): void };
 
-// @filename: /base/src/foo.ts
-/// <reference types="alpha" />
-var x: string = alpha.a;
-
-// @filename: /tsconfig.json
-{
-    "compilerOptions": {
-        "rootDir": "base"
-    }
-}
+// @filename: /src/consumer.ts
+/// <reference types="jquery" />
+$.foo();
diff --git a/tests/cases/conformance/references/library-reference-8.ts b/tests/cases/conformance/references/library-reference-8.ts
index 112ec18e446..9de93776989 100644
--- a/tests/cases/conformance/references/library-reference-8.ts
+++ b/tests/cases/conformance/references/library-reference-8.ts
@@ -1,5 +1,6 @@
 // @noImplicitReferences: true
 // @traceResolution: true
+// @typesRoot: /
 
 // Don't crash in circular library reference situations
 
diff --git a/tests/cases/fourslash/goToDefinitionTypeReferenceDirective.ts b/tests/cases/fourslash/goToDefinitionTypeReferenceDirective.ts
index 6d2fdc0112d..3aaa3ab980f 100644
--- a/tests/cases/fourslash/goToDefinitionTypeReferenceDirective.ts
+++ b/tests/cases/fourslash/goToDefinitionTypeReferenceDirective.ts
@@ -1,5 +1,6 @@
 /// <reference path="fourslash.ts"/>
 
+// @typesRoot: src
 // @Filename: src/types/lib/index.d.ts
 /////*0*/declare let $: {x: number};
 
diff --git a/tests/cases/fourslash/shims-pp/goToDefinitionTypeReferenceDirective.ts b/tests/cases/fourslash/shims-pp/goToDefinitionTypeReferenceDirective.ts
index 6d2fdc0112d..3aaa3ab980f 100644
--- a/tests/cases/fourslash/shims-pp/goToDefinitionTypeReferenceDirective.ts
+++ b/tests/cases/fourslash/shims-pp/goToDefinitionTypeReferenceDirective.ts
@@ -1,5 +1,6 @@
 /// <reference path="fourslash.ts"/>
 
+// @typesRoot: src
 // @Filename: src/types/lib/index.d.ts
 /////*0*/declare let $: {x: number};
 
diff --git a/tests/cases/fourslash/shims/goToDefinitionTypeReferenceDirective.ts b/tests/cases/fourslash/shims/goToDefinitionTypeReferenceDirective.ts
index 6d2fdc0112d..3aaa3ab980f 100644
--- a/tests/cases/fourslash/shims/goToDefinitionTypeReferenceDirective.ts
+++ b/tests/cases/fourslash/shims/goToDefinitionTypeReferenceDirective.ts
@@ -1,5 +1,6 @@
 /// <reference path="fourslash.ts"/>
 
+// @typesRoot: src
 // @Filename: src/types/lib/index.d.ts
 /////*0*/declare let $: {x: number};
 
diff --git a/tests/cases/unittests/moduleResolution.ts b/tests/cases/unittests/moduleResolution.ts
index e9677313409..29fde331892 100644
--- a/tests/cases/unittests/moduleResolution.ts
+++ b/tests/cases/unittests/moduleResolution.ts
@@ -956,9 +956,9 @@ import b = require("./moduleB.ts");
     });
 
