diff --git a/src/utils/resolve-module-name.ts b/src/utils/resolve-module-name.ts
index fb989dc..ac0758d 100755
--- a/src/utils/resolve-module-name.ts
+++ b/src/utils/resolve-module-name.ts
@@ -122,8 +122,10 @@ export function resolveModuleName(context: VisitorContext, moduleName: string):
 
   const resolvedSourceFile = getResolvedSourceFile(context, resolvedModule.resolvedFileName);
 
-  const { indexType, resolvedBaseNameNoExtension, resolvedFileName, implicitPackageIndex, extName, resolvedDir } =
-    getPathDetail(moduleName, resolvedModule);
+  const { indexType, resolvedBaseNameNoExtension, resolvedFileName, implicitPackageIndex, extName } = getPathDetail(
+    moduleName,
+    resolvedModule,
+  );
 
   /* Determine output filename */
   let outputBaseName = resolvedBaseNameNoExtension ?? "";
@@ -133,7 +135,12 @@ export function resolveModuleName(context: VisitorContext, moduleName: string):
 
   /* Determine output dir */
   let srcFileOutputDir = getOutputDirForSourceFile(context, sourceFile);
-  let moduleFileOutputDir = implicitPackageIndex ? resolvedDir : getOutputDirForSourceFile(context, resolvedSourceFile);
+  let moduleFileOutputDir = getOutputDirForSourceFile(context, resolvedSourceFile);
+
+  if (implicitPackageIndex) {
+    const implicitPackageDir = tsInstance.normalizePath(path.dirname(implicitPackageIndex));
+    if (implicitPackageDir !== ".") moduleFileOutputDir = removeSuffix(moduleFileOutputDir, `/${implicitPackageDir}`);
+  }
 
   // Handle rootDirs remapping
   if (config.useRootDirs && rootDirs) {
diff --git a/test/projects/project-ref/b/deep/package-root.ts b/test/projects/project-ref/b/deep/package-root.ts
new file mode 100644
index 0000000..89ac49b
--- /dev/null
+++ b/test/projects/project-ref/b/deep/package-root.ts
@@ -0,0 +1,2 @@
+export { PackageRootConst } from "#pkg/pkg-root";
+export type { PackageRootType } from "#pkg/pkg-root";
diff --git a/test/projects/project-ref/b/packages/pkg-root/index.ts b/test/projects/project-ref/b/packages/pkg-root/index.ts
new file mode 100644
index 0000000..3c2592d
--- /dev/null
+++ b/test/projects/project-ref/b/packages/pkg-root/index.ts
@@ -0,0 +1,5 @@
+export const PackageRootConst = "package-root";
+
+export interface PackageRootType {
+  value: string;
+}
diff --git a/test/projects/project-ref/b/packages/pkg-root/package.json b/test/projects/project-ref/b/packages/pkg-root/package.json
new file mode 100644
index 0000000..0f1aa21
--- /dev/null
+++ b/test/projects/project-ref/b/packages/pkg-root/package.json
@@ -0,0 +1,4 @@
+{
+  "name": "#pkg/pkg-root",
+  "version": "1.0.0"
+}
diff --git a/test/projects/project-ref/b/tsconfig.json b/test/projects/project-ref/b/tsconfig.json
index 9a61c6d..22cdfb3 100755
--- a/test/projects/project-ref/b/tsconfig.json
+++ b/test/projects/project-ref/b/tsconfig.json
@@ -1,5 +1,5 @@
 {
-  "files": ["index.ts", "local/index.ts"],
+  "files": ["index.ts", "local/index.ts", "deep/package-root.ts", "packages/pkg-root/index.ts"],
   "extends": "../tsconfig.base.json",
   "compilerOptions": {
     "outDir": "../lib/b"
diff --git a/test/projects/project-ref/tsconfig.base.json b/test/projects/project-ref/tsconfig.base.json
index b8d0bfe..eb1dedb 100755
--- a/test/projects/project-ref/tsconfig.base.json
+++ b/test/projects/project-ref/tsconfig.base.json
@@ -10,7 +10,8 @@
     "baseUrl": ".",
     "paths": {
       "#a/*": ["./a/*"],
-      "#b/*": ["./b/*"]
+      "#b/*": ["./b/*"],
+      "#pkg/*": ["./b/packages/*"]
     },
     "plugins": [
       {
diff --git a/test/tests/project-ref.test.ts b/test/tests/project-ref.test.ts
index 1f945db..ade1dfe 100755
--- a/test/tests/project-ref.test.ts
+++ b/test/tests/project-ref.test.ts
@@ -12,6 +12,7 @@ import { createTsSolutionBuilder, type EmittedFiles } from "../utils/index.ts";
 /* File Paths */
 const projectDir = ts.normalizePath(path.join(projectsPaths, "project-ref"));
 const indexFile = ts.normalizePath(path.join(projectDir, "lib/b/index.ts"));
+const packageRootFile = ts.normalizePath(path.join(projectDir, "lib/b/deep/package-root.ts"));
 
 /* ****************************************************************************************************************** *
  * Tests
@@ -35,4 +36,9 @@ describe(`Project References`, () => {
     t.assert.match(emittedFiles[indexFile].js, /export { LocalConst } from ".\/local\/index"/);
     t.assert.match(emittedFiles[indexFile].dts, /export { LocalConst } from ".\/local\/index"/);
   });
+
+  test(`Specifier for package root resolves to emitted output`, (t) => {
+    t.assert.match(emittedFiles[packageRootFile].js, /export { PackageRootConst } from "..\/packages\/pkg-root"/);
+    t.assert.match(emittedFiles[packageRootFile].dts, /export type { PackageRootType } from "..\/packages\/pkg-root"/);
+  });
 });