diff --git a/packages/js/src/plugins/typescript/plugin.spec.ts b/packages/js/src/plugins/typescript/plugin.spec.ts
index 27516ebe8fe75..78b13d7ba05a2 100644
--- a/packages/js/src/plugins/typescript/plugin.spec.ts
+++ b/packages/js/src/plugins/typescript/plugin.spec.ts
@@ -594,6 +594,83 @@ describe(`Plugin: ${PLUGIN_NAME}`, () => {
         `);
       });
 
+      it('should add extended config files supporting node.js style resolution and set npm packages as external dependencies', async () => {
+        await applyFilesToTempFsAndContext(tempFs, context, {
+          'tsconfig.base.json': JSON.stringify({
+            extends: '@tsconfig/strictest/tsconfig.json',
+            exclude: ['node_modules', 'tmp'],
+          }),
+          'tsconfig.foo.json': JSON.stringify({
+            extends: './tsconfig.base', // extensionless relative path
+          }),
+          'libs/my-lib/tsconfig.json': JSON.stringify({
+            extends: '../../tsconfig.foo.json',
+            include: ['src/**/*.ts'],
+          }),
+          'libs/my-lib/package.json': `{}`,
+        });
+        // simulate @tsconfig/strictest package
+        tempFs.createFilesSync({
+          'node_modules/@tsconfig/strictest/tsconfig.json': '{}',
+        });
+
+        expect(await invokeCreateNodesOnMatchingFiles(context, {}))
+          .toMatchInlineSnapshot(`
+          {
+            "projects": {
+              "libs/my-lib": {
+                "projectType": "library",
+                "targets": {
+                  "typecheck": {
+                    "cache": true,
+                    "command": "tsc --build --emitDeclarationOnly --pretty --verbose",
+                    "dependsOn": [
+                      "^typecheck",
+                    ],
+                    "inputs": [
+                      "{workspaceRoot}/tsconfig.foo.json",
+                      "{workspaceRoot}/tsconfig.base.json",
+                      "{projectRoot}/tsconfig.json",
+                      "{projectRoot}/src/**/*.ts",
+                      "!{workspaceRoot}/node_modules",
+                      "!{workspaceRoot}/tmp",
+                      "^production",
+                      {
+                        "externalDependencies": [
+                          "typescript",
+                          "@tsconfig/strictest",
+                        ],
+                      },
+                    ],
+                    "metadata": {
+                      "description": "Runs type-checking for the project.",
+                      "help": {
+                        "command": "npx tsc --build --help",
+                        "example": {
+                          "args": [
+                            "--force",
+                          ],
+                        },
+                      },
+                      "technologies": [
+                        "typescript",
+                      ],
+                    },
+                    "options": {
+                      "cwd": "libs/my-lib",
+                    },
+                    "outputs": [],
+                    "syncGenerators": [
+                      "@nx/js:typescript-sync",
+                    ],
+                  },
+                },
+              },
+            },
+          }
+        `);
+      });
+
       it('should add files from internal project references', async () => {
         await applyFilesToTempFsAndContext(tempFs, context, {
           'libs/my-lib/tsconfig.json': JSON.stringify({
@@ -1999,6 +2076,88 @@ describe(`Plugin: ${PLUGIN_NAME}`, () => {
         `);
       });
 
+      it('should add extended config files supporting node.js style resolution and set npm packages as external dependencies', async () => {
+        await applyFilesToTempFsAndContext(tempFs, context, {
+          'tsconfig.base.json': JSON.stringify({
+            extends: '@tsconfig/strictest/tsconfig.json',
+            exclude: ['node_modules', 'tmp'],
+          }),
+          'tsconfig.foo.json': JSON.stringify({
+            extends: './tsconfig.base', // extensionless relative path
+          }),
+          'libs/my-lib/tsconfig.json': '{}',
+          'libs/my-lib/tsconfig.lib.json': JSON.stringify({
+            extends: '../../tsconfig.foo.json',
+            include: ['src/**/*.ts'],
+          }),
+          'libs/my-lib/package.json': `{}`,
+        });
+        // simulate @tsconfig/strictest package
+        tempFs.createFilesSync({
+          'node_modules/@tsconfig/strictest/tsconfig.json': '{}',
+        });
+
+        expect(
+          await invokeCreateNodesOnMatchingFiles(context, {
+            typecheck: false,
+            build: true,
+          })
+        ).toMatchInlineSnapshot(`
+          {
+            "projects": {
+              "libs/my-lib": {
+                "projectType": "library",
+                "targets": {
+                  "build": {
+                    "cache": true,
+                    "command": "tsc --build tsconfig.lib.json --pretty --verbose",
+                    "dependsOn": [
+                      "^build",
+                    ],
+                    "inputs": [
+                      "{workspaceRoot}/tsconfig.foo.json",
+                      "{workspaceRoot}/tsconfig.base.json",
+                      "{projectRoot}/tsconfig.lib.json",
+                      "{projectRoot}/src/**/*.ts",
+                      "!{workspaceRoot}/node_modules",
+                      "!{workspaceRoot}/tmp",
+                      "^production",
+                      {
+                        "externalDependencies": [
+                          "typescript",
+                          "@tsconfig/strictest",
+                        ],
+                      },
+                    ],
+                    "metadata": {
+                      "description": "Builds the project with \`tsc\`.",
+                      "help": {
+                        "command": "npx tsc --build --help",
+                        "example": {
+                          "args": [
+                            "--force",
+                          ],
+                        },
+                      },
+                      "technologies": [
+                        "typescript",
+                      ],
+                    },
+                    "options": {
+                      "cwd": "libs/my-lib",
+                    },
+                    "outputs": [],
+                    "syncGenerators": [
+                      "@nx/js:typescript-sync",
+                    ],
+                  },
+                },
+              },
+            },
+          }
+        `);
+      });
+
       it('should add files from internal project references', async () => {
         await applyFilesToTempFsAndContext(tempFs, context, {
           'libs/my-lib/tsconfig.json': '{}',
diff --git a/packages/js/src/plugins/typescript/plugin.ts b/packages/js/src/plugins/typescript/plugin.ts
index 1fa00a7359aa8..e2431a6689ddf 100644
--- a/packages/js/src/plugins/typescript/plugin.ts
+++ b/packages/js/src/plugins/typescript/plugin.ts
@@ -182,7 +182,9 @@ async function createNodesInternal(
     readCachedTsConfig(fullConfigPath)
   );
   const nodeHash = hashArray([
-    ...[configFilePath, ...extendedConfigFiles, lockFileName].map(hashFile),
+    ...[configFilePath, ...extendedConfigFiles.files, lockFileName].map(
+      hashFile
+    ),
     hashObject(options),
   ]);
   const cacheKey = `${nodeHash}_${configFilePath}`;
@@ -334,14 +336,16 @@ function getInputs(
   projectRoot: string
 ): TargetConfiguration['inputs'] {
   const configFiles = new Set<string>();
-  const includePaths = new Set<string>();
-  const excludePaths = new Set<string>();
+  const externalDependencies = ['typescript'];
 
