diff --git a/Jakefile.js b/Jakefile.js
index cb53b479502..f27e61062f0 100644
--- a/Jakefile.js
+++ b/Jakefile.js
@@ -128,7 +128,8 @@ var harnessSources = [
     "services/preProcessFile.ts",
     "services/patternMatcher.ts",
     "versionCache.ts",
-    "convertToBase64.ts"
+    "convertToBase64.ts",
+    "transpile.ts"
 ].map(function (f) {
     return path.join(unittestsDirectory, f);
 })).concat([
diff --git a/src/compiler/program.ts b/src/compiler/program.ts
index 32503de2566..4cccc881d40 100644
--- a/src/compiler/program.ts
+++ b/src/compiler/program.ts
@@ -10,9 +10,6 @@ module ts {
     /** The version of the TypeScript compiler release */
     export const version = "1.5.3";
 
-    const carriageReturnLineFeed = "\r\n";
-    const lineFeed = "\n";
-
     export function findConfigFile(searchPath: string): string {
         var fileName = "tsconfig.json";
         while (true) {
@@ -94,10 +91,7 @@ module ts {
             }
         }
 
-        let newLine =
-            options.newLine === NewLineKind.CarriageReturnLineFeed ? carriageReturnLineFeed :
-            options.newLine === NewLineKind.LineFeed ? lineFeed :
-            sys.newLine;
+        const newLine = getNewLineCharacter(options);
 
         return {
             getSourceFile,
@@ -175,6 +169,7 @@ module ts {
             getGlobalDiagnostics,
             getSemanticDiagnostics,
             getDeclarationDiagnostics,
+            getCompilerOptionsDiagnostics,
             getTypeChecker,
             getDiagnosticsProducingTypeChecker,
             getCommonSourceDirectory: () => commonSourceDirectory,
@@ -291,6 +286,12 @@ module ts {
             }
         }
 
+        function getCompilerOptionsDiagnostics(): Diagnostic[]{
+            let allDiagnostics: Diagnostic[] = [];
+            addRange(allDiagnostics, diagnostics.getGlobalDiagnostics());
+            return sortAndDeduplicateDiagnostics(allDiagnostics);
+        }
+
         function getGlobalDiagnostics(): Diagnostic[] {
             let typeChecker = getDiagnosticsProducingTypeChecker();
 
diff --git a/src/compiler/types.ts b/src/compiler/types.ts
index a6fa89846bb..7eec44eb2f2 100644
--- a/src/compiler/types.ts
+++ b/src/compiler/types.ts
@@ -1064,6 +1064,7 @@ module ts {
         getGlobalDiagnostics(): Diagnostic[];
         getSemanticDiagnostics(sourceFile?: SourceFile): Diagnostic[];
         getDeclarationDiagnostics(sourceFile?: SourceFile): Diagnostic[];
+        /* @internal */ getCompilerOptionsDiagnostics(): Diagnostic[];
 
         /** 
          * Gets a type checker that can be used to semantically analyze source fils in the program.
diff --git a/src/compiler/utilities.ts b/src/compiler/utilities.ts
index 3ded0a7cfd9..3bb459ff99e 100644
--- a/src/compiler/utilities.ts
+++ b/src/compiler/utilities.ts
@@ -1774,6 +1774,21 @@ module ts {
 
         return result;
     }
+
+    const carriageReturnLineFeed = "\r\n";
+    const lineFeed = "\n";
+    export function getNewLineCharacter(options: CompilerOptions): string {
+        if (options.newLine === NewLineKind.CarriageReturnLineFeed) {
+            return carriageReturnLineFeed;
+        }
+        else if (options.newLine === NewLineKind.LineFeed) {
+            return lineFeed;
+        }
+        else if (sys) {
+            return sys.newLine
+        }
+        return carriageReturnLineFeed;
+    }
 }
 
 module ts {
diff --git a/src/services/services.ts b/src/services/services.ts
index d5ba024cee5..ff1e627a241 100644
--- a/src/services/services.ts
+++ b/src/services/services.ts
@@ -1772,15 +1772,24 @@ module ts {
         // Filename can be non-ts file.
         options.allowNonTsExtensions = true;
 
