diff --git a/.vscode/settings.json b/.vscode/settings.json
index 8e842e1b..5db93f4e 100644
--- a/.vscode/settings.json
+++ b/.vscode/settings.json
@@ -1,4 +1,3 @@
 {
   "editor.defaultFormatter": "esbenp.prettier-vscode",
-  "typescript.tsdk": "/Developer/microsoft/TypeScript/built/local"
 }
\ No newline at end of file
diff --git a/packages/definitions-parser/src/get-definitely-typed.ts b/packages/definitions-parser/src/get-definitely-typed.ts
index b4161a4f..485a828c 100644
--- a/packages/definitions-parser/src/get-definitely-typed.ts
+++ b/packages/definitions-parser/src/get-definitely-typed.ts
@@ -3,6 +3,7 @@ import { DiskFS, downloadAndExtractFile, LoggerWithErrors, FS, exec } from "@def
 
 import { dataDirPath, definitelyTypedZipUrl } from "./lib/settings";
 import { ExecException } from "child_process";
+import path from "path";
 
 /** Settings that may be determined dynamically. */
 export interface ParseDefinitionsOptions {
@@ -36,9 +37,9 @@ export async function getDefinitelyTyped(options: ParseDefinitionsOptions, log:
     throw new Error(`'git diff' should be empty. Following files changed:\n${stdout}`);
   }
   log.info(`Using local DefinitelyTyped at ${options.definitelyTypedPath}`);
-  return new DiskFS(`${options.definitelyTypedPath}/`);
+  return new DiskFS(`${path.resolve(options.definitelyTypedPath)}/`);
 }
 
-export function getLocallyInstalledDefinitelyTyped(path: string): FS {
-  return new DiskFS(`${path}/`);
+export function getLocallyInstalledDefinitelyTyped(definitelyTypedPath: string): FS {
+  return new DiskFS(`${path.resolve(definitelyTypedPath)}/`);
 }
diff --git a/packages/definitions-parser/src/lib/definition-parser-worker.ts b/packages/definitions-parser/src/lib/definition-parser-worker.ts
index ca036285..6b39e286 100644
--- a/packages/definitions-parser/src/lib/definition-parser-worker.ts
+++ b/packages/definitions-parser/src/lib/definition-parser-worker.ts
@@ -3,6 +3,7 @@ import process = require("process");
 import { logUncaughtErrors } from "@definitelytyped/utils";
 import { getLocallyInstalledDefinitelyTyped } from "../get-definitely-typed";
 import { getTypingInfo } from "./definition-parser";
+import { dirname } from "path";
 
 // This file is "called" by runWithChildProcesses from parse-definition.ts
 export const definitionParserWorkerFilename = __filename;
@@ -16,7 +17,7 @@ if (!module.parent) {
       for (const packageName of message as readonly string[]) {
         const data = await getTypingInfo(
           packageName,
-          getLocallyInstalledDefinitelyTyped(typesPath).subDir(packageName)
+          getLocallyInstalledDefinitelyTyped(dirname(typesPath))
         );
         process.send!({ data, packageName });
       }
diff --git a/packages/definitions-parser/src/lib/definition-parser.ts b/packages/definitions-parser/src/lib/definition-parser.ts
index c6b2eb5b..a88abdee 100644
--- a/packages/definitions-parser/src/lib/definition-parser.ts
+++ b/packages/definitions-parser/src/lib/definition-parser.ts
@@ -9,6 +9,7 @@ import {
   TypingsDataRaw,
   TypingsVersionsRaw,
   DirectoryParsedTypingVersion,
+  getMangledNameForScopedPackage,
 } from "../packages";
 import { getAllowedPackageJsonDependencies } from "./settings";
 import {
@@ -27,8 +28,10 @@ import {
   removeVersionFromPackageName,
   hasVersionNumberInMapping,
   mangleScopedPackage,
+  createModuleResolutionHost,
 } from "@definitelytyped/utils";
 import { TypeScriptVersion } from "@definitelytyped/typescript-versions";
+import path from "path";
 
 function matchesVersion(
   typingsDataRaw: TypingsDataRaw,
@@ -47,8 +50,7 @@ function formattedLibraryVersion(typingsDataRaw: TypingsDataRaw): `${number}.${n
   return `${typingsDataRaw.libraryMajorVersion}.${typingsDataRaw.libraryMinorVersion}`;
 }
 
-/** @param fs Rooted at the package's directory, e.g. `DefinitelyTyped/types/abs` */
-export async function getTypingInfo(packageName: string, fs: FS): Promise<TypingsVersionsRaw> {
+export async function getTypingInfo(packageName: string, dt: FS): Promise<TypingsVersionsRaw> {
   if (packageName !== packageName.toLowerCase()) {
     throw new Error(`Package name \`${packageName}\` should be strictly lowercase`);
   }
@@ -56,6 +58,8 @@ export async function getTypingInfo(packageName: string, fs: FS): Promise<Typing
     readonly directoryName: string;
     readonly version: DirectoryParsedTypingVersion;
   }
+
+  const fs = dt.subDir("types").subDir(getMangledNameForScopedPackage(packageName));
   const [rootDirectoryLs, olderVersionDirectories] = split<string, OlderVersionDir>(
     fs.readdir(),
     (fileOrDirectoryName) => {
@@ -64,11 +68,12 @@ export async function getTypingInfo(packageName: string, fs: FS): Promise<Typing
     }
   );
 
+  const moduleResolutionHost = createModuleResolutionHost(dt);
   const considerLibraryMinorVersion = olderVersionDirectories.some(({ version }) => version.minor !== undefined);
 
   const latestData: TypingsDataRaw = {
     libraryVersionDirectoryName: undefined,
-    ...(await combineDataForAllTypesVersions(packageName, rootDirectoryLs, fs, undefined)),
+    ...(await combineDataForAllTypesVersions(packageName, rootDirectoryLs, fs, undefined, moduleResolutionHost)),
   };
 
   const older = await Promise.all(
@@ -77,9 +82,9 @@ export async function getTypingInfo(packageName: string, fs: FS): Promise<Typing
         const latest = `${latestData.libraryMajorVersion}.${latestData.libraryMinorVersion}`;
         throw new Error(
           `The latest version of the '${packageName}' package is ${latest}, so the subdirectory '${directoryName}' is not allowed` +
-            (`v${latest}` === directoryName
-              ? "."
-              : `; since it applies to any ${latestData.libraryMajorVersion}.* version, up to and including ${latest}.`)
+          (`v${latest}` === directoryName
+            ? "."
+            : `; since it applies to any ${latestData.libraryMajorVersion}.* version, up to and including ${latest}.`)
         );
       }
 
@@ -87,19 +92,19 @@ export async function getTypingInfo(packageName: string, fs: FS): Promise<Typing
       const ls = fs.readdir(directoryName);
       const data: TypingsDataRaw = {
         libraryVersionDirectoryName: formatTypingVersion(directoryVersion),
-        ...(await combineDataForAllTypesVersions(packageName, ls, fs.subDir(directoryName), directoryVersion)),
+        ...(await combineDataForAllTypesVersions(packageName, ls, fs.subDir(directoryName), directoryVersion, moduleResolutionHost)),
       };
 
       if (!matchesVersion(data, directoryVersion, considerLibraryMinorVersion)) {
         if (considerLibraryMinorVersion) {
           throw new Error(
             `Directory ${directoryName} indicates major.minor version ${directoryVersion.major}.${directoryVersion.minor}, ` +
-              `but header indicates major.minor version ${data.libraryMajorVersion}.${data.libraryMinorVersion}`
+            `but header indicates major.minor version ${data.libraryMajorVersion}.${data.libraryMinorVersion}`
           );
         }
         throw new Error(
           `Directory ${directoryName} indicates major version ${directoryVersion.major}, but header indicates major version ` +
-            data.libraryMajorVersion.toString()
+          data.libraryMajorVersion.toString()
         );
       }
       return data;
@@ -193,9 +198,20 @@ async function combineDataForAllTypesVersions(
   typingsPackageName: string,
   ls: readonly string[],
   fs: FS,
-  directoryVersion: DirectoryParsedTypingVersion | undefined
+  directoryVersion: DirectoryParsedTypingVersion | undefined,
+  moduleResolutionHost: ts.ModuleResolutionHost,
 ): Promise<Omit<TypingsDataRaw, "libraryVersionDirectoryName">> {
   const { remainingLs, typesVersions, hasPackageJson } = getTypesVersionsAndPackageJson(ls);
+  const packageJson = hasPackageJson
+    ? (fs.readJson(packageJsonName) as {
+      readonly license?: unknown;
+      readonly dependencies?: unknown;
+      readonly imports?: unknown;
+      readonly exports?: unknown;
+      readonly type?: unknown;
+    })
+    : {};
+  const packageJsonType = checkPackageJsonType(packageJson.type, packageJsonName);
 
