diff --git a/src/loader.ts b/src/loader.ts
index 4dff9c6..fe63d0b 100644
--- a/src/loader.ts
+++ b/src/loader.ts
@@ -81,14 +81,21 @@ async function ESBuildLoader(
 		} else {
 			/* Detect tsconfig file */
 
-			// Don't look for tsconfig.json based on external sources (see
-			// https://github.com/privatenumber/esbuild-loader/issues/363)
-			if (resourcePath.match(/node_modules/) !== null) {
-				return;
+			let tsconfig;
+
+			try {
+				// Webpack shouldn't be loading the same path multiple times so doesn't need to be cached
+				tsconfig = getTsconfig(resourcePath, 'tsconfig.json', tsconfigCache);
+			} catch (error) {
+				if (resourcePath.split(path.sep).includes('node_modules')) {
+					this.emitWarning(
+						new Error(`[esbuild-loader] Error while discovering tsconfig.json in dependency: "${error?.toString()}"`),
+					);
+				} else {
+					throw error;
+				}
 			}
 
-			// Webpack shouldn't be loading the same path multiple times so doesn't need to be cached
-			const tsconfig = getTsconfig(resourcePath, 'tsconfig.json', tsconfigCache);
 			if (tsconfig) {
 				const fileMatcher = createFilesMatcher(tsconfig);
 				transformOptions.tsconfigRaw = fileMatcher(resourcePath) as TransformOptions['tsconfigRaw'];
diff --git a/tests/specs/tsconfig.ts b/tests/specs/tsconfig.ts
index 000b426..5e59659 100644
--- a/tests/specs/tsconfig.ts
+++ b/tests/specs/tsconfig.ts
@@ -269,12 +269,9 @@ export default testSuite(({ describe }) => {
 					// Fake external dependency
 					node_modules: {
 						'fake-lib': {
-							'index.js': 'export function testFn() { return "Hi!" }',
+							'index.ts': 'export function testFn(): string { return "Hi!" }',
 							'package.json': JSON.stringify({
 								name: 'fake-lib',
-								exports: {
-									'.': './index.js',
-								},
 							}),
 							'tsconfig.json': tsconfigJson({
 								extends: 'something-imaginary',
@@ -302,6 +299,10 @@ export default testSuite(({ describe }) => {
 							},
 						},
 
+						resolve: {
+							extensions: ['.ts', '.js'],
+						},
+
 						module: {
 							rules: [
 								{
@@ -330,9 +331,10 @@ export default testSuite(({ describe }) => {
 				} catch (error) {
 					result = error as ExecaError;
 				}
-				const { exitCode, stderr } = result;
+				const { exitCode, stdout } = result;
 
-				expect(stderr).not.toMatch("File 'something-imaginary' not found.");
+				// We log this as a warning, and continue the transform
+				expect(stdout).toMatch("Error while discovering tsconfig.json in dependency: \"Error: File 'something-imaginary' not found.\"");
 				expect(exitCode).toEqual(0);
 			});
 		});