     describe("Type reference directive resolution: ", () => {
-        function test(compilationRoot: string, typeDirective: string, primary: boolean, initialFile: File, targetFile: File, ...otherFiles: File[]) {
+        function test(typesRoot: string, typeDirective: string, primary: boolean, initialFile: File, targetFile: File, ...otherFiles: File[]) {
             const host = createModuleResolutionHost(false, ...[initialFile, targetFile].concat(...otherFiles));
-            const result = resolveTypeReferenceDirective(typeDirective, initialFile.name, compilationRoot, {}, host);
+            const result = resolveTypeReferenceDirective(typeDirective, initialFile.name, {typesRoot}, host);
             assert(result.resolvedTypeReferenceDirective.resolvedFileName !== undefined, "expected type directive to be resolved");
             assert.equal(result.resolvedTypeReferenceDirective.resolvedFileName, targetFile.name, "unexpected result of type reference resolution");
             assert.equal(result.resolvedTypeReferenceDirective.primary, primary, "unexpected 'primary' value");
@@ -968,64 +968,64 @@ import b = require("./moduleB.ts");
             {
                 const f1 = { name: "/root/src/app.ts" }
                 const f2 = { name: "/root/src/types/lib/index.d.ts" }; 
-                test(/*libraryRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2);
+                test(/*typesRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2);
             }
             {
                 const f1 = { name: "/root/src/app.ts" }
                 const f2 = { name: "/root/src/types/lib/typings/lib.d.ts" };
                 const package = { name: "/root/src/types/lib/package.json", content: JSON.stringify({types: "typings/lib.d.ts"}) }; 
-                test(/*libraryRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2, package);
+                test(/*typesRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2, package);
             }
             {
                 const f1 = { name: "/root/src/app.ts" }
                 const f2 = { name: "/root/src/node_modules/lib/index.d.ts" }; 
-                test(/*libraryRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2);
+                test(/*typesRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2);
             }
             {
                 const f1 = { name: "/root/src/app.ts" }
                 const f2 = { name: "/root/src/node_modules/lib/typings/lib.d.ts" };
                 const package = { name: "/root/src/node_modules/lib/package.json", content: JSON.stringify({types: "typings/lib.d.ts"}) }; 
-                test(/*libraryRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2, package);
+                test(/*typesRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2, package);
             }
             {
                 const f1 = { name: "/root/src/app.ts" }
                 const f2 = { name: "/root/src/node_modules/@types/lib/index.d.ts" }; 
-                test(/*libraryRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2);
+                test(/*typesRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2);
             }
             {
                 const f1 = { name: "/root/src/app.ts" }
                 const f2 = { name: "/root/src/node_modules/@types/lib/typings/lib.d.ts" };
                 const package = { name: "/root/src/node_modules/@types/lib/package.json", content: JSON.stringify({types: "typings/lib.d.ts"}) }; 
-                test(/*libraryRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2, package);
+                test(/*typesRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2, package);
             }
         });
         it("Can be resolved from secondary location", () => {
             {
                 const f1 = { name: "/root/src/app.ts" }
                 const f2 = { name: "/root/node_modules/lib.d.ts" };
-                test(/*libraryRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ false, f1, f2);
+                test(/*typesRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ false, f1, f2);
             }
             {
                 const f1 = { name: "/root/src/app.ts" }
                 const f2 = { name: "/root/node_modules/lib/index.d.ts" };
-                test(/*libraryRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ false, f1, f2);
+                test(/*typesRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ false, f1, f2);
             }
             {
                 const f1 = { name: "/root/src/app.ts" }
                 const f2 = { name: "/root/node_modules/lib/typings/lib.d.ts" };
                 const package = { name: "/root/node_modules/lib/package.json", content: JSON.stringify({typings: "typings/lib.d.ts"}) };
-                test(/*libraryRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ false, f1, f2, package);
+                test(/*typesRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ false, f1, f2, package);
             }
             {
                 const f1 = { name: "/root/src/app.ts" }
                 const f2 = { name: "/root/node_modules/@types/lib/index.d.ts" };
-                test(/*libraryRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ false, f1, f2);
+                test(/*typesRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ false, f1, f2);
             }
             {
                 const f1 = { name: "/root/src/app.ts" }
                 const f2 = { name: "/root/node_modules/@types/lib/typings/lib.d.ts" };
                 const package = { name: "/root/node_modules/@types/lib/package.json", content: JSON.stringify({typings: "typings/lib.d.ts"}) };
-                test(/*libraryRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ false, f1, f2, package);
+                test(/*typesRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ false, f1, f2, package);
             }
         });
         it("Primary resolution overrides secondary resolutions", () => {
@@ -1033,7 +1033,7 @@ import b = require("./moduleB.ts");
                 const f1 = { name: "/root/src/a/b/c/app.ts" };
                 const f2 = { name: "/root/src/types/lib/index.d.ts" };
                 const f3 = { name: "/root/src/a/b/node_modules/lib.d.ts" }
-                test(/*libraryRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2, f3);
+                test(/*typesRoot*/"/root/src", /* typeDirective */"lib", /*primary*/ true, f1, f2, f3);
             }
         })
         it("Reused program keeps errors", () => {
diff --git a/tests/cases/unittests/reuseProgramStructure.ts b/tests/cases/unittests/reuseProgramStructure.ts
index 4b85e2fa827..036a58e0c99 100644
--- a/tests/cases/unittests/reuseProgramStructure.ts
+++ b/tests/cases/unittests/reuseProgramStructure.ts
@@ -333,40 +333,40 @@ module ts {
 