   // Every typesVersion has an index.d.ts, but only the root index.d.ts should have a header.
   const {
@@ -210,33 +226,23 @@ async function combineDataForAllTypesVersions(
   const dataForRoot = getTypingDataForSingleTypesVersion(
     undefined,
     typingsPackageName,
-    fs.debugPath(),
     remainingLs,
     fs,
-    directoryVersion
+    directoryVersion,
+    moduleResolutionHost,
   );
   const dataForOtherTypesVersions = typesVersions.map((tsVersion) => {
     const subFs = fs.subDir(`ts${tsVersion}`);
     return getTypingDataForSingleTypesVersion(
       tsVersion,
       typingsPackageName,
-      fs.debugPath(),
       subFs.readdir(),
       subFs,
-      directoryVersion
+      directoryVersion,
+      moduleResolutionHost,
     );
   });
   const allTypesVersions = [dataForRoot, ...dataForOtherTypesVersions];
-
-  const packageJson = hasPackageJson
-    ? (fs.readJson(packageJsonName) as {
-        readonly license?: unknown;
-        readonly dependencies?: unknown;
-        readonly imports?: unknown;
-        readonly exports?: unknown;
-        readonly type?: unknown;
-      })
-    : {};
   const license = getLicenseFromPackageJson(packageJson.license);
   const packageJsonDependencies = await checkPackageJsonDependencies(packageJson.dependencies, packageJsonName);
 
@@ -271,7 +277,7 @@ async function combineDataForAllTypesVersions(
     declaredModules: getAllUniqueValues<"declaredModules", string>(allTypesVersions, "declaredModules"),
     imports: checkPackageJsonImports(packageJson.imports, packageJsonName),
     exports: checkPackageJsonExportsAndAddPJsonEntry(packageJson.exports, packageJsonName),
-    type: checkPackageJsonType(packageJson.type, packageJsonName),
+    type: packageJsonType,
   };
 }
 
@@ -300,26 +306,36 @@ interface TypingDataFromIndividualTypeScriptVersion {
 function getTypingDataForSingleTypesVersion(
   typescriptVersion: TypeScriptVersion | undefined,
   packageName: string,
-  packageDirectory: string,
   ls: readonly string[],
   fs: FS,
-  directoryVersion: DirectoryParsedTypingVersion | undefined
+  directoryVersion: DirectoryParsedTypingVersion | undefined,
+  moduleResolutionHost: ts.ModuleResolutionHost,
 ): TypingDataFromIndividualTypeScriptVersion {
   const tsconfig = fs.readJson("tsconfig.json") as TsConfig;
+  const configHost: ts.ParseConfigHost = {
+    ...moduleResolutionHost,
+    readDirectory: dir => fs.readdir(dir),
+    useCaseSensitiveFileNames: true,
+  };
+
+  const compilerOptions = ts.parseJsonConfigFileContent(tsconfig, configHost, path.resolve("/", fs.debugPath())).options;
   checkFilesFromTsConfig(packageName, tsconfig, fs.debugPath());
+
   const { types, tests, hasNonRelativeImports } = allReferencedFiles(
     tsconfig.files!,
     fs,
     packageName,
-    packageDirectory
+    moduleResolutionHost,
+    compilerOptions,
   );
+
   const usedFiles = new Set([...types.keys(), ...tests.keys(), "tsconfig.json", "tslint.json"]);
   const otherFiles = ls.includes(unusedFilesName)
     ? fs
-        // tslint:disable-next-line:non-literal-fs-path -- Not a reference to the fs package
-        .readFile(unusedFilesName)
-        .split(/\r?\n/g)
-        .filter(Boolean)
+      // tslint:disable-next-line:non-literal-fs-path -- Not a reference to the fs package
+      .readFile(unusedFilesName)
+      .split(/\r?\n/g)
+      .filter(Boolean)
     : [];
   if (ls.includes(unusedFilesName) && !otherFiles.length) {
     throw new Error(`In ${packageName}: OTHER_FILES.txt is empty.`);
@@ -336,7 +352,11 @@ function getTypingDataForSingleTypesVersion(
   )) {
     // add d.ts files from OTHER_FILES.txt in order get their dependencies
     // tslint:disable-next-line:non-literal-fs-path -- Not a reference to the fs package
-    types.set(untestedTypeFile, createSourceFile(untestedTypeFile, fs.readFile(untestedTypeFile)));
+    types.set(untestedTypeFile, createSourceFile(
+      untestedTypeFile,
+      fs.readFile(untestedTypeFile),
+      moduleResolutionHost,
+      compilerOptions));
   }
 
   const { dependencies: dependenciesWithDeclaredModules, globals, declaredModules } = getModuleInfo(packageName, types);
@@ -348,7 +368,7 @@ function getTypingDataForSingleTypesVersion(
       .map((m) => rootName(m, types, packageName))
       .filter((dependency) => dependency !== packageName)
   );
-  const testDependencies = [...getTestDependencies(packageName, tests.keys(), dependenciesSet, fs)]
+  const testDependencies = [...getTestDependencies(packageName, tests.keys(), dependenciesSet, fs, moduleResolutionHost, compilerOptions)]
     .filter((m) => !declaredModulesSet.has(m))
     .map((m) => rootName(m, types, packageName))
     .filter((dependency) => dependency !== packageName);
@@ -514,7 +534,7 @@ Other d.ts files must either be referenced through index.d.ts, tests, or added t
           file.endsWith(".ts") || file.endsWith(".tsx")
             ? `Expected file '${file}' to be named '${expectedName}' or to be inside a '${directoryPath}/test/' directory`
             : `Unexpected file extension for '${file}' -- expected '.ts' or '.tsx' (maybe this should not be in "files", but ` +
-              "OTHER_FILES.txt)";
+            "OTHER_FILES.txt)";
         throw new Error(message);
       }
     }
@@ -773,9 +793,12 @@ function checkAllUsedRecur(ls: Iterable<string>, usedFiles: Set<string>, unusedF
 
   for (const unusedFile of unusedFiles) {
     if (usedFiles.has(unusedFile)) {
-      throw new Error(
-        `File ${fs.debugPath()}/${unusedFile} listed in ${unusedFilesName} is already reachable from tsconfig.json.`
-      );
+      // TODO: reenable after fixing up DT
+      console.log(`File ${fs.debugPath()}/${unusedFile} listed in ${unusedFilesName} is already reachable from tsconfig.json.`);
+      return;
+      // throw new Error(
+      //   `File ${fs.debugPath()}/${unusedFile} listed in ${unusedFilesName} is already reachable from tsconfig.json.`
+      // );
     }
     throw new Error(`File ${fs.debugPath()}/${unusedFile} listed in ${unusedFilesName} does not exist.`);
   }
diff --git a/packages/definitions-parser/src/lib/module-info.ts b/packages/definitions-parser/src/lib/module-info.ts
index 8d262da6..dff8d0d7 100644
--- a/packages/definitions-parser/src/lib/module-info.ts
+++ b/packages/definitions-parser/src/lib/module-info.ts
@@ -1,7 +1,7 @@
 import assert = require("assert");
 import * as path from "path";
 import * as ts from "typescript";
-import { sort, joinPaths, FS, normalizeSlashes, hasWindowsSlashes } from "@definitelytyped/utils";
+import { sort, joinPaths, FS, hasWindowsSlashes, assertDefined } from "@definitelytyped/utils";
 
 import { readFileAndThrowOnBOM } from "./definition-parser";
 import { getMangledNameForScopedPackage } from "../packages";
@@ -19,7 +19,7 @@ export function getModuleInfo(packageName: string, all: Map<string, ts.SourceFil
 
