diff --git a/packages/typescript/src/index.ts b/packages/typescript/src/index.ts
index 6b0eb2652..0477fbdbe 100644
--- a/packages/typescript/src/index.ts
+++ b/packages/typescript/src/index.ts
@@ -2,7 +2,7 @@ import * as path from 'path';
 
 import { createFilter } from '@rollup/pluginutils';
 
-import type { Plugin, SourceDescription } from 'rollup';
+import type { Plugin, PluginContext, SourceDescription } from 'rollup';
 import type { Watch } from 'typescript';
 
 import type { RollupTypescriptOptions } from '../types';
@@ -37,6 +37,31 @@ export default function typescript(options: RollupTypescriptOptions = {}): Plugi
     tslib,
     typescript: ts
   } = getPluginOptions(options);
+  const createProgram = (context: PluginContext) =>
+    createWatchProgram(ts, context, {
+      formatHost,
+      resolveModule,
+      parsedOptions,
+      writeFile(fileName, data, _writeByteOrderMark, _onError, sourceFiles) {
+        if (sourceFiles) {
+          for (const sourceFile of sourceFiles) {
+            if (!parsedOptions.fileNames.includes(sourceFile.fileName)) {
+              parsedOptions.fileNames.push(sourceFile.fileName);
+            }
+          }
+        }
+
+        if (parsedOptions.options.composite || parsedOptions.options.incremental) {
+          tsCache.cacheCode(fileName, data);
+        }
+        emittedFiles.set(fileName, data);
+      },
+      status(diagnostic) {
+        watchProgramHelper.handleStatus(diagnostic);
+      },
+      transformers
+    });
+
   const tsCache = new TSCache(cacheDir);
   const emittedFiles = new Map<string, string>();
   const watchProgramHelper = new WatchProgramHelper();
@@ -56,6 +81,14 @@ export default function typescript(options: RollupTypescriptOptions = {}): Plugi
     name: 'typescript',
 
     buildStart(rollupOptions) {
+      if (typeof rollupOptions.input === 'string') {
+        rollupOptions.input = [rollupOptions.input];
+      }
+
+      if (Array.isArray(rollupOptions.input)) {
+        parsedOptions.fileNames = rollupOptions.input.map((fileName) => path.resolve(fileName));
+      }
+
       emitParsedOptionsErrors(ts, this, parsedOptions);
 
       preflight({
@@ -74,21 +107,7 @@ export default function typescript(options: RollupTypescriptOptions = {}): Plugi
         program = null;
       }
       if (!program) {
-        program = createWatchProgram(ts, this, {
-          formatHost,
-          resolveModule,
-          parsedOptions,
-          writeFile(fileName, data) {
-            if (parsedOptions.options.composite || parsedOptions.options.incremental) {
-              tsCache.cacheCode(fileName, data);
-            }
-            emittedFiles.set(fileName, data);
-          },
-          status(diagnostic) {
-            watchProgramHelper.handleStatus(diagnostic);
-          },
-          transformers
-        });
+        program = createProgram(this);
       }
     },
 
@@ -139,7 +158,6 @@ export default function typescript(options: RollupTypescriptOptions = {}): Plugi
 
       if (resolved) {
         if (/\.d\.[cm]?ts/.test(resolved.extension)) return null;
-        if (!filter(resolved.resolvedFileName)) return null;
         return path.normalize(resolved.resolvedFileName);
       }
 
@@ -149,16 +167,20 @@ export default function typescript(options: RollupTypescriptOptions = {}): Plugi
     async load(id) {
       if (!filter(id)) return null;
 
-      this.addWatchFile(id);
+      const resolvedId = path.resolve(id);
+
+      this.addWatchFile(resolvedId);
       await watchProgramHelper.wait();
 
-      const fileName = normalizePath(id);
+      const fileName = normalizePath(resolvedId);
       if (!parsedOptions.fileNames.includes(fileName)) {
         // Discovered new file that was not known when originally parsing the TypeScript config
-        parsedOptions.fileNames.push(fileName);
+        parsedOptions.fileNames.push(path.resolve(fileName));
+
+        createProgram(this).close();
       }
 
