diff --git a/src/server/editorServices.ts b/src/server/editorServices.ts
index 3ea03ff035..7009619b26 100644
--- a/src/server/editorServices.ts
+++ b/src/server/editorServices.ts
@@ -2109,7 +2109,20 @@ namespace ts.server {
         }
 
         private getOrCreateScriptInfoNotOpenedByClientForNormalizedPath(fileName: NormalizedPath, currentDirectory: string, scriptKind: ScriptKind | undefined, hasMixedContent: boolean | undefined, hostToQueryFileExistsOn: DirectoryStructureHost | undefined) {
-            return this.getOrCreateScriptInfoWorker(fileName, currentDirectory, /*openedByClient*/ false, /*fileContent*/ undefined, scriptKind, hasMixedContent, hostToQueryFileExistsOn);
+            if (isRootedDiskPath(fileName) || isDynamicFileName(fileName)) {
+                return this.getOrCreateScriptInfoWorker(fileName, currentDirectory, /*openedByClient*/ false, /*fileContent*/ undefined, scriptKind, hasMixedContent, hostToQueryFileExistsOn);
+            }
+
+            // This is non rooted path with different current directory than project service current directory
+            // Only paths recognized are open relative file paths
+            const info = this.openFilesWithNonRootedDiskPath.get(this.toCanonicalFileName(fileName));
+            if (info) {
+                return info;
+            }
+
+            // This means triple slash references wont be resolved in dynamic and unsaved files
+            // which is intentional since we dont know what it means to be relative to non disk files
+            return undefined;
         }
 
         private getOrCreateScriptInfoOpenedByClientForNormalizedPath(fileName: NormalizedPath, currentDirectory: string, fileContent: string | undefined, scriptKind: ScriptKind | undefined, hasMixedContent: boolean | undefined) {
@@ -2126,7 +2139,7 @@ namespace ts.server {
             let info = this.getScriptInfoForPath(path);
             if (!info) {
                 const isDynamic = isDynamicFileName(fileName);
-                Debug.assert(isRootedDiskPath(fileName) || isDynamic || openedByClient, "", () => `${JSON.stringify({ fileName, currentDirectory, hostCurrentDirectory: this.currentDirectory, openKeys: arrayFrom(this.openFilesWithNonRootedDiskPath.keys()) })}\nScript info with non-dynamic relative file name can only be open script info`);
+                Debug.assert(isRootedDiskPath(fileName) || isDynamic || openedByClient, "", () => `${JSON.stringify({ fileName, currentDirectory, hostCurrentDirectory: this.currentDirectory, openKeys: arrayFrom(this.openFilesWithNonRootedDiskPath.keys()) })}\nScript info with non-dynamic relative file name can only be open script info or in context of host currentDirectory`);
                 Debug.assert(!isRootedDiskPath(fileName) || this.currentDirectory === currentDirectory || !this.openFilesWithNonRootedDiskPath.has(this.toCanonicalFileName(fileName)), "", () => `${JSON.stringify({ fileName, currentDirectory, hostCurrentDirectory: this.currentDirectory, openKeys: arrayFrom(this.openFilesWithNonRootedDiskPath.keys()) })}\nOpen script files with non rooted disk path opened with current directory context cannot have same canonical names`);
                 Debug.assert(!isDynamic || this.currentDirectory === currentDirectory, "", () => `${JSON.stringify({ fileName, currentDirectory, hostCurrentDirectory: this.currentDirectory, openKeys: arrayFrom(this.openFilesWithNonRootedDiskPath.keys()) })}\nDynamic files must always have current directory context since containing external project name will always match the script info name.`);
                 // If the file is not opened by client and the file doesnot exist on the disk, return
@@ -2139,7 +2152,7 @@ namespace ts.server {
                 if (!openedByClient) {
                     this.watchClosedScriptInfo(info);
                 }
-                else if (!isRootedDiskPath(fileName) && currentDirectory !== this.currentDirectory) {
+                else if (!isRootedDiskPath(fileName) && !isDynamic) {
                     // File that is opened by user but isn't rooted disk path
                     this.openFilesWithNonRootedDiskPath.set(this.toCanonicalFileName(fileName), info);
                 }
diff --git a/src/testRunner/unittests/tsserverProjectSystem.ts b/src/testRunner/unittests/tsserverProjectSystem.ts
index 31ca940321..a113ea14d7 100644
--- a/src/testRunner/unittests/tsserverProjectSystem.ts
+++ b/src/testRunner/unittests/tsserverProjectSystem.ts
@@ -3301,7 +3301,7 @@ namespace ts.projectSystem {
             });
         });
 