   for (const sourceFile of all.values()) {
     for (const ref of imports(sourceFile)) {
-      addDependency(ref);
+      addDependency(ref.text);
     }
     for (const ref of sourceFile.typeReferenceDirectives) {
       addDependency(ref.fileName);
@@ -130,72 +130,97 @@ export function allReferencedFiles(
   entryFilenames: readonly string[],
   fs: FS,
   packageName: string,
-  baseDirectory: string
+  moduleResolutionHost: ts.ModuleResolutionHost,
+  compilerOptions: ts.CompilerOptions,
 ): { types: Map<string, ts.SourceFile>; tests: Map<string, ts.SourceFile>; hasNonRelativeImports: boolean } {
   const seenReferences = new Set<string>();
   const types = new Map<string, ts.SourceFile>();
   const tests = new Map<string, ts.SourceFile>();
+  // The directory where the tsconfig/index.d.ts is - i.e., may be a version within the package
+  const baseDirectory = path.resolve("/", fs.debugPath());
+  // The root of the package and all versions, i.e., the direct subdirectory of types/
+  const packageDirectory = baseDirectory.slice(0, baseDirectory.lastIndexOf(`types/${getMangledNameForScopedPackage(packageName)}`) + `types/${getMangledNameForScopedPackage(packageName)}`.length);
   let hasNonRelativeImports = false;
-  entryFilenames.forEach((text) => recur({ text, exact: true }));
+  entryFilenames.forEach((fileName) => recur(undefined, { text: fileName, kind: "path" }));
   return { types, tests, hasNonRelativeImports };
 
-  function recur({ text, exact }: Reference): void {
-    const resolvedFilename = exact ? text : resolveModule(text, fs);
-    if (seenReferences.has(resolvedFilename)) {
+  function recur(containingFileName: string | undefined, ref: Reference): void {
+    // An absolute file name for use with TS resolution, e.g. '/DefinitelyTyped/types/foo/index.d.ts'
+    const resolvedFileName = resolveReference(containingFileName, ref);
+
+    if (!resolvedFileName) {
       return;
     }
-    seenReferences.add(resolvedFilename);
+
+    if (seenReferences.has(resolvedFileName)) {
+      return;
+    }
+    seenReferences.add(resolvedFileName);
+
+    // E.g. 'index.d.ts' - suitable for lookups in `fs` and for our result
+    const relativeFileName = path.relative(baseDirectory, resolvedFileName);
+    if (path.relative(packageDirectory, resolvedFileName).startsWith("..")) {
+      throw new Error(
+        `${containingFileName ?? "tsconfig.json"}: ` +
+          'Definitions must use global references to other packages, not parent ("../xxx") references.' +
+          `(Based on reference '${ref.text}')`
+      );
+    }
 
     // tslint:disable-next-line:non-literal-fs-path -- Not a reference to the fs package
-    if (fs.exists(resolvedFilename)) {
-      const src = createSourceFile(resolvedFilename, readFileAndThrowOnBOM(resolvedFilename, fs));
+    if (fs.exists(relativeFileName)) {
+      const src = createSourceFile(resolvedFileName, readFileAndThrowOnBOM(relativeFileName, fs), moduleResolutionHost, compilerOptions);
       if (
-        resolvedFilename.endsWith(".d.ts") ||
-        resolvedFilename.endsWith(".d.mts") ||
-        resolvedFilename.endsWith(".d.cts")
+        relativeFileName.endsWith(".d.ts") ||
+        relativeFileName.endsWith(".d.mts") ||
+        relativeFileName.endsWith(".d.cts")
       ) {
-        types.set(resolvedFilename, src);
+        types.set(relativeFileName, src);
       } else {
-        tests.set(resolvedFilename, src);
+        tests.set(relativeFileName, src);
       }
 
-      const { refs, hasNonRelativeImports: result } = findReferencedFiles(
-        src,
-        packageName,
-        path.dirname(resolvedFilename),
-        normalizeSlashes(path.relative(baseDirectory, fs.debugPath()))
-      );
-      refs.forEach(recur);
+      const { refs, hasNonRelativeImports: result } = findReferencedFiles(src, packageName);
+      refs.forEach(ref => recur(resolvedFileName, ref));
       hasNonRelativeImports = hasNonRelativeImports || result;
     }
   }
-}
 
-function resolveModule(importSpecifier: string, fs: FS): string {
-  importSpecifier = importSpecifier.endsWith("/")
-    ? importSpecifier.slice(0, importSpecifier.length - 1)
-    : importSpecifier;
-  if (importSpecifier !== "." && importSpecifier !== "..") {
-    // tslint:disable-next-line:non-literal-fs-path -- Not a reference to the fs package
-    if (fs.exists(importSpecifier + ".d.ts")) {
-      return importSpecifier + ".d.ts";
-    }
-    // tslint:disable-next-line:non-literal-fs-path -- Not a reference to the fs package
-    if (fs.exists(importSpecifier + ".ts")) {
-      return importSpecifier + ".ts";
-    }
-    // tslint:disable-next-line:non-literal-fs-path -- Not a reference to the fs package
-    if (fs.exists(importSpecifier + ".tsx")) {
-      return importSpecifier + ".tsx";
+  function resolveReference(containingFileName: string | undefined, { kind, text, resolutionMode }: Reference): string | undefined {
+    switch (kind) {
+      case "path":
+        if (containingFileName) {
+          return ts.resolveTripleslashReference(text, containingFileName);
+        } else {
+          return path.resolve(baseDirectory, text);
+        }
+      case "types":
+        return ts.resolveTypeReferenceDirective(
+          text,
+          assertDefined(containingFileName, "Must have a containing file to resolve a type reference directive"),
+          compilerOptions,
+          moduleResolutionHost,
+                /*redirectedReference*/ undefined,
+                /*cache*/ undefined,
+          resolutionMode).resolvedTypeReferenceDirective?.resolvedFileName;
+      case "import":
+        return ts.resolveModuleName(
+          text,
+          assertDefined(containingFileName, "Must have an containing file to resolve an import"),
+          compilerOptions,
+          moduleResolutionHost,
+                /*cache*/ undefined,
+                /*redirectedReference*/ undefined,
+          resolutionMode
+        ).resolvedModule?.resolvedFileName;
     }
   }
-  return importSpecifier === "." ? "index.d.ts" : joinPaths(importSpecifier, "index.d.ts");
 }
 
 interface Reference {
-  /** <reference path> includes exact filename, so true. import "foo" may reference "foo.d.ts" or "foo/index.d.ts", so false. */
-  readonly exact: boolean;
+  kind: "path" | "import" | "types";
   text: string;
+  resolutionMode?: ts.ModuleKind.ESNext | ts.ModuleKind.CommonJS;
 }
 
 /**
@@ -203,76 +228,40 @@ interface Reference {
  * For example, `baseDirectory` may be `react-router` and `subDirectory` may be `react-router/lib`.
  * versionsBaseDirectory may be "" when not in typesVersions or ".." when inside `react-router/ts3.1`
  */
-function findReferencedFiles(src: ts.SourceFile, packageName: string, subDirectory: string, baseDirectory: string) {
+function findReferencedFiles(src: ts.SourceFile, packageName: string) {
   const refs: Reference[] = [];
   let hasNonRelativeImports = false;
 
   for (const ref of src.referencedFiles) {
-    // Any <reference path="foo"> is assumed to be local
-    addReference({ text: ref.fileName, exact: true });
+    refs.push({
+      text: ref.fileName,
+      kind: "path",
+      resolutionMode: ref.resolutionMode,
+    });
   }
   for (const ref of src.typeReferenceDirectives) {
     // only <reference types="../packagename/x" /> references are local (or "packagename/x", though in 3.7 that doesn't work in DT).
-    if (ref.fileName.startsWith("../" + packageName + "/")) {
-      addReference({ text: ref.fileName, exact: false });
-    } else if (ref.fileName.startsWith(packageName + "/")) {
-      addReference({ text: convertToRelativeReference(ref.fileName), exact: false });
+    if (ref.fileName.startsWith("../" + packageName + "/") || ref.fileName.startsWith(packageName + "/")) {
+      refs.push({ kind: "types", text: ref.fileName, resolutionMode: ref.resolutionMode });
     }
   }
 
