diff --git a/packages/js/src/plugins/typescript/plugin.spec.ts b/packages/js/src/plugins/typescript/plugin.spec.ts
index 71421d3917..ad32643e9d 100644
--- a/packages/js/src/plugins/typescript/plugin.spec.ts
+++ b/packages/js/src/plugins/typescript/plugin.spec.ts
@@ -796,6 +796,73 @@ describe(`Plugin: ${PLUGIN_NAME}`, () => {
         `);
       });
 
+      it('should add the config file and the `include` and `exclude` patterns using the "${configDir}" template', async () => {
+        await applyFilesToTempFsAndContext(tempFs, context, {
+          'libs/my-lib/tsconfig.json': JSON.stringify({
+            include: ['${configDir}/src/**/*.ts'],
+            exclude: ['${configDir}/src/**/foo.ts'],
+            // set this to keep outputs smaller
+            compilerOptions: { outDir: 'dist' },
+          }),
+          'libs/my-lib/package.json': `{}`,
+        });
+        expect(await invokeCreateNodesOnMatchingFiles(context, {}))
+          .toMatchInlineSnapshot(`
+          {
+            "projects": {
+              "libs/my-lib": {
+                "projectType": "library",
+                "targets": {
+                  "typecheck": {
+                    "cache": true,
+                    "command": "tsc --build --emitDeclarationOnly",
+                    "dependsOn": [
+                      "^typecheck",
+                    ],
+                    "inputs": [
+                      "{projectRoot}/package.json",
+                      "{projectRoot}/tsconfig.json",
+                      "{projectRoot}/src/**/*.ts",
+                      "!{projectRoot}/src/**/foo.ts",
+                      "^production",
+                      {
+                        "externalDependencies": [
+                          "typescript",
+                        ],
+                      },
+                    ],
+                    "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": [
+                      "{projectRoot}/dist/**/*.d.ts",
+                      "{projectRoot}/dist/tsconfig.tsbuildinfo",
+                    ],
+                    "syncGenerators": [
+                      "@nx/js:typescript-sync",
+                    ],
+                  },
+                },
+              },
+            },
+          }
+        `);
+      });
+
       it('should normalize and add directories in `include` with the ts extensions', async () => {
         await applyFilesToTempFsAndContext(tempFs, context, {
           'libs/my-lib/tsconfig.json': JSON.stringify({
@@ -2608,6 +2675,68 @@ describe(`Plugin: ${PLUGIN_NAME}`, () => {
           }
         `);
       });
+
+      it('should support the "${configDir}" template', async () => {
+        await applyFilesToTempFsAndContext(tempFs, context, {
+          'libs/my-lib/tsconfig.json': JSON.stringify({
+            compilerOptions: { outDir: '${configDir}/dist' },
+            files: ['main.ts'],
+          }),
+          'libs/my-lib/package.json': `{}`,
+        });
+        expect(await invokeCreateNodesOnMatchingFiles(context, {}))
+          .toMatchInlineSnapshot(`
+          {
+            "projects": {
+              "libs/my-lib": {
+                "projectType": "library",
+                "targets": {
+                  "typecheck": {
+                    "cache": true,
+                    "command": "tsc --build --emitDeclarationOnly",
+                    "dependsOn": [
+                      "^typecheck",
+                    ],
+                    "inputs": [
+                      "production",
+                      "^production",
+                      {
+                        "externalDependencies": [
+                          "typescript",
+                        ],
+                      },
+                    ],
+                    "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": [
+                      "{projectRoot}/dist/**/*.d.ts",
+                      "{projectRoot}/dist/tsconfig.tsbuildinfo",
+                    ],
+                    "syncGenerators": [
+                      "@nx/js:typescript-sync",
+                    ],
+                  },
+                },
+              },
+            },
+          }
+        `);
+      });
     });
   });
 
@@ -3351,6 +3480,78 @@ describe(`Plugin: ${PLUGIN_NAME}`, () => {
         `);
       });
 
