diff --git a/package-lock.json b/package-lock.json
index c9b39c7..3d6b2af 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -12,8 +12,10 @@
         "@isaacs/cached": "^1.0.1",
         "@isaacs/catcher": "^1.0.4",
         "foreground-child": "^3.1.1",
+        "get-tsconfig": "^4.7.2",
         "mkdirp": "^3.0.1",
         "pirates": "^4.0.6",
+        "resolve-pkg-maps": "^1.0.0",
         "rimraf": "^6.0.1",
         "signal-exit": "^4.1.0",
         "sock-daemon": "^1.4.2",
@@ -3956,7 +3958,6 @@
       "version": "4.8.1",
       "resolved": "https://registry.npmjs.org/get-tsconfig/-/get-tsconfig-4.8.1.tgz",
       "integrity": "sha512-k9PN+cFBmaLWtVz29SkUoqU5O0slLuHJXt/2P+tMVFT+phsSGXGkp9t3rQIqdz0e+06EHNGs3oM6ZX1s2zHxRg==",
-      "dev": true,
       "license": "MIT",
       "dependencies": {
         "resolve-pkg-maps": "^1.0.0"
@@ -6032,7 +6033,6 @@
       "version": "1.0.0",
       "resolved": "https://registry.npmjs.org/resolve-pkg-maps/-/resolve-pkg-maps-1.0.0.tgz",
       "integrity": "sha512-seS2Tj26TBVOC2NIc2rOe2y2ZO7efxITtLZcGSOnHHNOQ7CkiUBfw0Iw2ck6xkIhPwLhKNLS8BO+hEpngQlqzw==",
-      "dev": true,
       "license": "MIT",
       "funding": {
         "url": "https://github.com/privatenumber/resolve-pkg-maps?sponsor=1"
diff --git a/package.json b/package.json
index 161c564..4898cd8 100644
--- a/package.json
+++ b/package.json
@@ -57,8 +57,10 @@
     "@isaacs/cached": "^1.0.1",
     "@isaacs/catcher": "^1.0.4",
     "foreground-child": "^3.1.1",
+    "get-tsconfig": "^4.7.2",
     "mkdirp": "^3.0.1",
     "pirates": "^4.0.6",
+    "resolve-pkg-maps": "^1.0.0",
     "rimraf": "^6.0.1",
     "signal-exit": "^4.1.0",
     "sock-daemon": "^1.4.2",
diff --git a/src/hooks/hooks.mts b/src/hooks/hooks.mts
index 4978a49..accf621 100644
--- a/src/hooks/hooks.mts
+++ b/src/hooks/hooks.mts
@@ -13,6 +13,7 @@ import { MessagePort } from 'node:worker_threads'
 import { classifyModule } from '../classify-module.js'
 import { DaemonClient } from '../client.js'
 import { getDiagMode } from '../diagnostic-mode.js'
+import { resolveMapping } from '../service/resolve-mapping.js'
 
 // in some cases on the loader thread, console.error doesn't actually
 // print. sync write to fd 1 instead.
@@ -54,6 +55,7 @@ export const resolve: ResolveHook = async (
   context,
   nextResolve,
 ) => {
+  url = resolveMapping(url, context.parentURL)
   const { parentURL } = context
   const target =
     /* c8 ignore start */
diff --git a/src/service/resolve-mapping.ts b/src/service/resolve-mapping.ts
new file mode 100644
index 0000000..2f535ed
--- /dev/null
+++ b/src/service/resolve-mapping.ts
@@ -0,0 +1,93 @@
+import { tsconfig } from './tsconfig.js'
+import { relative, dirname, join } from 'node:path'
+import { fileURLToPath } from 'node:url'
+import { createPathsMatcher, type TsConfigResult } from 'get-tsconfig'
+import {
+  resolveImports,
+  type PathConditionsMap,
+} from 'resolve-pkg-maps'
+import { walkUp } from 'walk-up-path'
+import { catcher } from '@isaacs/catcher'
+import { readFile } from '../ts-sys-cached.js'
+import { classifyModule } from '../classify-module.js'
+
+const resolveTypescriptMapping = (
+  url: string,
+  parent: string | undefined
+): string | undefined => {
+  if (!url || url.startsWith('file:///') || !parent) return undefined
+  const options = tsconfig().options
+
+  const relativePath = url
+  const tsconfigArg = {
+    config: { compilerOptions: { ...options, baseUrl: './' } },
+    path: options.configFilePath as string,
+  } as TsConfigResult
+
+  const pathMather = createPathsMatcher(tsconfigArg)
+
+  if (!pathMather) return undefined
+  const found = pathMather(relativePath)
+  if (found.length === 0) return undefined
+  return relative(
+    dirname(fileURLToPath(parent)),
+    found[0] as string
+  ).toString()
+}
+
+const getPackageJson = (
+  from: string
+):
+  | ({ imports: PathConditionsMap } & { path: string })
+  | undefined => {
+  for (const d of walkUp(from)) {
+    const pj = catcher(() => {
+      const json = readFile(d + '/package.json')
+      if (!json) return undefined
+      const pj = JSON.parse(json) as { imports: PathConditionsMap }
+      return pj
+    })
+    if (pj) {
+      return { imports: pj?.imports, path: d }
+    }
+  }
+  return undefined
+}
+
+const resolvePackageJsonMapping = (
+  url: string,
+  parent: string | undefined
+): string | undefined => {
+  if (
+    !url ||
+    url.startsWith('file:///') ||
+    !url.startsWith('#') ||
+    !parent
+  )
+    return undefined
+
+  const options = getPackageJson(dirname(fileURLToPath(parent)))
+  if (options === undefined) return undefined
+
+  const found = resolveImports(options.imports, url, [
+    'default',
+    'node',
+    classifyModule(url) === 'commonjs' ? 'require' : 'import',
+  ])
+  if (found.length === 0) return undefined
+  return relative(
+    dirname(fileURLToPath(parent)),
+    join(options.path, found[0] as string)
+  ).toString()
+}
+
+export const resolveMapping = (
+  url: string,
+  parent: string | undefined
+): string => {
+  return (
+    resolvePackageJsonMapping(url, parent) ??
+    resolveTypescriptMapping(url, parent) ??
+    url
+  )
+}
diff --git a/src/service/transpile-only.ts b/src/service/transpile-only.ts
index 18182f1..88e735e 100644
--- a/src/service/transpile-only.ts
+++ b/src/service/transpile-only.ts
@@ -66,6 +66,7 @@ const createTsTranspileModule = ({
     ) {
       continue
     }
+    if (option.name === 'paths') continue
 