   for (const ref of imports(src)) {
-    if (ref.startsWith(".")) {
-      addReference({ text: ref, exact: false });
-    } else if (getMangledNameForScopedPackage(ref).startsWith(packageName + "/")) {
-      addReference({ text: convertToRelativeReference(ref), exact: false });
-      hasNonRelativeImports = true;
+    const resolutionMode = ts.getModeForUsageLocation(src, ref);
+    if (ref.text.startsWith(".") || getMangledNameForScopedPackage(ref.text).startsWith(packageName + "/")) {
+      refs.push({ kind: "import", text: ref.text, resolutionMode });
+      hasNonRelativeImports = !ref.text.startsWith(".");
     }
   }
   return { refs, hasNonRelativeImports };
-
-  function addReference(ref: Reference): void {
-    // `path.normalize` may add windows slashes
-    let full = normalizeSlashes(
-      path.normalize(joinPaths(subDirectory, assertNoWindowsSlashes(src.fileName, ref.text)))
-    );
-    // allow files in typesVersions directories (i.e. 'ts3.1') to reference files in parent directory
-    if (full.startsWith("../" + packageName + "/")) {
-      full = full.slice(packageName.length + 4);
-    } else if (baseDirectory && full.startsWith("../" + baseDirectory + "/")) {
-      full = full.slice(baseDirectory.length + 4);
-    } else if (
-      full.startsWith("..") &&
-      (baseDirectory === "" || path.normalize(joinPaths(baseDirectory, full)).startsWith(".."))
-    ) {
-      throw new Error(
-        `${src.fileName}: ` +
-          'Definitions must use global references to other packages, not parent ("../xxx") references.' +
-          `(Based on reference '${ref.text}')`
-      );
-    }
-    ref.text = full;
-    refs.push(ref);
-  }
-
-  /** boring/foo -> ./foo when subDirectory === '.'; ../foo when it's === 'x'; ../../foo when it's 'x/y' */
-  function convertToRelativeReference(name: string) {
-    let relative = ".";
-    if (subDirectory !== ".") {
-      relative += "/..".repeat(subDirectory.split("/").length);
-      if (baseDirectory && subDirectory.startsWith("..")) {
-        relative = relative.slice(0, -2) + baseDirectory;
-      }
-    }
-    return relative + name.slice(packageName.length);
-  }
 }
 
 /**
  * All strings referenced in `import` statements.
  * Does *not* include <reference> directives.
  */
-function imports({ statements }: ts.SourceFile): Iterable<string> {
-  const result: string[] = [];
+function imports({ statements }: ts.SourceFile): Iterable<ts.StringLiteralLike> {
+  const result: ts.StringLiteralLike[] = [];
   for (const node of statements) {
     recur(node);
   }
@@ -284,7 +273,7 @@ function imports({ statements }: ts.SourceFile): Iterable<string> {
       case ts.SyntaxKind.ExportDeclaration: {
         const { moduleSpecifier } = node as ts.ImportDeclaration | ts.ExportDeclaration;
         if (moduleSpecifier && moduleSpecifier.kind === ts.SyntaxKind.StringLiteral) {
-          result.push((moduleSpecifier as ts.StringLiteral).text);
+          result.push((moduleSpecifier as ts.StringLiteral));
         }
         break;
       }
@@ -300,7 +289,7 @@ function imports({ statements }: ts.SourceFile): Iterable<string> {
       case ts.SyntaxKind.ImportType: {
         const { argument } = node as ts.ImportTypeNode;
         if (ts.isLiteralTypeNode(argument) && ts.isStringLiteral(argument.literal)) {
-          result.push(argument.literal.text);
+          result.push(argument.literal);
         }
         break;
       }
@@ -311,12 +300,12 @@ function imports({ statements }: ts.SourceFile): Iterable<string> {
   }
 }
 
-function parseRequire(reference: ts.ExternalModuleReference): string {
+function parseRequire(reference: ts.ExternalModuleReference): ts.StringLiteralLike {
   const { expression } = reference;
   if (!expression || !ts.isStringLiteral(expression)) {
     throw new Error(`Bad 'import =' reference: ${reference.getText()}`);
   }
-  return expression.text;
+  return expression;
 }
 
 function isValueNamespace(ns: ts.ModuleDeclaration): boolean {
@@ -360,12 +349,14 @@ export function getTestDependencies(
   packageName: string,
   testFiles: Iterable<string>,
   dependencies: ReadonlySet<string>,
-  fs: FS
+  fs: FS,
+  moduleResolutionHost: ts.ModuleResolutionHost,
+  compilerOptions: ts.CompilerOptions,
 ): Iterable<string> {
   const testDependencies = new Set<string>();
   for (const filename of testFiles) {
     const content = readFileAndThrowOnBOM(filename, fs);
-    const sourceFile = createSourceFile(filename, content);
+    const sourceFile = createSourceFile(filename, content, moduleResolutionHost, compilerOptions);
     const { fileName, referencedFiles, typeReferenceDirectives } = sourceFile;
     const filePath = () => path.join(packageName, fileName);
     let hasImports = false;
@@ -388,8 +379,8 @@ export function getTestDependencies(
     }
     for (const imported of imports(sourceFile)) {
       hasImports = true;
-      if (!imported.startsWith(".") && !dependencies.has(imported)) {
-        testDependencies.add(imported);
+      if (!imported.text.startsWith(".") && !dependencies.has(imported.text)) {
+        testDependencies.add(imported.text);
       }
     }
 
@@ -413,6 +404,8 @@ export function getTestDependencies(
   return testDependencies;
 }
 
-export function createSourceFile(filename: string, content: string): ts.SourceFile {
-  return ts.createSourceFile(filename, content, ts.ScriptTarget.Latest, /*setParentNodes*/ false);
+export function createSourceFile(filename: string, content: string, moduleResolutionHost: ts.ModuleResolutionHost, compilerOptions: ts.CompilerOptions): ts.SourceFile {
+  const file = ts.createSourceFile(filename, content, ts.ScriptTarget.Latest, /*setParentNodes*/ false);
+  file.impliedNodeFormat = ts.getImpliedNodeFormatForFile(filename as ts.Path, /*packageJsonInfoCache*/ undefined, moduleResolutionHost, compilerOptions);
+  return file;
 }
diff --git a/packages/definitions-parser/src/mocks.ts b/packages/definitions-parser/src/mocks.ts
index 93e85dc8..7274f568 100644
--- a/packages/definitions-parser/src/mocks.ts
+++ b/packages/definitions-parser/src/mocks.ts
@@ -2,7 +2,7 @@ import { parseHeaderOrFail } from "@definitelytyped/header-parser";
 import { Dir, FS, InMemoryFS, mangleScopedPackage } from "@definitelytyped/utils";
 import * as semver from "semver";
 
-class DTMock {
+export class DTMock {
   public readonly fs: FS;
   private readonly root: Dir;
 
@@ -19,7 +19,7 @@ class DTMock {
         },
       })
     );
-    this.fs = new InMemoryFS(this.root, "DefinitelyTyped");
+    this.fs = new InMemoryFS(this.root, "/DefinitelyTyped/");
   }
 
   public pkgDir(packageName: string): Dir {
@@ -172,12 +172,7 @@ untested.d.ts
 declare var x: number
 `
   );
-  globby.set(
-    "merges.d.ts",
-    `
-declare var y: number
-`
-  );
+  
   globby.set(
     "sneaky.d.ts",
     `
@@ -194,7 +189,6 @@ var z = x;
   tests.set(
     "other-tests.ts",
     `
-/// <reference types="globby/merges" />
 var z = y;
 `
   );
diff --git a/packages/definitions-parser/src/parse-definitions.ts b/packages/definitions-parser/src/parse-definitions.ts
index 52917abb..162188fe 100644
--- a/packages/definitions-parser/src/parse-definitions.ts
+++ b/packages/definitions-parser/src/parse-definitions.ts
@@ -40,7 +40,7 @@ export async function parseDefinitions(
   } else {
     log.info("Parsing in main process...");
     for (const packageName of packageNames) {
-      typings[packageName] = await getTypingInfo(packageName, typesFS.subDir(packageName));
+      typings[packageName] = await getTypingInfo(packageName, dt);
     }
   }
   log.info("Parsing took " + (Date.now() - start) / 1000 + " s");
diff --git a/packages/definitions-parser/test/definition-parser.test.ts b/packages/definitions-parser/test/definition-parser.test.ts
index 9aa5bf85..1796487a 100644
--- a/packages/definitions-parser/test/definition-parser.test.ts
+++ b/packages/definitions-parser/test/definition-parser.test.ts
@@ -1,3 +1,4 @@
+import path from "path";
 import { DiskFS } from "@definitelytyped/utils";
 import { createMockDT } from "../src/mocks";
 import { getTypingInfo } from "../src/lib/definition-parser";
@@ -7,14 +8,14 @@ describe(getTypingInfo, () => {
     const dt = createMockDT();
     dt.addOldVersionOfPackage("jquery", "1.42");
     dt.addOldVersionOfPackage("jquery", "2");
-    const info = await getTypingInfo("jquery", dt.pkgFS("jquery"));
+    const info = await getTypingInfo("jquery", dt.fs);
 
     expect(Object.keys(info).sort()).toEqual(["1.42", "2.0", "3.3"]);
   });
 
   it("works for a package with dependencies", async () => {
     const dt = createMockDT();
-    const info = await getTypingInfo("has-dependency", dt.pkgFS("has-dependency"));
+    const info = await getTypingInfo("has-dependency", dt.fs);
     expect(info).toBeDefined();
   });
 