+        // We are not returning a lib file when asked, so pass this flag to
+        // avoid reporting a file not found error
+        options.noLib = true;
+
+        // Similar to the library, we are not returning any refrenced files
+        options.noResolve = true;
+
         // Parse
-        var inputFileName = fileName || "module.ts";
-        var sourceFile = createSourceFile(inputFileName, input, options.target);
+        let inputFileName = fileName || "module.ts";
+        let sourceFile = createSourceFile(inputFileName, input, options.target);
 
         // Store syntactic diagnostics
         if (diagnostics && sourceFile.parseDiagnostics) {
             diagnostics.push(...sourceFile.parseDiagnostics);
         }
 
+        let newLine = getNewLineCharacter(options);
+
         // Output
         let outputText: string;
 
@@ -1795,13 +1804,13 @@ module ts {
             useCaseSensitiveFileNames: () => false,
             getCanonicalFileName: fileName => fileName,
             getCurrentDirectory: () => "",
-            getNewLine: () => (sys && sys.newLine) || "\r\n"
+            getNewLine: () => newLine
         };
 
         var program = createProgram([inputFileName], options, compilerHost);
 
         if (diagnostics) {
-            diagnostics.push(...program.getGlobalDiagnostics());
+            diagnostics.push(...program.getCompilerOptionsDiagnostics());
         }
 
         // Emit
diff --git a/tests/cases/unittests/transpile.ts b/tests/cases/unittests/transpile.ts
new file mode 100644
index 00000000000..32caad8d05c
--- /dev/null
+++ b/tests/cases/unittests/transpile.ts
@@ -0,0 +1,59 @@
+/// <reference path="..\..\..\src\harness\harness.ts" />
+
+module ts {
+    describe("Transpile", () => {
+
+        function runTest(input: string, compilerOptions: ts.CompilerOptions = {}, expectedOutput?: string, expectedDiagnosticCodes: number[] = []): void {
+            let diagnostics: Diagnostic[] = [];
+            let result = transpile(input, compilerOptions, "file.ts", diagnostics);
+
+            assert.equal(diagnostics.length, expectedDiagnosticCodes.length);
+            for (let diagnostic of diagnostics) {
+                assert.isTrue(expectedDiagnosticCodes.indexOf(diagnostic.code) >= 0, `Found an unexpected diagnostic: ${ diagnostic.code }`);
+            }
+
+            if (expectedOutput !== undefined) {
+                assert.equal(result, expectedOutput);
+            }
+        }
+
+        it("Generates correct compilerOptions diagnostics", () => {
+            // Expecting 5047: "Option 'isolatedModules' can only be used when either option'--module' is provided or option 'target' is 'ES6' or higher."
+            runTest(`var x = 0;`, {}, /*expectedOutput*/ undefined, [5047]);
+        });
+
+        it("Generates no diagnostics with valid inputs", () => {
+            // No errors
+            runTest(`var x = 0;`, { module: ModuleKind.CommonJS }, /*expectedOutput*/ undefined, []);
+        });
+
+        it("Generates no diagnostics for missing file references", () => {
+            runTest(`/// <reference path="file2.ts" />
+var x = 0;`,
+                { module: ModuleKind.CommonJS }, /*expectedOutput*/ undefined, []);
+        });
+
+        it("Generates no diagnostics for missing module imports", () => {
+            runTest(`import {a} from "module2";`,
+                { module: ModuleKind.CommonJS }, /*expectedOutput*/ undefined, []);
+        });
+
+        it("Generates expected syntactic diagnostics", () => {
+            runTest(`a b`,
+                { module: ModuleKind.CommonJS }, /*expectedOutput*/ undefined, [1005]); /// 1005: ';' Expected
+        });
+
+        it("Does not generate semantic diagnostics", () => {
+            runTest(`var x: string = 0;`,
+                { module: ModuleKind.CommonJS }, /*expectedOutput*/ undefined, []);
+        });
+
+        it("Generates module output", () => {
+            runTest(`var x = 0;`, { module: ModuleKind.AMD }, `define(["require", "exports"], function (require, exports) {\r\n    var x = 0;\r\n});\r\n`);
+        });
+
+        it("Uses correct newLine character", () => {
+            runTest(`var x = 0;`, { module: ModuleKind.CommonJS, newLine: NewLineKind.LineFeed }, `var x = 0;\n`);
+        });
+    });
+}