         it("resolved type directives cache follows type directives", () => {
             let files = [
-                { name: "a.ts", text: SourceText.New("/// <reference types='typedefs'/>", "", "var x = $") },
-                { name: "types/typedefs/index.d.ts", text: SourceText.New("", "", "declare var $: number") },
+                { name: "/a.ts", text: SourceText.New("/// <reference types='typedefs'/>", "", "var x = $") },
+                { name: "/types/typedefs/index.d.ts", text: SourceText.New("", "", "declare var $: number") },
             ];
-            var options: CompilerOptions = { target };
+            var options: CompilerOptions = { target, typesRoot: "/" };
 
-            var program_1 = newProgram(files, ["a.ts"], options);
-            checkResolvedTypeDirectivesCache(program_1, "a.ts", { "typedefs": { resolvedFileName: "types/typedefs/index.d.ts", primary: true } });
-            checkResolvedTypeDirectivesCache(program_1, "types/typedefs/index.d.ts", undefined);
+            var program_1 = newProgram(files, ["/a.ts"], options);
+            checkResolvedTypeDirectivesCache(program_1, "/a.ts", { "typedefs": { resolvedFileName: "/types/typedefs/index.d.ts", primary: true } });
+            checkResolvedTypeDirectivesCache(program_1, "/types/typedefs/index.d.ts", undefined);
 
-            var program_2 = updateProgram(program_1, ["a.ts"], options, files => {
+            var program_2 = updateProgram(program_1, ["/a.ts"], options, files => {
                 files[0].text = files[0].text.updateProgram("var x = 2");
             });
             assert.isTrue(program_1.structureIsReused);
 
             // content of resolution cache should not change
-            checkResolvedTypeDirectivesCache(program_1, "a.ts", { "typedefs": { resolvedFileName: "types/typedefs/index.d.ts", primary: true } });
-            checkResolvedTypeDirectivesCache(program_1, "types/typedefs/index.d.ts", undefined);
+            checkResolvedTypeDirectivesCache(program_1, "/a.ts", { "typedefs": { resolvedFileName: "/types/typedefs/index.d.ts", primary: true } });
+            checkResolvedTypeDirectivesCache(program_1, "/types/typedefs/index.d.ts", undefined);
 
             // type reference directives has changed - program is not reused
-            var program_3 = updateProgram(program_2, ["a.ts"], options, files => {
+            var program_3 = updateProgram(program_2, ["/a.ts"], options, files => {
                 files[0].text = files[0].text.updateReferences("");
             });
 
             assert.isTrue(!program_2.structureIsReused);
-            checkResolvedTypeDirectivesCache(program_3, "a.ts", undefined);
+            checkResolvedTypeDirectivesCache(program_3, "/a.ts", undefined);
 
-            var program_4 = updateProgram(program_3, ["a.ts"], options, files => {
+            var program_4 = updateProgram(program_3, ["/a.ts"], options, files => {
                 let newReferences = `/// <reference types="typedefs"/>
                 /// <reference types="typedefs2"/>
                 `;
                 files[0].text = files[0].text.updateReferences(newReferences);
             });
             assert.isTrue(!program_3.structureIsReused);
-            checkResolvedTypeDirectivesCache(program_1, "a.ts", { "typedefs": { resolvedFileName: "types/typedefs/index.d.ts", primary: true } });
+            checkResolvedTypeDirectivesCache(program_1, "/a.ts", { "typedefs": { resolvedFileName: "/types/typedefs/index.d.ts", primary: true } });
         });
     })
 }
\ No newline at end of file