@@ -65,7 +66,7 @@ export function myFunction(arg:string): string;
 
     dt.addOldVersionOfPackage("@ckeditor/ckeditor5-utils", "10");
 
-    const info = await getTypingInfo("@ckeditor/ckeditor5-engine", dt.pkgFS("ckeditor__ckeditor5-engine"));
+    const info = await getTypingInfo("@ckeditor/ckeditor5-engine", dt.fs);
     expect(info).toBeDefined();
   });
 
@@ -124,7 +125,7 @@ export * from 'buffer';
 } `
     );
 
-    const info = await getTypingInfo("safer", dt.pkgFS("safer"));
+    const info = await getTypingInfo("safer", dt.fs);
     expect(info).toBeDefined();
     expect(info["1.0"].dependencies).toEqual({ node: "*" });
   });
@@ -189,7 +190,7 @@ const a = new webpack.AutomaticPrefetchPlugin();
 }`
     );
 
-    const info = await getTypingInfo("webpack", dt.pkgFS("webpack"));
+    const info = await getTypingInfo("webpack", dt.fs);
     expect(info).toBeDefined();
   });
 
@@ -198,7 +199,7 @@ const a = new webpack.AutomaticPrefetchPlugin();
       getTypingInfo(
         "typeref-fails",
         new DiskFS(
-          "packages/definitions-parser/test/fixtures/rejects-references-to-old-versions-of-other-types-packages/"
+          path.resolve(__dirname, "fixtures/rejects-references-to-old-versions-of-other-types-packages/")
         )
       )
     ).rejects.toThrow("do not directly import specific versions of another types package");
@@ -207,7 +208,7 @@ const a = new webpack.AutomaticPrefetchPlugin();
   it("allows references to old versions of self", async () => {
     const info = await getTypingInfo(
       "fail",
-      new DiskFS("packages/definitions-parser/test/fixtures/allows-references-to-old-versions-of-self/")
+      new DiskFS(path.resolve(__dirname, "fixtures/allows-references-to-old-versions-of-self/"))
     );
     expect(info).toBeDefined();
   });
@@ -261,7 +262,7 @@ import route = require('@ember/routing/route');
 }`
     );
 
-    const info = await getTypingInfo("ember", dt.pkgFS("ember"));
+    const info = await getTypingInfo("ember", dt.fs);
     expect(info["2.8"].testDependencies).toEqual([]);
   });
 
@@ -269,18 +270,27 @@ import route = require('@ember/routing/route');
     const info = await getTypingInfo(
       "styled-components-react-native",
       new DiskFS(
-        "packages/definitions-parser/test/fixtures/doesnt-omit-dependencies-if-only-some-deep-modules-are-declared/"
+        path.resolve(__dirname, "fixtures/doesnt-omit-dependencies-if-only-some-deep-modules-are-declared/")
       )
     );
     expect(info["5.1"].dependencies).toEqual({ "styled-components": "*" });
   });
 
+  it("rejects relative references to other packages", async () => {
+    expect(() => getTypingInfo(
+      "referencing",
+      new DiskFS(
+        path.resolve(__dirname, "fixtures/rejects-relative-references-to-other-packages/")
+      )
+    )).rejects.toThrow("Definitions must use global references to other packages");
+  });
+
   describe("concerning multiple versions", () => {
     it("records what the version directory looks like on disk", async () => {
       const dt = createMockDT();
       dt.addOldVersionOfPackage("jquery", "2");
       dt.addOldVersionOfPackage("jquery", "1.5");
-      const info = await getTypingInfo("jquery", dt.pkgFS("jquery"));
+      const info = await getTypingInfo("jquery", dt.fs);
 
       expect(info).toEqual({
         "1.5": expect.objectContaining({
@@ -300,7 +310,7 @@ import route = require('@ember/routing/route');
       const dt = createMockDT();
       dt.addOldVersionOfPackage("jquery", "2");
       dt.addOldVersionOfPackage("jquery", "1.5");
-      const info = await getTypingInfo("jquery", dt.pkgFS("jquery"));
+      const info = await getTypingInfo("jquery", dt.fs);
 
       expect(info).toEqual({
         "1.5": expect.objectContaining({
@@ -343,7 +353,7 @@ import route = require('@ember/routing/route');
 
       dt.addOldVersionOfPackage("@ckeditor/ckeditor5-utils", "10");
 
-      const info = await getTypingInfo("@ckeditor/ckeditor5-utils", dt.pkgFS("ckeditor__ckeditor5-utils"));
+      const info = await getTypingInfo("@ckeditor/ckeditor5-utils", dt.fs);
       expect(info).toEqual({
         "10.0": expect.objectContaining({
           pathMappings: {
@@ -362,7 +372,7 @@ import route = require('@ember/routing/route');
         const dt = createMockDT();
         dt.addOldVersionOfPackage("jquery", "3");
 
-        return expect(getTypingInfo("jquery", dt.pkgFS("jquery"))).rejects.toThrow(
+        return expect(getTypingInfo("jquery", dt.fs)).rejects.toThrow(
           "The latest version of the 'jquery' package is 3.3, so the subdirectory 'v3' is not allowed; " +
             "since it applies to any 3.* version, up to and including 3.3."
         );
@@ -372,7 +382,7 @@ import route = require('@ember/routing/route');
         const dt = createMockDT();
         dt.addOldVersionOfPackage("jquery", "3.3");
 
-        return expect(getTypingInfo("jquery", dt.pkgFS("jquery"))).rejects.toThrow(
+        return expect(getTypingInfo("jquery", dt.fs)).rejects.toThrow(
           "The latest version of the 'jquery' package is 3.3, so the subdirectory 'v3.3' is not allowed."
         );
       });
@@ -381,7 +391,7 @@ import route = require('@ember/routing/route');
         const dt = createMockDT();
         dt.addOldVersionOfPackage("jquery", "3.0");
 
-        return expect(getTypingInfo("jquery", dt.pkgFS("jquery"))).resolves.toBeDefined();
+        return expect(getTypingInfo("jquery", dt.fs)).resolves.toBeDefined();
       });
 
       it("checks that older versions with non-relative imports have wildcard path mappings", () => {
@@ -393,7 +403,7 @@ import route = require('@ember/routing/route');
 `
         );
         dt.addOldVersionOfPackage("jquery", "1");
-        return expect(getTypingInfo("jquery", dt.pkgFS("jquery"))).rejects.toThrow(
+        return expect(getTypingInfo("jquery", dt.fs)).rejects.toThrow(
           'jquery: Older version 1 must have a "paths" entry of "jquery/*": ["jquery/v1/*"]'
         );
       });
@@ -423,7 +433,7 @@ import first from "@ckeditor/ckeditor5-utils/src/first";
         dt.addOldVersionOfPackage("@ckeditor/ckeditor5-utils", "10");
 
         return expect(
-          getTypingInfo("ckeditor__ckeditor5-utils", dt.pkgFS("ckeditor__ckeditor5-utils"))
+          getTypingInfo("ckeditor__ckeditor5-utils", dt.fs)
         ).rejects.toThrow(
           '@ckeditor/ckeditor5-utils: Older version 10 must have a "paths" entry of "@ckeditor/ckeditor5-utils/*": ["ckeditor__ckeditor5-utils/v10/*"]'
         );
@@ -433,6 +443,6 @@ import first from "@ckeditor/ckeditor5-utils/src/first";
 
