diff --git a/fixtures/tsconfig/cases/project-references-priority/app/index.ts b/fixtures/tsconfig/cases/project-references-priority/app/index.ts
new file mode 100644
index 000000000..794bd4f76
--- /dev/null
+++ b/fixtures/tsconfig/cases/project-references-priority/app/index.ts
@@ -0,0 +1,3 @@
+import { foo } from "1/foo";
+
+foo();
diff --git a/fixtures/tsconfig/cases/project-references-priority/lib/foo.ts b/fixtures/tsconfig/cases/project-references-priority/lib/foo.ts
new file mode 100644
index 000000000..f99d42777
--- /dev/null
+++ b/fixtures/tsconfig/cases/project-references-priority/lib/foo.ts
@@ -0,0 +1 @@
+export function foo() {}
diff --git a/fixtures/tsconfig/cases/project-references-priority/tsconfig.app.json b/fixtures/tsconfig/cases/project-references-priority/tsconfig.app.json
new file mode 100644
index 000000000..07de83ec7
--- /dev/null
+++ b/fixtures/tsconfig/cases/project-references-priority/tsconfig.app.json
@@ -0,0 +1,10 @@
+{
+  "compilerOptions": {
+    "composite": true,
+    "moduleResolution": "bundler",
+    "paths": {
+      "1/*": ["./lib/*"]
+    }
+  },
+  "include": ["app", "lib"]
+}
diff --git a/fixtures/tsconfig/cases/project-references-priority/tsconfig.json b/fixtures/tsconfig/cases/project-references-priority/tsconfig.json
new file mode 100644
index 000000000..e295d7ac4
--- /dev/null
+++ b/fixtures/tsconfig/cases/project-references-priority/tsconfig.json
@@ -0,0 +1,3 @@
+{
+  "references": [{ "path": "./tsconfig.app.json" }]
+}
diff --git a/src/tests/tsconfck.rs b/src/tests/tsconfck.rs
index 5e941357a..1b6dda791 100644
--- a/src/tests/tsconfck.rs
+++ b/src/tests/tsconfck.rs
@@ -65,8 +65,8 @@ fn part_of_solution() {
         ("mixed", "src/baz.cts", "tsconfig.src.json"),
         ("mixed", "src/foo.ts", "tsconfig.src.json"),
         ("mixed", "src/foo.spec.ts", "tsconfig.test.json"),
-        ("referenced-extends-original", "src/foo.ts", "tsconfig.json"),
-        ("referenced-extends-original", "tests/foo.test.ts", "tsconfig.json"),
+        ("referenced-extends-original", "src/foo.ts", "src/tsconfig.src.json"),
+        ("referenced-extends-original", "tests/foo.test.ts", "tests/tsconfig.test.json"),
         ("referenced-with-configDir", "src/foo.ts", "tsconfig.src.json"),
         (
             "referenced-with-configDir-and-extends",
diff --git a/src/tests/tsconfig_project_references.rs b/src/tests/tsconfig_project_references.rs
index d067231cf..a57c257ad 100644
--- a/src/tests/tsconfig_project_references.rs
+++ b/src/tests/tsconfig_project_references.rs
@@ -152,3 +152,19 @@ fn references_with_extends() {
 
     assert_eq!(resolved_path, Ok(f.join("src/pages/index.tsx")));
 }
+
+#[test]
+fn referenced_paths_win_over_root_with_no_paths() {
+    let f = super::fixture_root().join("tsconfig/cases/project-references-priority");
+
+    let resolver = Resolver::new(ResolveOptions {
+        extensions: vec![".ts".into()],
+        tsconfig: Some(TsconfigDiscovery::Auto),
+        ..ResolveOptions::default()
+    });
+
+    let resolved_path =
+        resolver.resolve_file(f.join("app/index.ts"), "1/foo").map(|f| f.full_path());
+
+    assert_eq!(resolved_path, Ok(f.join("lib/foo.ts")));
+}
diff --git a/src/tsconfig.rs b/src/tsconfig.rs
index 168eb9a9f..a219c3a6d 100644
--- a/src/tsconfig.rs
+++ b/src/tsconfig.rs
@@ -551,7 +551,6 @@ impl TsConfig {
     pub(crate) fn resolve_tsconfig_solution(tsconfig: Arc<Self>, path: &Path) -> Arc<Self> {
         if !tsconfig.references_resolved.is_empty()
             && tsconfig.is_file_extension_allowed_in_tsconfig(path)
-            && !tsconfig.is_file_included_in_tsconfig(path)
             && let Some(solution_tsconfig) = tsconfig
                 .references_resolved
                 .iter()