diff --git a/mypy/main.py b/mypy/main.py
index 6361e68b9403..188e8c2fcb9f 100644
--- a/mypy/main.py
+++ b/mypy/main.py
@@ -763,7 +763,7 @@ def add_invertible_flag(flag: str,
         search_paths = SearchPaths((os.getcwd(),), tuple(mypy_path() + options.mypy_path), (), ())
         targets = []
         # TODO: use the same cache that the BuildManager will
-        cache = FindModuleCache(search_paths, fscache)
+        cache = FindModuleCache(search_paths, fscache, options, special_opts.packages)
         for p in special_opts.packages:
             if os.sep in p or os.altsep and os.altsep in p:
                 fail("Package name '{}' cannot have a slash in it.".format(p),
diff --git a/mypy/modulefinder.py b/mypy/modulefinder.py
index 1cbdf7a04604..f054319b5d54 100644
--- a/mypy/modulefinder.py
+++ b/mypy/modulefinder.py
@@ -64,7 +64,8 @@ class FindModuleCache:
     def __init__(self,
                  search_paths: SearchPaths,
                  fscache: Optional[FileSystemCache] = None,
-                 options: Optional[Options] = None) -> None:
+                 options: Optional[Options] = None,
+                 ns_packages: Optional[List[str]] = None) -> None:
         self.search_paths = search_paths
         self.fscache = fscache or FileSystemCache()
         # Cache for get_toplevel_possibilities:
@@ -74,6 +75,7 @@ def __init__(self,
         self.results = {}  # type: Dict[str, Optional[str]]
         self.ns_ancestors = {}  # type: Dict[str, str]
         self.options = options
+        self.ns_packages = ns_packages or []  # type: List[str]
 
     def clear(self) -> None:
         self.results.clear()
@@ -307,6 +309,13 @@ def find_modules_recursive(self, module: str) -> List[BuildSource]:
                     if mod not in hits:
                         hits.add(mod)
                         result += self.find_modules_recursive(module + '.' + mod)
+        elif os.path.isdir(module_path) and module in self.ns_packages:
+            # Even more subtler: handle recursive decent into PEP 420
+            # namespace packages that are explicitly listed on the command
+            # line with -p/--packages.
+            for item in sorted(self.fscache.listdir(module_path)):
+                if os.path.isdir(os.path.join(module_path, item)):
+                    result += self.find_modules_recursive(module + '.' + item)
         return result
 
 
diff --git a/test-data/unit/cmdline.test b/test-data/unit/cmdline.test
index 0be634c9d2a9..3e24056e2d2b 100644
--- a/test-data/unit/cmdline.test
+++ b/test-data/unit/cmdline.test
@@ -1124,6 +1124,19 @@ p/a.py:4: error: Argument 1 to "foo" has incompatible type "str"; expected "int"
 p/b/__init__.py:5: error: Argument 1 to "bar" has incompatible type "str"; expected "int"
 c.py:2: error: Argument 1 to "bar" has incompatible type "str"; expected "int"
 
+[case testSrcPEP420Packages]
+# cmd: mypy -p anamespace --namespace-packages
+[file mypy.ini]
+[[mypy]]
+mypy_path = src
+[file src/setup.cfg]
+[file src/anamespace/foo/__init__.py]
+[file src/anamespace/foo/bar.py]
+def bar(a: int, b: int) -> str:
+    return a + b
+[out]
+src/anamespace/foo/bar.py:2: error: Incompatible return value type (got "int", expected "str")
+
 [case testFollowImportStubs1]
 # cmd: mypy main.py
 [file mypy.ini]