   it("allows wildcard scope path mappings", () => {
     const dt = createMockDT();
-    return expect(getTypingInfo("wordpress__plugins", dt.pkgFS("wordpress__plugins"))).resolves.toBeDefined();
+    return expect(getTypingInfo("wordpress__plugins", dt.fs)).resolves.toBeDefined();
   });
 });
diff --git a/packages/definitions-parser/test/fixtures/allows-references-to-old-versions-of-self/index.d.ts b/packages/definitions-parser/test/fixtures/allows-references-to-old-versions-of-self/types/fail/index.d.ts
similarity index 100%
rename from packages/definitions-parser/test/fixtures/allows-references-to-old-versions-of-self/index.d.ts
rename to packages/definitions-parser/test/fixtures/allows-references-to-old-versions-of-self/types/fail/index.d.ts
diff --git a/packages/definitions-parser/test/fixtures/allows-references-to-old-versions-of-self/tsconfig.json b/packages/definitions-parser/test/fixtures/allows-references-to-old-versions-of-self/types/fail/tsconfig.json
similarity index 100%
rename from packages/definitions-parser/test/fixtures/allows-references-to-old-versions-of-self/tsconfig.json
rename to packages/definitions-parser/test/fixtures/allows-references-to-old-versions-of-self/types/fail/tsconfig.json
diff --git a/packages/definitions-parser/test/fixtures/doesnt-omit-dependencies-if-only-some-deep-modules-are-declared/index.d.ts b/packages/definitions-parser/test/fixtures/doesnt-omit-dependencies-if-only-some-deep-modules-are-declared/types/styled-components-react-native/index.d.ts
similarity index 100%
rename from packages/definitions-parser/test/fixtures/doesnt-omit-dependencies-if-only-some-deep-modules-are-declared/index.d.ts
rename to packages/definitions-parser/test/fixtures/doesnt-omit-dependencies-if-only-some-deep-modules-are-declared/types/styled-components-react-native/index.d.ts
diff --git a/packages/definitions-parser/test/fixtures/doesnt-omit-dependencies-if-only-some-deep-modules-are-declared/tsconfig.json b/packages/definitions-parser/test/fixtures/doesnt-omit-dependencies-if-only-some-deep-modules-are-declared/types/styled-components-react-native/tsconfig.json
similarity index 100%
rename from packages/definitions-parser/test/fixtures/doesnt-omit-dependencies-if-only-some-deep-modules-are-declared/tsconfig.json
rename to packages/definitions-parser/test/fixtures/doesnt-omit-dependencies-if-only-some-deep-modules-are-declared/types/styled-components-react-native/tsconfig.json
diff --git a/packages/definitions-parser/test/fixtures/rejects-references-to-old-versions-of-other-types-packages/index.d.ts b/packages/definitions-parser/test/fixtures/rejects-references-to-old-versions-of-other-types-packages/types/typeref-fails/index.d.ts
similarity index 100%
rename from packages/definitions-parser/test/fixtures/rejects-references-to-old-versions-of-other-types-packages/index.d.ts
rename to packages/definitions-parser/test/fixtures/rejects-references-to-old-versions-of-other-types-packages/types/typeref-fails/index.d.ts
diff --git a/packages/definitions-parser/test/fixtures/rejects-references-to-old-versions-of-other-types-packages/tsconfig.json b/packages/definitions-parser/test/fixtures/rejects-references-to-old-versions-of-other-types-packages/types/typeref-fails/tsconfig.json
similarity index 100%
rename from packages/definitions-parser/test/fixtures/rejects-references-to-old-versions-of-other-types-packages/tsconfig.json
rename to packages/definitions-parser/test/fixtures/rejects-references-to-old-versions-of-other-types-packages/types/typeref-fails/tsconfig.json
diff --git a/packages/definitions-parser/test/fixtures/rejects-relative-references-to-other-packages/types/referenced/index.d.ts b/packages/definitions-parser/test/fixtures/rejects-relative-references-to-other-packages/types/referenced/index.d.ts
new file mode 100644
index 00000000..f8660820
--- /dev/null
+++ b/packages/definitions-parser/test/fixtures/rejects-relative-references-to-other-packages/types/referenced/index.d.ts
@@ -0,0 +1,6 @@
+// Type definitions for referenced 1.0
+// Project: https://youtube.com/s-fails
+// Definitions by: Type Ref Fails <https://github.com/typeref-fails>
+// Definitions: https://github.com/DefinitelyTyped/DefinitelyTyped
+
+export interface Referenced {}
diff --git a/packages/definitions-parser/test/fixtures/rejects-relative-references-to-other-packages/types/referenced/tsconfig.json b/packages/definitions-parser/test/fixtures/rejects-relative-references-to-other-packages/types/referenced/tsconfig.json
new file mode 100644
index 00000000..ca03578a
--- /dev/null
+++ b/packages/definitions-parser/test/fixtures/rejects-relative-references-to-other-packages/types/referenced/tsconfig.json
@@ -0,0 +1,16 @@
+{
+  "compilerOptions": {
+    "module": "commonjs",
+    "lib": ["es6"],
+    "noImplicitAny": true,
+    "noImplicitThis": true,
+    "strictFunctionTypes": true,
+    "strictNullChecks": true,
+    "baseUrl": "../",
+    "typeRoots": ["../"],
+    "types": [],
+    "noEmit": true,
+    "forceConsistentCasingInFileNames": true
+  },
+  "files": ["index.d.ts"]
+}
diff --git a/packages/definitions-parser/test/fixtures/rejects-relative-references-to-other-packages/types/referencing/index.d.ts b/packages/definitions-parser/test/fixtures/rejects-relative-references-to-other-packages/types/referencing/index.d.ts
new file mode 100644
index 00000000..f56cad3a
--- /dev/null
+++ b/packages/definitions-parser/test/fixtures/rejects-relative-references-to-other-packages/types/referencing/index.d.ts
@@ -0,0 +1,8 @@
+// Type definitions for referencing 1.0
+// Project: https://youtube.com/s-fails
+// Definitions by: Type Ref Fails <https://github.com/typeref-fails>
+// Definitions: https://github.com/DefinitelyTyped/DefinitelyTyped
+
+import { Referenced } from "../referenced";
+
+export interface Referencing extends Referenced {}
diff --git a/packages/definitions-parser/test/fixtures/rejects-relative-references-to-other-packages/types/referencing/tsconfig.json b/packages/definitions-parser/test/fixtures/rejects-relative-references-to-other-packages/types/referencing/tsconfig.json
new file mode 100644
index 00000000..ca03578a
--- /dev/null
+++ b/packages/definitions-parser/test/fixtures/rejects-relative-references-to-other-packages/types/referencing/tsconfig.json
@@ -0,0 +1,16 @@
+{
+  "compilerOptions": {
+    "module": "commonjs",
+    "lib": ["es6"],
+    "noImplicitAny": true,
+    "noImplicitThis": true,
+    "strictFunctionTypes": true,
+    "strictNullChecks": true,
+    "baseUrl": "../",
+    "typeRoots": ["../"],
+    "types": [],
+    "noEmit": true,
+    "forceConsistentCasingInFileNames": true
+  },
+  "files": ["index.d.ts"]
+}
diff --git a/packages/definitions-parser/test/get-definitely-typed.test.ts b/packages/definitions-parser/test/get-definitely-typed.test.ts
index 6c513b1f..032b1d23 100644
--- a/packages/definitions-parser/test/get-definitely-typed.test.ts
+++ b/packages/definitions-parser/test/get-definitely-typed.test.ts
@@ -26,7 +26,7 @@ testo({
     root.set("file1.txt", "ok");
     const dir = root.subdir("sub1");
     dir.set("file2.txt", "x");
-    const fs: FS = new InMemoryFS(root, "test/");
+    const fs: FS = new InMemoryFS(root, "/test/");
     expect(fs.exists("file1.txt")).toBe(true);
     expect(fs.readFile("file1.txt")).toBe("ok");
     expect(fs.readFile("sub1/file2.txt")).toBe("x");
diff --git a/packages/definitions-parser/test/module-info.test.ts b/packages/definitions-parser/test/module-info.test.ts
index 4172fc2c..1903ec70 100644
--- a/packages/definitions-parser/test/module-info.test.ts
+++ b/packages/definitions-parser/test/module-info.test.ts
@@ -1,16 +1,20 @@
 import * as ts from "typescript";
-import { Dir, InMemoryFS } from "@definitelytyped/utils";
-import { createMockDT } from "../src/mocks";
+import { createModuleResolutionHost } from "@definitelytyped/utils";
+import { DTMock, createMockDT } from "../src/mocks";
 import { testo } from "./utils";
 import { allReferencedFiles, getModuleInfo, getTestDependencies } from "../src/lib/module-info";
 