     options[option.name] = option.transpileOptionValue
   }
diff --git a/src/service/tsconfig.ts b/src/service/tsconfig.ts
index bf248a2..236fa96 100644
--- a/src/service/tsconfig.ts
+++ b/src/service/tsconfig.ts
@@ -5,7 +5,7 @@
 // return the same object if it parses to the same values.
 import { catcher } from '@isaacs/catcher'
 import { statSync } from 'fs'
-import { resolve } from 'path'
+import { dirname, resolve } from 'node:path'
 import ts from 'typescript'
 import { walkUp } from 'walk-up-path'
 import { error, warn } from '../debug.js'
@@ -73,7 +73,7 @@ export const tsconfig = () => {
       // also default to recommended setting for node programs
       {
         compilerOptions: {
-          rootDir: dir,
+          rootDir: dirname(configPath),
           skipLibCheck: true,
           isolatedModules: true,
           esModuleInterop: true,
@@ -106,7 +106,11 @@ export const tsconfig = () => {
         noEmit: false,
       },
     })
-    const newConfig = ts.parseJsonConfigFileContent(res, ts.sys, dir)
+    const newConfig = ts.parseJsonConfigFileContent(
+      res,
+      ts.sys,
+      dirname(configPath)
+    )
     const newConfigJSON = JSON.stringify(newConfig)
     if (loadedConfig && newConfigJSON === loadedConfigJSON) {
       // no changes, keep the old one
diff --git a/test/bin.ts b/test/bin.ts
index 8cd141a..5051aad 100644
--- a/test/bin.ts
+++ b/test/bin.ts
@@ -8,8 +8,13 @@ const bin = fileURLToPath(
   new URL('../dist/esm/bin.mjs', import.meta.url),
 )
 
-const run = (args: string[]) =>
-  spawnSync(process.execPath, [bin, ...args], { encoding: 'utf8' })
+const run = (args: string[], tsconfigPath?: string) =>
+  spawnSync(process.execPath, [bin, ...args], {
+    encoding: 'utf8',
+    env: {
+      TSIMP_PROJECT: tsconfigPath,
+    },
+  })
 
 t.teardown(() => run(['--stop']))
 
@@ -65,6 +70,36 @@ t.test('actually run a program', async t => {
       export const f: Foo = { bar: true, baz: 'xyz' }
       console.error(f)
     `,
+
+    // subpath import tests
+    'package.json': JSON.stringify({
+      type: 'module',
+      imports: {
+        '#utilities/*': './utilities/*',
+      },
+    }),
+    'tsconfig.json': JSON.stringify({
+      compilerOptions: {
+        baseUrl: '.',
+        resolvePackageJsonImports: true,
+        paths: {
+          '+utilities/*': ['./utilities/*'],
+        },
+      },
+    }),
+
+    utilities: {
+      source: {
+        'constants.ts':
+          'enum Constants { one = "one", two = "two", three = "three" }; export default Constants;',
+      },
+    },
+
+    test: {
+      'getOne.ts': `import Constants from "../utilities/source/constants.js"; console.log(Constants.one);`,
+      'getTwo.ts': `import Constants from "#utilities/source/constants.ts"; console.log(Constants.two);`,
+      'getThree.ts': `import Constants from "+utilities/source/constants.js"; console.log(Constants.three);`,
+    },
   })
   const rel = relative(process.cwd(), dir).replace(/\\/g, '/')
 
@@ -125,4 +160,41 @@ t.test('actually run a program', async t => {
     t.equal(status, 0)
     t.equal(stdout, 'ok\n')
   })
+
+  t.test('run file with subpath imports', async t => {
+    run(['--restart'], `./${rel}/tsconfig.json`)
+
+    {
+      const pathToFile = `./${rel}/test/getOne.ts`
+      const { stdout, status } = run(
+        [pathToFile],
+        `./${rel}/tsconfig.json`
+      )
+
+      t.equal(status, 0)
+      t.equal(stdout, 'one\n')
+    }
+
+    {
+      const pathToFile = `./${rel}/test/getTwo.ts`
+      const { stdout, status } = run(
+        [pathToFile],
+        `./${rel}/tsconfig.json`
+      )
+
+      t.equal(status, 0)
+      t.equal(stdout, 'two\n')
+    }
+
+    {
+      const pathToFile = `./${rel}/test/getThree.ts`
+      const { stdout, status } = run(
+        [pathToFile],
+        `./${rel}/tsconfig.json`
+      )
+
+      t.equal(status, 0)
+      t.equal(stdout, 'three\n')
+    }
+  })
 })