diff --git a/CHANGELOG.md b/CHANGELOG.md
index 42ac39fb09a..5a0ce71b59d 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -23,6 +23,12 @@
 
     This approach should ensure maximum compatibility with all JavaScript environments that support ES5 and above. Note that this means minified files containing Unicode properties may be slightly larger than before.
 
+* Ignore `tsconfig.json` files inside `node_modules` ([#1355](https://github.com/evanw/esbuild/issues/1355))
+
+    Package authors often publish their `tsconfig.json` files to npm because of npm's default-include publishing model and because these authors probably don't know about `.npmignore` files. People trying to use these packages with esbuild have historically complained that esbuild is respecting `tsconfig.json` in these cases. The assumption is that the package author published these files by accident.
+
+    With this release, esbuild will no longer respect `tsconfig.json` files when the source file is inside a `node_modules` folder. Note that `tsconfig.json` files inside `node_modules` are still parsed, and extending `tsconfig.json` files from inside a package is still supported.
+
 ## 0.12.6
 
 * Improve template literal lowering transformation conformance ([#1327](https://github.com/evanw/esbuild/issues/1327))
diff --git a/internal/bundler/bundler_tsconfig_test.go b/internal/bundler/bundler_tsconfig_test.go
index 2074911fd19..4638fe5aaaf 100644
--- a/internal/bundler/bundler_tsconfig_test.go
+++ b/internal/bundler/bundler_tsconfig_test.go
@@ -994,6 +994,31 @@ func TestTsconfigJsonNodeModulesImplicitFile(t *testing.T) {
 	})
 }
 
+func TestTsconfigJsonInsideNodeModules(t *testing.T) {
+	tsconfig_suite.expectBundled(t, bundled{
+		files: map[string]string{
+			"/Users/user/project/src/app/entry.tsx": `
+				import 'foo'
+			`,
+			"/Users/user/project/src/node_modules/foo/index.tsx": `
+				console.log(<div/>)
+			`,
+			"/Users/user/project/src/node_modules/foo/tsconfig.json": `
+				{
+					"compilerOptions": {
+						"jsxFactory": "TEST_FAILED"
+					}
+				}
+			`,
+		},
+		entryPaths: []string{"/Users/user/project/src/app/entry.tsx"},
+		options: config.Options{
+			Mode:          config.ModeBundle,
+			AbsOutputFile: "/Users/user/project/out.js",
+		},
+	})
+}
+
 func TestTsconfigWarningsInsideNodeModules(t *testing.T) {
 	tsconfig_suite.expectBundled(t, bundled{
 		files: map[string]string{
diff --git a/internal/bundler/snapshots/snapshots_tsconfig.txt b/internal/bundler/snapshots/snapshots_tsconfig.txt
index 82d3466b450..5794947c22b 100644
--- a/internal/bundler/snapshots/snapshots_tsconfig.txt
+++ b/internal/bundler/snapshots/snapshots_tsconfig.txt
@@ -279,6 +279,12 @@ console.log("works");
 // Users/user/project/src/entry.jsx
 console.log(/* @__PURE__ */ baseFactory("div", null), /* @__PURE__ */ baseFactory(derivedFragment, null));
 
+================================================================================
+TestTsconfigJsonInsideNodeModules
+---------- /Users/user/project/out.js ----------
+// Users/user/project/src/node_modules/foo/index.tsx
+console.log(/* @__PURE__ */ React.createElement("div", null));
+
 ================================================================================
 TestTsconfigJsonNodeModulesImplicitFile
 ---------- /Users/user/project/out.js ----------
diff --git a/internal/resolver/resolver.go b/internal/resolver/resolver.go
index 7ef94d69a21..b69b807a9fb 100644
--- a/internal/resolver/resolver.go
+++ b/internal/resolver/resolver.go
@@ -499,24 +499,46 @@ func (r resolverQuery) finalizeResolve(result *ResolveResult) {
 
 				// Copy various fields from the nearest enclosing "tsconfig.json" file if present
 				if path == &result.PathPair.Primary && dirInfo.enclosingTSConfigJSON != nil {
-					result.JSXFactory = dirInfo.enclosingTSConfigJSON.JSXFactory
-					result.JSXFragment = dirInfo.enclosingTSConfigJSON.JSXFragmentFactory
-					result.UseDefineForClassFieldsTS = dirInfo.enclosingTSConfigJSON.UseDefineForClassFields
-					result.PreserveUnusedImportsTS = dirInfo.enclosingTSConfigJSON.PreserveImportsNotUsedAsValues
-					result.TSTarget = dirInfo.enclosingTSConfigJSON.TSTarget
-
-					if r.debugLogs != nil {
-						r.debugLogs.addNote(fmt.Sprintf("This import is under the effect of %q",
-							dirInfo.enclosingTSConfigJSON.AbsPath))
-						if result.JSXFactory != nil {
-							r.debugLogs.addNote(fmt.Sprintf("\"jsxFactory\" is %q due to %q",
-								strings.Join(result.JSXFactory, "."),
-								dirInfo.enclosingTSConfigJSON.AbsPath))
+					// Except don't do this if we're inside a "node_modules" directory. Package
+					// authors often publish their "tsconfig.json" files to npm because of
+					// npm's default-include publishing model and because these authors
+					// probably don't know about ".npmignore" files.
+					//
+					// People trying to use these packages with esbuild have historically
+					// complained that esbuild is respecting "tsconfig.json" in these cases.
+					// The assumption is that the package author published these files by
+					// accident.
+					//
+					// Ignoring "tsconfig.json" files inside "node_modules" directories breaks
+					// the use case of publishing TypeScript code and having it be transpiled
+					// for you, but that's the uncommon case and likely doesn't work with
+					// many other tools anyway. So now these files are ignored.
+					if helpers.IsInsideNodeModules(result.PathPair.Primary.Text) {
+						if r.debugLogs != nil {
+							r.debugLogs.addNote(fmt.Sprintf("Ignoring %q because %q is inside \"node_modules\"",
+								dirInfo.enclosingTSConfigJSON.AbsPath,
+								result.PathPair.Primary.Text))
 						}
-						if result.JSXFragment != nil {
-							r.debugLogs.addNote(fmt.Sprintf("\"jsxFragment\" is %q due to %q",
-								strings.Join(result.JSXFragment, "."),
+					} else {
+						result.JSXFactory = dirInfo.enclosingTSConfigJSON.JSXFactory
+						result.JSXFragment = dirInfo.enclosingTSConfigJSON.JSXFragmentFactory
+						result.UseDefineForClassFieldsTS = dirInfo.enclosingTSConfigJSON.UseDefineForClassFields
+						result.PreserveUnusedImportsTS = dirInfo.enclosingTSConfigJSON.PreserveImportsNotUsedAsValues
+						result.TSTarget = dirInfo.enclosingTSConfigJSON.TSTarget
+
+						if r.debugLogs != nil {
+							r.debugLogs.addNote(fmt.Sprintf("This import is under the effect of %q",
 								dirInfo.enclosingTSConfigJSON.AbsPath))
+							if result.JSXFactory != nil {
+								r.debugLogs.addNote(fmt.Sprintf("\"jsxFactory\" is %q due to %q",
+									strings.Join(result.JSXFactory, "."),
+									dirInfo.enclosingTSConfigJSON.AbsPath))
+							}
+							if result.JSXFragment != nil {
+								r.debugLogs.addNote(fmt.Sprintf("\"jsxFragment\" is %q due to %q",
+									strings.Join(result.JSXFragment, "."),
+									dirInfo.enclosingTSConfigJSON.AbsPath))
+							}
 						}
 					}
 				}