   const extendedConfigFiles = getExtendedConfigFiles(configFilePath, tsConfig);
-  extendedConfigFiles.forEach((configPath) => {
+  extendedConfigFiles.files.forEach((configPath) => {
     configFiles.add(configPath);
   });
+  externalDependencies.push(...extendedConfigFiles.packages);
 
+  const includePaths = new Set<string>();
+  const excludePaths = new Set<string>();
   const projectTsConfigFiles: [string, ParsedCommandLine][] = [
     [configFilePath, tsConfig],
     ...Object.entries(internalProjectReferences),
@@ -429,7 +433,7 @@ function getInputs(
     inputs.push('production' in namedInputs ? '^production' : '^default');
   }
 
-  inputs.push({ externalDependencies: ['typescript'] });
+  inputs.push({ externalDependencies });
 
   return inputs;
 }
@@ -537,23 +541,36 @@ function pathToInputOrOutput(
 function getExtendedConfigFiles(
   tsConfigPath: string,
   tsConfig: ParsedCommandLine
-): string[] {
+): {
+  files: string[];
+  packages: string[];
+} {
   const extendedConfigFiles = new Set<string>();
+  const extendedExternalPackages = new Set<string>();
 
   let currentConfigPath = tsConfigPath;
   let currentConfig = tsConfig;
   while (currentConfig.raw?.extends) {
-    const extendedConfigPath = join(
-      dirname(currentConfigPath),
-      currentConfig.raw.extends
+    const extendedConfigPath = resolveExtendedTsConfigPath(
+      currentConfig.raw.extends,
+      dirname(currentConfigPath)
     );
-    extendedConfigFiles.add(extendedConfigPath);
-    const extendedConfig = readCachedTsConfig(extendedConfigPath);
-    currentConfigPath = extendedConfigPath;
-    currentConfig = extendedConfig;
+    if (!extendedConfigPath) {
+      break;
+    }
+    if (extendedConfigPath.externalPackage) {
+      extendedExternalPackages.add(extendedConfigPath.externalPackage);
+      break;
+    }
+    extendedConfigFiles.add(extendedConfigPath.filePath);
+    currentConfig = readCachedTsConfig(extendedConfigPath.filePath);
+    currentConfigPath = extendedConfigPath.filePath;
   }
 
-  return Array.from(extendedConfigFiles);
+  return {
+    files: Array.from(extendedConfigFiles),
+    packages: Array.from(extendedExternalPackages),
+  };
 }
 
 function resolveInternalProjectReferences(
@@ -742,3 +759,27 @@ function normalizePluginOptions(
     build,
   };
 }
+
+function resolveExtendedTsConfigPath(
+  tsConfigPath: string,
+  directory?: string
+): { filePath: string; externalPackage?: string } | null {
+  try {
+    const resolvedPath = require.resolve(tsConfigPath, {
+      paths: directory ? [directory] : undefined,
+    });
+
+    if (tsConfigPath.startsWith('.')) {
+      return { filePath: resolvedPath };
+    }
+
+    // parse the package from the tsconfig path
+    const packageName = tsConfigPath.startsWith('@')
+      ? tsConfigPath.split('/').slice(0, 2).join('/')
+      : tsConfigPath.split('/')[0];
+
+    return { filePath: resolvedPath, externalPackage: packageName };
+  } catch {
+    return null;
+  }
+}