diff --git a/test/data/recomp/Setup.hs b/test/data/recomp/Setup.hs
new file mode 100644
index 000000000..9a994af67
--- /dev/null
+++ b/test/data/recomp/Setup.hs
@@ -0,0 +1,2 @@
+import Distribution.Simple
+main = defaultMain
diff --git a/test/data/recomp/cabal.project b/test/data/recomp/cabal.project
new file mode 100644
index 000000000..e6fdbadb4
--- /dev/null
+++ b/test/data/recomp/cabal.project
@@ -0,0 +1 @@
+packages: .
diff --git a/test/data/recomp/hie.yaml b/test/data/recomp/hie.yaml
new file mode 100644
index 000000000..57919a091
--- /dev/null
+++ b/test/data/recomp/hie.yaml
@@ -0,0 +1 @@
+cradle: {cabal: {component: "lib:recomp"}}
diff --git a/test/data/recomp/lib/A.hs b/test/data/recomp/lib/A.hs
new file mode 100644
index 000000000..ac1a62242
--- /dev/null
+++ b/test/data/recomp/lib/A.hs
@@ -0,0 +1,6 @@
+module A where
+
+import B
+
+x :: Int
+x = y
diff --git a/test/data/recomp/lib/B.hs b/test/data/recomp/lib/B.hs
new file mode 100644
index 000000000..b3e34ed73
--- /dev/null
+++ b/test/data/recomp/lib/B.hs
@@ -0,0 +1,4 @@
+module B where
+
+y :: Int
+y = undefined
diff --git a/test/data/recomp/lib/P.hs b/test/data/recomp/lib/P.hs
new file mode 100644
index 000000000..214a1373e
--- /dev/null
+++ b/test/data/recomp/lib/P.hs
@@ -0,0 +1,5 @@
+module P where
+import A
+import B
+
+bar = x :: Int
diff --git a/test/data/recomp/recomp.cabal b/test/data/recomp/recomp.cabal
new file mode 100644
index 000000000..742ae8e68
--- /dev/null
+++ b/test/data/recomp/recomp.cabal
@@ -0,0 +1,13 @@
+cabal-version:       >=1.10
+name:                recomp
+version:             0.1.0.0
+author:              Zubin Duggal
+maintainer:          zubin@cmi.ac.in
+build-type:          Simple
+
+library
+  exposed-modules:     A, B, P
+  ghc-options:         -Wmissing-signatures
+  hs-source-dirs:      lib
+  build-depends:       base
+  default-language:    Haskell2010
diff --git a/test/exe/Main.hs b/test/exe/Main.hs
index 45baf9570..cc351236e 100644
--- a/test/exe/Main.hs
+++ b/test/exe/Main.hs
@@ -461,6 +461,7 @@ diagnosticTests = testGroup "diagnostics"
             Lens.filtered (T.isInfixOf ("/" <> name <> ".hs:"))
           failure msg = liftIO $ assertFailure $ "Expected file path to be stripped but got " <> T.unpack msg
       Lens.mapMOf_ offenders failure notification
+  , ifaceErrorTest
   ]
 
 codeActionTests :: TestTree
@@ -2190,6 +2191,45 @@ simpleMultiTest2 = testCase "simple-multi-test2" $ withoutStackEnv $ runWithExtr
     checkDefs locs (pure [fooL])
     expectNoMoreDiagnostics 0.5
 
+ifaceErrorTest :: TestTree
+ifaceErrorTest = testCase "iface-error-test" $ withoutStackEnv $ runWithExtraFiles "recomp" $ \dir -> do
+    let aPath = dir </> "lib/A.hs"
+        bPath = dir </> "lib/B.hs"
+        pPath = dir </> "lib/P.hs"
+
+    aSource <- liftIO $ readFileUtf8 aPath -- x = y :: Int
+    bSource <- liftIO $ readFileUtf8 bPath -- y :: Int
+    pSource <- liftIO $ readFileUtf8 pPath -- bar = x :: Int
+
+    bdoc <- createDoc bPath "haskell" bSource
+    pdoc <- createDoc pPath "haskell" pSource
+    expectDiagnostics [("lib/P.hs", [(DsWarning,(4,0), "Top-level binding")]) -- So what we know P has been loaded
+                      ]
+
+    -- Change y from Int to B
+    changeDoc bdoc [TextDocumentContentChangeEvent Nothing Nothing $ T.unlines ["module B where", "y :: Bool", "y = undefined"]]
+
+    -- Check that the error propogates to A
+    adoc <- createDoc aPath "haskell" aSource
+    expectDiagnostics
+      [("lib/A.hs", [(DsError, (5, 4), "Couldn't match expected type 'Int' with actual type 'Bool'")])]
+    closeDoc adoc -- Close A
+
+    changeDoc pdoc [TextDocumentContentChangeEvent Nothing Nothing $ pSource <> "\nfoo = y :: Bool" ]
+    -- Now in P we have
+    -- bar = x :: Int
+    -- foo = y :: Bool
+    -- HOWEVER, in A...
+    -- x = y  :: Int
+    -- This is clearly inconsistent, yet we don't get an error
+    expectDiagnostics [("lib/P.hs", [(DsWarning,(4,0), "Top-level binding")])
+                      ,("lib/P.hs", [(DsWarning,(6,0), "Top-level binding")])
+                      ]
+    expectDiagnostics
+      [("lib/A.hs", [(DsError, (5, 4), "Couldn't match expected type 'Int' with actual type 'Bool'")])]
+    expectNoMoreDiagnostics 2
+
+
 sessionDepsArePickedUp :: TestTree
 sessionDepsArePickedUp = testSession'
   "session-deps-are-picked-up"