-        it("dynamic file with reference paths external project", () => {
+        it("dynamic file with reference paths without external project", () => {
             const file: File = {
                 path: "^walkThroughSnippet:/Users/UserName/projects/someProject/out/someFile#1.js",
                 content: `/// <reference path="../../../../../../typings/@epic/Core.d.ts" />
@@ -3899,18 +3899,30 @@ var x = 10;`
 
         describe("when opening new file that doesnt exist on disk yet", () => {
             function verifyNonExistentFile(useProjectRoot: boolean) {
-                const host = createServerHost([libFile]);
+                const folderPath = "/user/someuser/projects/someFolder";
+                const fileInRoot: File = {
+                    path: `/src/somefile.d.ts`,
+                    content: "class c { }"
+                };
+                const fileInProjectRoot: File = {
+                    path: `${folderPath}/src/somefile.d.ts`,
+                    content: "class c { }"
+                };
+                const host = createServerHost([libFile, fileInRoot, fileInProjectRoot]);
                 const { hasError, errorLogger } = createErrorLogger();
                 const session = createSession(host, { canUseEvents: true, logger: errorLogger, useInferredProjectPerProjectRoot: true });
 
-                const folderPath = "/user/someuser/projects/someFolder";
                 const projectService = session.getProjectService();
                 const untitledFile = "untitled:Untitled-1";
+                const refPathNotFound1 = "../../../../../../typings/@epic/Core.d.ts";
+                const refPathNotFound2 = "./src/somefile.d.ts";
+                const fileContent = `/// <reference path="${refPathNotFound1}" />
+/// <reference path="${refPathNotFound2}" />`;
                 session.executeCommandSeq<protocol.OpenRequest>({
                     command: server.CommandNames.Open,
                     arguments: {
                         file: untitledFile,
-                        fileContent: `/// <reference path="../../../../../../typings/@epic/Core.d.ts" />`,
+                        fileContent,
                         scriptKindName: "TS",
                         projectRootPath: useProjectRoot ? folderPath : undefined
                     }
@@ -3918,6 +3930,8 @@ var x = 10;`
                 checkNumberOfProjects(projectService, { inferredProjects: 1 });
                 const infoForUntitledAtProjectRoot = projectService.getScriptInfoForPath(`${folderPath.toLowerCase()}/${untitledFile.toLowerCase()}` as Path);
                 const infoForUnitiledAtRoot = projectService.getScriptInfoForPath(`/${untitledFile.toLowerCase()}` as Path);
+                const infoForSomefileAtProjectRoot = projectService.getScriptInfoForPath(`/${folderPath.toLowerCase()}/src/somefile.d.ts` as Path);
+                const infoForSomefileAtRoot = projectService.getScriptInfoForPath(`${fileInRoot.path.toLowerCase()}` as Path);
                 if (useProjectRoot) {
                     assert.isDefined(infoForUntitledAtProjectRoot);
                     assert.isUndefined(infoForUnitiledAtRoot);
@@ -3926,7 +3940,11 @@ var x = 10;`
                     assert.isDefined(infoForUnitiledAtRoot);
                     assert.isUndefined(infoForUntitledAtProjectRoot);
                 }
-                host.checkTimeoutQueueLength(2);
+                assert.isUndefined(infoForSomefileAtRoot);
+                assert.isUndefined(infoForSomefileAtProjectRoot);
+
+                // Since this is not js project so no typings are queued
+                host.checkTimeoutQueueLength(0);
 
                 const newTimeoutId = host.getNextTimeoutId();
                 const expectedSequenceId = session.getNextSeq();
@@ -3937,19 +3955,26 @@ var x = 10;`
                         files: [untitledFile]
                     }
                 });
-                host.checkTimeoutQueueLength(3);
+                host.checkTimeoutQueueLength(1);
 
                 // Run the last one = get error request
                 host.runQueuedTimeoutCallbacks(newTimeoutId);
 
                 assert.isFalse(hasError());
-                host.checkTimeoutQueueLength(2);
+                host.checkTimeoutQueueLength(0);
                 checkErrorMessage(session, "syntaxDiag", { file: untitledFile, diagnostics: [] });
                 session.clearMessages();
 
                 host.runQueuedImmediateCallbacks();
                 assert.isFalse(hasError());
-                checkErrorMessage(session, "semanticDiag", { file: untitledFile, diagnostics: [] });
+                const errorOffset = fileContent.indexOf(refPathNotFound1) + 1;
+                checkErrorMessage(session, "semanticDiag", {
+                    file: untitledFile,
+                    diagnostics: [
+                        createDiagnostic({ line: 1, offset: errorOffset }, { line: 1, offset: errorOffset + refPathNotFound1.length }, Diagnostics.File_0_not_found, [refPathNotFound1], "error"),
+                        createDiagnostic({ line: 2, offset: errorOffset }, { line: 2, offset: errorOffset + refPathNotFound2.length }, Diagnostics.File_0_not_found, [refPathNotFound2.substr(2)], "error")
+                    ]
+                });
                 session.clearMessages();
 
                 host.runQueuedImmediateCallbacks(1);