diff --git a/packages/angular-cli/blueprints/ng2/files/__path__/tsconfig.json b/packages/angular-cli/blueprints/ng2/files/__path__/tsconfig.json
index d69d63ccf7ce..1e5a0ffce133 100644
--- a/packages/angular-cli/blueprints/ng2/files/__path__/tsconfig.json
+++ b/packages/angular-cli/blueprints/ng2/files/__path__/tsconfig.json
@@ -1,5 +1,6 @@
 {
   "compilerOptions": {
+    "baseUrl": ".",
     "declaration": false,
     "emitDecoratorMetadata": true,
     "experimentalDecorators": true,
diff --git a/packages/angular-cli/models/webpack-build-common.ts b/packages/angular-cli/models/webpack-build-common.ts
index ec755c36979a..872d25ab7481 100644
--- a/packages/angular-cli/models/webpack-build-common.ts
+++ b/packages/angular-cli/models/webpack-build-common.ts
@@ -33,9 +33,13 @@ export function getWebpackCommonConfig(
   return {
     devtool: 'source-map',
     resolve: {
-      extensions: ['.ts', '.js']
+      extensions: ['.ts', '.js'],
+      modules: [
+        path.resolve(projectRoot, appConfig.root),
+        'node_modules'
+      ]
     },
-    context: path.resolve(__dirname, './'),
+    context: path.resolve(projectRoot, appConfig.root),
     entry: entry,
     output: {
       path: path.resolve(projectRoot, appConfig.outDir),
diff --git a/packages/angular-cli/models/webpack-build-test.js b/packages/angular-cli/models/webpack-build-test.js
index 403ed91fdeec..9b08136d2b45 100644
--- a/packages/angular-cli/models/webpack-build-test.js
+++ b/packages/angular-cli/models/webpack-build-test.js
@@ -9,9 +9,13 @@ const getWebpackTestConfig = function (projectRoot, environment, appConfig) {
 
   return {
     devtool: 'inline-source-map',
-    context: path.resolve(__dirname, './'),
+    context: path.resolve(projectRoot, appConfig.root),
     resolve: {
-      extensions: ['.ts', '.js']
+      extensions: ['.ts', '.js'],
+      modules: [
+        path.resolve(projectRoot, appConfig.root),
+        'node_modules'
+      ]
     },
     entry: {
       test: path.resolve(appRoot, appConfig.test)