diff --git a/src/test/extension/nodeConfigurationProvider.test.ts b/src/test/extension/nodeConfigurationProvider.test.ts
index 32f708ae0..42e348ac7 100644
--- a/src/test/extension/nodeConfigurationProvider.test.ts
+++ b/src/test/extension/nodeConfigurationProvider.test.ts
@@ -361,6 +361,26 @@ describe('NodeDebugConfigurationProvider', () => {
       ]);
     });
 
+    it('does not resolve in node_modules', async () => {
+      createFileTree(testFixturesDir, {
+        'a/node_modules/c/hello.js': '',
+        'a/node_modules/c/package.json': '{}',
+        'a/package.json': '{}',
+      });
+
+      const result = await provider.resolveDebugConfiguration(folder, {
+        type: DebugType.Node,
+        name: '',
+        request: 'launch',
+        program: 'a/node_modules/c/hello.js',
+      });
+
+      expect(result?.outFiles).to.deep.equal([
+        '${workspaceFolder}/a/**/*.js',
+        '!**/node_modules/**',
+      ]);
+    });
+
     it('does not resolve outside the workspace folder', async () => {
       createFileTree(testFixturesDir, {
         'a/b/c/hello.js': '',
diff --git a/src/ui/configuration/nodeDebugConfigurationResolver.ts b/src/ui/configuration/nodeDebugConfigurationResolver.ts
index a82f28e7c..9f1cc9e55 100644
--- a/src/ui/configuration/nodeDebugConfigurationResolver.ts
+++ b/src/ui/configuration/nodeDebugConfigurationResolver.ts
@@ -14,7 +14,7 @@ import { EnvironmentVars } from '../../common/environmentVars';
 import { findOpenPort } from '../../common/findOpenPort';
 import { IFsUtils, LocalFsUtils } from '../../common/fsUtils';
 import { forceForwardSlashes, isSubdirectoryOf } from '../../common/pathUtils';
-import { nearestDirectoryContaining } from '../../common/urlUtils';
+import { nearestDirectoryWhere } from '../../common/urlUtils';
 import {
   AnyNodeConfiguration,
   applyNodeDefaults,
@@ -219,11 +219,11 @@ async function guessOutFiles(
     return;
   }
 
-  const root = await nearestDirectoryContaining(
-    fsUtils,
+  const root = await nearestDirectoryWhere(
     path.dirname(programLocation),
-    'package.json',
+    async p => !p.includes('node_modules') && (await fsUtils.exists(path.join(p, 'package.json'))),
   );
+
   if (root && isSubdirectoryOf(folder.uri.fsPath, root)) {
     const rel = forceForwardSlashes(path.relative(folder.uri.fsPath, root));
     config.outFiles = resolveVariableInConfig(