 const fs = createMockDT().fs;
+const moduleResolutionHost = createModuleResolutionHost(fs);
+const compilerOptions = { module: ts.ModuleKind.CommonJS, baseUrl: "/DefinitelyTyped/types", typeRoots: ["/DefinitelyTyped/types"] };
+
 function getBoringReferences() {
   return allReferencedFiles(
     ["index.d.ts", "boring-tests.ts"],
     fs.subDir("types").subDir("boring"),
     "boring",
-    "types/boring"
+    moduleResolutionHost,
+    compilerOptions
   );
 }
 testo({
@@ -31,7 +35,8 @@ testo({
       ["boring-tests.ts"],
       fs.subDir("types").subDir("boring"),
       "boring",
-      "types/boring"
+      moduleResolutionHost,
+      compilerOptions
     );
     expect(Array.from(types.keys())).toEqual([
       "secondary.d.ts",
@@ -47,7 +52,8 @@ testo({
       ["jquery-tests.ts", "index.d.ts"],
       fs.subDir("types").subDir("jquery"),
       "jquery",
-      "types/jquery"
+      moduleResolutionHost,
+      compilerOptions
     );
     expect(Array.from(types.keys())).toEqual(["index.d.ts", "JQuery.d.ts"]);
     expect(Array.from(tests.keys())).toEqual(["jquery-tests.ts"]);
@@ -57,21 +63,22 @@ testo({
       ["globby-tests.ts", "test/other-tests.ts"],
       fs.subDir("types").subDir("globby"),
       "globby",
-      "types/globby"
+      moduleResolutionHost,
+      compilerOptions
     );
-    expect(Array.from(types.keys())).toEqual(["merges.d.ts"]);
+    expect(Array.from(types.keys())).toEqual([]);
     expect(Array.from(tests.keys())).toEqual(["globby-tests.ts", "test/other-tests.ts"]);
   },
   allReferencedFilesIncludesTypesImports() {
-    const pkg = new Dir(undefined);
+    const dtMock = new DTMock();
+    const pkg = dtMock.pkgDir("mock");
     pkg.set(
       "index.d.ts",
       `type T = import("./types");
 `
     );
     pkg.set("types.d.ts", "");
-    const memFS = new InMemoryFS(pkg, "types/mock");
-    const { types, tests } = allReferencedFiles(["index.d.ts"], memFS, "mock", "types/mock");
+    const { types, tests } = allReferencedFiles(["index.d.ts"], dtMock.fs.subDir("types/mock"), "mock", createModuleResolutionHost(dtMock.fs), compilerOptions);
     expect(Array.from(types.keys())).toEqual(["index.d.ts", "types.d.ts"]);
     expect(Array.from(tests.keys())).toEqual([]);
   },
@@ -97,32 +104,35 @@ testo({
       ["index.d.ts", "globby-tests.ts", "test/other-tests.ts"],
       fs.subDir("types").subDir("globby"),
       "globby",
-      "types/globby"
+      moduleResolutionHost,
+      compilerOptions
     );
-    expect(Array.from(types.keys())).toEqual(["index.d.ts", "sneaky.d.ts", "merges.d.ts"]);
+    expect(Array.from(types.keys())).toEqual(["index.d.ts", "sneaky.d.ts"]);
     const i = getModuleInfo("globby", types);
     expect(i.dependencies).toEqual(new Set(["andere/snee"]));
   },
   selfInScopedPackage() {
-    const scoped = new Dir(undefined);
+    const dtMock = new DTMock();
+    const scoped = dtMock.pkgDir("rdfjs__to-ntriples");
     scoped.set(
       "index.d.ts",
       `import "@rdfjs/to-ntriples/component";
 `
     );
     scoped.set("component.d.ts", "");
-    const memFS = new InMemoryFS(scoped, "types/rdfjs__to-ntriples");
     const { types, tests } = allReferencedFiles(
       ["index.d.ts"],
-      memFS,
+      dtMock.fs.subDir("types/rdfjs__to-ntriples"),
       "rdfjs__to-ntriples",
-      "types/rdfjs__to-ntriples"
+      createModuleResolutionHost(dtMock.fs),
+      { ...compilerOptions, paths: { "@rdfjs/to-ntriples/*": ["rdfjs__to-ntriples/*"] } }
     );
     expect(Array.from(types.keys())).toEqual(["index.d.ts", "component.d.ts"]);
     expect(Array.from(tests.keys())).toEqual([]);
   },
   selfInTypesVersionsParent() {
-    const pkg = new Dir(undefined);
+    const dtMock = new DTMock();
+    const pkg = dtMock.pkgDir("mock");
     const ts20 = pkg.subdir("ts2.0");
     ts20.set(
       "index.d.ts",
@@ -136,15 +146,20 @@ testo({
       `import "mock/component";
 `
     );
-    const memFS = new InMemoryFS(ts20, "types/mock/ts2.0");
-    const { types, tests } = allReferencedFiles(["index.d.ts"], memFS, "mock", "types/mock");
+
+    const { types, tests } = allReferencedFiles(
+      ["index.d.ts"],
+      dtMock.fs.subDir("types/mock/ts2.0"),
+      "mock",
+      createModuleResolutionHost(dtMock.fs),
+      { ...compilerOptions, paths: { "mock/*": ["mock/ts2.0/*"] } });
     expect(Array.from(types.keys())).toEqual(["index.d.ts", "../ts1.0/index.d.ts", "component.d.ts"]);
     expect(Array.from(tests.keys())).toEqual([]);
   },
   getTestDependenciesWorks() {
     const { types, tests } = getBoringReferences();
     const i = getModuleInfo("boring", types);
-    const d = getTestDependencies("boring", tests.keys(), i.dependencies, fs.subDir("types").subDir("boring"));
+    const d = getTestDependencies("boring", tests.keys(), i.dependencies, fs.subDir("types").subDir("boring"), moduleResolutionHost, compilerOptions);
     expect(d).toEqual(new Set(["boring", "boring/commonjs", "boring/secondary", "boring/v1", "super-big-fun-hus"]));
   },
 });
diff --git a/packages/definitions-parser/test/packages.test.ts b/packages/definitions-parser/test/packages.test.ts
index 87905e04..a807829e 100644
--- a/packages/definitions-parser/test/packages.test.ts
+++ b/packages/definitions-parser/test/packages.test.ts
@@ -66,7 +66,7 @@ describe(TypingsVersions, () => {
     dt.addOldVersionOfPackage("jquery", "1");
     dt.addOldVersionOfPackage("jquery", "2");
     dt.addOldVersionOfPackage("jquery", "2.5");
-    versions = new TypingsVersions(await getTypingInfo("jquery", dt.pkgFS("jquery")));
+    versions = new TypingsVersions(await getTypingInfo("jquery", dt.fs));
   });
 
   it("sorts the data from latest to oldest version", () => {
diff --git a/packages/definitions-parser/tsconfig.json b/packages/definitions-parser/tsconfig.json
index bef69d32..7220864f 100644
--- a/packages/definitions-parser/tsconfig.json
+++ b/packages/definitions-parser/tsconfig.json
@@ -2,7 +2,8 @@
   "extends": "../../tsconfig.base.json",
   "compilerOptions": {
     "outDir": "dist",
-    "rootDir": "src"
+    "rootDir": "src",
+    "types": ["node"],
   },
   "include": ["src"],
   "references": [
diff --git a/packages/publisher/src/lib/common.ts b/packages/publisher/src/lib/common.ts
index 1ade7b4a..f886282d 100644
--- a/packages/publisher/src/lib/common.ts
+++ b/packages/publisher/src/lib/common.ts
@@ -14,7 +14,7 @@ export interface TesterOptions extends ParseDefinitionsOptions {
 export const defaultLocalOptions: TesterOptions = {
   definitelyTypedPath: "../../../DefinitelyTyped",
   progress: true,
-  parseInParallel: true,
+  parseInParallel: !process.env.VSCODE_INSPECTOR_OPTIONS,
 };
 