+      it('should add the config file and the `include` and `exclude` patterns using the "${configDir}" template', async () => {
+        await applyFilesToTempFsAndContext(tempFs, context, {
+          'libs/my-lib/tsconfig.lib.json': JSON.stringify({
+            compilerOptions: {
+              outDir: 'dist',
+            },
+            include: ['${configDir}/src/**/*.ts'],
+            exclude: ['${configDir}/src/**/*.spec.ts'],
+          }),
+          'libs/my-lib/tsconfig.json': `{}`,
+          'libs/my-lib/package.json': `{"main": "./dist/index.js"}`,
+        });
+        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",
+                    "dependsOn": [
+                      "^build",
+                    ],
+                    "inputs": [
+                      "{projectRoot}/package.json",
+                      "{projectRoot}/tsconfig.lib.json",
+                      "{projectRoot}/src/**/*.ts",
+                      "!{projectRoot}/src/**/*.spec.ts",
+                      "^production",
+                      {
+                        "externalDependencies": [
+                          "typescript",
+                        ],
+                      },
+                    ],
+                    "metadata": {
+                      "description": "Builds the project with \`tsc\`.",
+                      "help": {
+                        "command": "npx tsc --build --help",
+                        "example": {
+                          "args": [
+                            "--force",
+                          ],
+                        },
+                      },
+                      "technologies": [
+                        "typescript",
+                      ],
+                    },
+                    "options": {
+                      "cwd": "libs/my-lib",
+                    },
+                    "outputs": [
+                      "{projectRoot}/dist",
+                    ],
+                    "syncGenerators": [
+                      "@nx/js:typescript-sync",
+                    ],
+                  },
+                },
+              },
+            },
+          }
+        `);
+      });
+
       it('should normalize and add directories in `include` with the ts extensions', async () => {
         await applyFilesToTempFsAndContext(tempFs, context, {
           'libs/my-lib/tsconfig.lib.json': JSON.stringify({
@@ -4948,6 +5149,74 @@ describe(`Plugin: ${PLUGIN_NAME}`, () => {
           }
         `);
       });
+
+      it('should support the "${configDir}" template', async () => {
+        await applyFilesToTempFsAndContext(tempFs, context, {
+          'libs/my-lib/tsconfig.lib.json': JSON.stringify({
+            compilerOptions: {
+              outDir: '${configDir}/dist',
+            },
+            files: ['main.ts'],
+          }),
+          'libs/my-lib/tsconfig.json': `{}`,
+          'libs/my-lib/package.json': `{"main": "./dist/index.js"}`,
+        });
+        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",
+                    "dependsOn": [
+                      "^build",
+                    ],
+                    "inputs": [
+                      "production",
+                      "^production",
+                      {
+                        "externalDependencies": [
+                          "typescript",
+                        ],
+                      },
+                    ],
+                    "metadata": {
+                      "description": "Builds the project with \`tsc\`.",
+                      "help": {
+                        "command": "npx tsc --build --help",
+                        "example": {
+                          "args": [
+                            "--force",
+                          ],
+                        },
+                      },
+                      "technologies": [
+                        "typescript",
+                      ],
+                    },
+                    "options": {
+                      "cwd": "libs/my-lib",
+                    },
+                    "outputs": [
+                      "{projectRoot}/dist",
+                    ],
+                    "syncGenerators": [
+                      "@nx/js:typescript-sync",
+                    ],
+                  },
+                },
+              },
+            },
+          }
+        `);
+      });
     });
   });
 });
diff --git a/packages/js/src/plugins/typescript/plugin.ts b/packages/js/src/plugins/typescript/plugin.ts
index 91c0e63f24..0122e4e807 100644
--- a/packages/js/src/plugins/typescript/plugin.ts
+++ b/packages/js/src/plugins/typescript/plugin.ts
@@ -344,7 +344,7 @@ async function getConfigFileHash(
     ...(packageJson ? [hashObject(packageJson)] : []),
     // change this to bust the cache when making changes that would yield
     // different results for the same hash
-    hashObject({ bust: 2 }),
+    hashObject({ bust: 3 }),
   ]);
 }
 
@@ -636,11 +636,18 @@ function getInputs(
     return [input];
   };
 
+  const configDirTemplate = '${configDir}';
+  const substituteConfigDir = (p: string) =>
+    p.startsWith(configDirTemplate) ? p.replace(configDirTemplate, './') : p;
+
   projectTsConfigFiles.forEach(([configPath, config]) => {
     configFiles.add(configPath);
     const offset = relative(absoluteProjectRoot, dirname(configPath));
     (config.raw?.include ?? []).forEach((p: string) => {
-      const normalized = normalizeInput(join(offset, p), config);
+      const normalized = normalizeInput(
+        join(offset, substituteConfigDir(p)),
+        config
+      );
       normalized.forEach((input) => includePaths.add(input));
     });
 
@@ -653,11 +660,14 @@ function getInputs(
       const otherFilesInclude: string[] = [];
       projectTsConfigFiles.forEach(([path, c]) => {
         if (path !== configPath) {
-          otherFilesInclude.push(...(c.raw?.include ?? []));
+          otherFilesInclude.push(
+            ...(c.raw?.include ?? []).map(substituteConfigDir)
+          );
         }
       });
       const normalize = (p: string) => (p.startsWith('./') ? p.slice(2) : p);
-      config.raw.exclude.forEach((excludePath: string) => {
+      config.raw.exclude.forEach((e: string) => {
+        const excludePath = substituteConfigDir(e);
         if (
           !otherFilesInclude.some(
             (includePath) =>