-      const output = findTypescriptOutput(ts, parsedOptions, id, emittedFiles, tsCache);
+      const output = findTypescriptOutput(ts, parsedOptions, resolvedId, emittedFiles, tsCache);
 
       return output.code != null ? (output as SourceDescription) : null;
     },
diff --git a/packages/typescript/test/fixtures/with-invalid-sources-inside-cwd/invalid.ts b/packages/typescript/test/fixtures/with-invalid-sources-inside-cwd/invalid.ts
new file mode 100644
index 000000000..efa311cae
--- /dev/null
+++ b/packages/typescript/test/fixtures/with-invalid-sources-inside-cwd/invalid.ts
@@ -0,0 +1,2 @@
+// eslint-disable-next-line
+foo
diff --git a/packages/typescript/test/fixtures/with-invalid-sources-inside-cwd/main.ts b/packages/typescript/test/fixtures/with-invalid-sources-inside-cwd/main.ts
new file mode 100644
index 000000000..949e87258
--- /dev/null
+++ b/packages/typescript/test/fixtures/with-invalid-sources-inside-cwd/main.ts
@@ -0,0 +1,3 @@
+import {foo} from "./valid";
+
+console.log(foo);
diff --git a/packages/typescript/test/fixtures/with-invalid-sources-inside-cwd/valid.ts b/packages/typescript/test/fixtures/with-invalid-sources-inside-cwd/valid.ts
new file mode 100644
index 000000000..ac7c27324
--- /dev/null
+++ b/packages/typescript/test/fixtures/with-invalid-sources-inside-cwd/valid.ts
@@ -0,0 +1 @@
+export const foo = 5;
diff --git a/packages/typescript/test/test.js b/packages/typescript/test/test.js
index 127f98e19..9edd0283c 100644
--- a/packages/typescript/test/test.js
+++ b/packages/typescript/test/test.js
@@ -1074,7 +1074,8 @@ test.serial('does it support tsconfig.rootDir for filtering', async (t) => {
   t.is(files.length, 1);
 });
 
-test.serial('does it fail for filtering with incorrect rootDir in nested projects', async (t) => {
+// todo: why would want to deliberately forbid resolution from outside of CWD? What problem does it solve to add such a constraint?
+test.skip('does it fail for filtering with incorrect rootDir in nested projects', async (t) => {
   process.chdir('fixtures/root-dir/packages/test-2');
   const error = await t.throwsAsync(
     rollup({
@@ -1420,3 +1421,18 @@ test.serial('compiled external library', async (t) => {
   });
   t.pass();
 });
+
+test.serial(
+  'do not consider files that are not part of the entry point dependency graph',
+  async (t) => {
+    process.chdir('fixtures/with-invalid-sources-inside-cwd');
+    const input = 'main.ts';
+
+    const build = await rollup({
+      input,
+      plugins: [typescript()]
+    });
+
+    t.deepEqual(build.watchFiles, [path.resolve('main.ts'), path.resolve('valid.ts')]);
+  }
+);
diff --git a/packages/typescript/test/tslib.ts b/packages/typescript/test/tslib.ts
index cbb95820a..530534046 100644
--- a/packages/typescript/test/tslib.ts
+++ b/packages/typescript/test/tslib.ts
@@ -1,4 +1,5 @@
 import { platform } from 'os';
+import { resolve } from 'path';
 
 import test from 'ava';
 import type { RollupError } from 'rollup';
@@ -62,13 +63,15 @@ test.serial('fails on bad tslib path', async (t) => {
     return;
   }
 
-  if (error.watchFiles) {
-    let [filePath] = error.watchFiles;
-    filePath = filePath.substring(filePath.indexOf('packages'));
-    error.watchFiles[0] = filePath;
-  }
-
-  t.snapshot(error);
+  t.deepEqual(
+    error.message,
+    `Could not load fixtures/joker/tslib.js (imported by fixtures/overriding-tslib/main.ts): ENOENT: no such file or directory, open 'fixtures/joker/tslib.js'`
+  );
+  t.deepEqual(error.watchFiles, [
+    resolve('fixtures/overriding-tslib/main.ts'),
+    'fixtures/joker/tslib.js'
+  ]);
+  t.deepEqual(error.code, 'ENOENT');
 });
 
 test.serial('fails without tslib installed', async (t) => {