 export const defaultRemoteOptions: ParseDefinitionsOptions = {
diff --git a/packages/publisher/src/parse-definitions.ts b/packages/publisher/src/parse-definitions.ts
index de3e61af..61fee746 100644
--- a/packages/publisher/src/parse-definitions.ts
+++ b/packages/publisher/src/parse-definitions.ts
@@ -39,7 +39,7 @@ if (!module.parent) {
 }
 
 async function single(singleName: string, dt: FS): Promise<void> {
-  const data = await getTypingInfo(singleName, dt.subDir("types").subDir(singleName));
+  const data = await getTypingInfo(singleName, dt);
   const typings = { [singleName]: data };
   await writeDataFile(typesDataFilename, typings);
   console.log(JSON.stringify(data, undefined, 4));
diff --git a/packages/publisher/test/generate-packages.test.ts b/packages/publisher/test/generate-packages.test.ts
index 36f70922..e68c316d 100644
--- a/packages/publisher/test/generate-packages.test.ts
+++ b/packages/publisher/test/generate-packages.test.ts
@@ -60,7 +60,7 @@ function defaultFS(): FS {
 `
   );
   pkg.set("jquery.test.ts", "// tests");
-  const memFS = new InMemoryFS(pkg, "types/mock");
+  const memFS = new InMemoryFS(pkg, "/types/mock/");
   return memFS;
 }
 
diff --git a/packages/utils/src/fs.ts b/packages/utils/src/fs.ts
index c4d76b19..62fec850 100644
--- a/packages/utils/src/fs.ts
+++ b/packages/utils/src/fs.ts
@@ -1,4 +1,5 @@
 import assert from "assert";
+import { relative, resolve } from "path";
 import { assertDefined } from "./assertions";
 import { pathExistsSync, readdirSync, statSync } from "fs-extra";
 import { readFileSync, readJsonSync } from "./io";
@@ -37,6 +38,18 @@ export interface FS {
   debugPath(): string;
 }
 
+export function createModuleResolutionHost(fs: FS): import("typescript").ModuleResolutionHost {
+  return {
+    fileExists: (filename) => fs.exists(filename),
+    readFile: (filename) => fs.readFile(filename),
+    directoryExists: (directoryName) => fs.exists(directoryName),
+    getCurrentDirectory: () => "",
+    realpath: (path) => path,
+    useCaseSensitiveFileNames: () => true,
+  };
+}
+
+
 interface ReadonlyDir extends ReadonlyMap<string, ReadonlyDir | string> {
   readonly parent: Dir | undefined;
 }
@@ -70,15 +83,28 @@ export class Dir extends Map<string, Dir | string> implements ReadonlyDir {
   }
 }
 
+function ensureTrailingSlash(dir: string) {
+  return dir.endsWith("/") ? dir : dir + "/";
+}
+
 export class InMemoryFS implements FS {
-  /** pathToRoot is just for debugging */
-  constructor(readonly curDir: ReadonlyDir, readonly pathToRoot: string) {}
+  constructor(readonly curDir: ReadonlyDir, readonly rootPrefix: string) {
+    this.rootPrefix = ensureTrailingSlash(rootPrefix);
+    assert(rootPrefix[0] === "/", `rootPrefix must be absolute: ${rootPrefix}`);
+  }
 
   private tryGetEntry(path: string): ReadonlyDir | string | undefined {
-    validatePath(path);
+    if (path[0] === "/") {
+      path = relative(this.rootPrefix, path);
+    }
     if (path === "") {
       return this.curDir;
     }
+    const needsDir = path.endsWith("/");
+    if (needsDir) {
+      path = path.slice(0, -1);
+    }
+
     const components = path.split("/");
     const baseName = assertDefined(components.pop());
     let dir = this.curDir;
@@ -89,18 +115,19 @@ export class InMemoryFS implements FS {
       }
       if (!(entry instanceof Dir)) {
         throw new Error(
-          `No file system entry at ${this.pathToRoot}/${path}. Siblings are: ${Array.from(dir.keys()).toString()}`
+          `No file system entry at ${this.rootPrefix}/${path}. Siblings are: ${Array.from(dir.keys()).toString()}`
         );
       }
       dir = entry;
     }
-    return dir.get(baseName);
+    const res = dir.get(baseName);
+    return needsDir ? (res instanceof Dir ? res : undefined) : res;
   }
 
   private getEntry(path: string): ReadonlyDir | string {
     const entry = this.tryGetEntry(path);
     if (entry === undefined) {
-      throw new Error(`No file system entry at ${this.pathToRoot}/${path}`);
+      throw new Error(`No file system entry at ${this.rootPrefix}/${path}`);
     }
     return entry;
   }
@@ -108,7 +135,7 @@ export class InMemoryFS implements FS {
   private getDir(dirPath: string): Dir {
     const res = this.getEntry(dirPath);
     if (!(res instanceof Dir)) {
-      throw new Error(`${this.pathToRoot}/${dirPath} is a file, not a directory.`);
+      throw new Error(`${this.rootPrefix}/${dirPath} is a file, not a directory.`);
     }
     return res;
   }
@@ -116,7 +143,7 @@ export class InMemoryFS implements FS {
   readFile(filePath: string): string {
     const res = this.getEntry(filePath);
     if (typeof res !== "string") {
-      throw new Error(`${this.pathToRoot}/${filePath} is a directory, not a file.`);
+      throw new Error(`${this.rootPrefix}/${filePath} is a directory, not a file.`);
     }
     return res;
   }
@@ -138,25 +165,23 @@ export class InMemoryFS implements FS {
   }
 
   subDir(path: string): FS {
-    return new InMemoryFS(this.getDir(path), joinPaths(this.pathToRoot, path));
+    assert(path[0] !== "/", "Cannot use absolute paths with InMemoryFS.subDir");
+    return new InMemoryFS(this.getDir(path), resolve(this.rootPrefix, path));
   }
 
   debugPath(): string {
-    return this.pathToRoot;
+    return this.rootPrefix;
   }
 }
 
 export class DiskFS implements FS {
   constructor(private readonly rootPrefix: string) {
-    assert(rootPrefix.endsWith("/"));
+    assert(rootPrefix.startsWith("/"), "DiskFS must use absolute paths");
+    this.rootPrefix = ensureTrailingSlash(rootPrefix);
   }
 
   private getPath(path: string | undefined): string {
-    if (path === undefined) {
-      return this.rootPrefix;
-    }
-    validatePath(path);
-    return this.rootPrefix + path;
+    return resolve(this.rootPrefix, path ?? "");
   }
 
   readdir(dirPath?: string): readonly string[] {
@@ -189,16 +214,3 @@ export class DiskFS implements FS {
     return this.rootPrefix.slice(0, this.rootPrefix.length - 1); // remove trailing '/'
   }
 }
-
-/** FS only handles simple paths like `foo/bar` or `../foo`. No `./foo` or `/foo`. */
-function validatePath(path: string): void {
-  if (path.startsWith(".") && path !== ".editorconfig" && path !== ".eslintrc.json" && !path.startsWith("../")) {
-    throw new Error(`${path}: filesystem doesn't support paths of the form './x'.`);
-  }
-  if (path.startsWith("/")) {
-    throw new Error(`${path}: filesystem doesn't support paths of the form '/xxx'.`);
-  }
-  if (path.endsWith("/")) {
-    throw new Error(`${path}: filesystem doesn't support paths of the form 'xxx/'.`);
-  }
-}
diff --git a/packages/utils/src/io.ts b/packages/utils/src/io.ts
index 0ca7b51e..3bb983c4 100644
--- a/packages/utils/src/io.ts
+++ b/packages/utils/src/io.ts
@@ -237,7 +237,7 @@ export function downloadAndExtractFile(url: string, log: LoggerWithErrors): Prom
         extract.on("finish", () => {
           log.info("Done receiving " + url);
           clearTimeout(timeout);
-          resolve(new InMemoryFS(root.finish(), ""));
+          resolve(new InMemoryFS(root.finish(), "/"));
         });
 
         response.pipe(zlib.createGunzip()).pipe(extract);