diff --git a/CHANGELOG.md b/CHANGELOG.md
index 409927b44..08b0ea398 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,5 +1,9 @@
 # Changelog
 
+## v1.1.1 - NOT RELEASED YET
+
+- [Crash when adding/removing files in watch-mode](https://github.com/TypeStrong/ts-loader/pull/364) [#358] - thanks @jbbr for the suggested fix
+
 ## v1.1.0
 
 - [Added support for vuejs via `appendTsSuffixTo` option](https://github.com/TypeStrong/ts-loader/pull/354) [#270] - thanks @HerringtonDarkholme
diff --git a/src/after-compile.ts b/src/after-compile.ts
index cd472c4b8..27f47b0a1 100644
--- a/src/after-compile.ts
+++ b/src/after-compile.ts
@@ -1,13 +1,12 @@
 import interfaces = require('./interfaces');
 import path = require('path');
+import typescript = require('typescript');
 import utils = require('./utils');
 
 function makeAfterCompile(
     instance: interfaces.TSInstance,
     configFilePath: string
 ) {
-    const { compiler, languageService } = instance;
-
     let getCompilerOptionDiagnostics = true;
     let checkAllFilesForErrors = true;
 
@@ -20,103 +19,18 @@ function makeAfterCompile(
 
         removeTSLoaderErrors(compilation.errors);
 
-        // handle compiler option errors after the first compile
-        if (getCompilerOptionDiagnostics) {
-            getCompilerOptionDiagnostics = false;
-            utils.registerWebpackErrors(
-                compilation.errors,
-                utils.formatErrors(languageService.getCompilerOptionsDiagnostics(),
-                    instance.loaderOptions,
-                    compiler,
-                    { file: configFilePath || 'tsconfig.json' }));
-        }
+        provideCompilerOptionDiagnosticErrorsToWebpack(getCompilerOptionDiagnostics, compilation, instance, configFilePath);
+        getCompilerOptionDiagnostics = false;
 
-        // build map of all modules based on normalized filename
-        // this is used for quick-lookup when trying to find modules
-        // based on filepath
-        const modules: { [modulePath: string]: interfaces.WebpackModule[] } = {};
-        compilation.modules.forEach(module => {
-            if (module.resource) {
-                const modulePath = path.normalize(module.resource);
-                if (utils.hasOwnProperty(modules, modulePath)) {
-                    const existingModules = modules[modulePath];
-                    if (existingModules.indexOf(module) === -1) {
-                        existingModules.push(module);
-                    }
-                } else {
-                    modules[modulePath] = [module];
-                }
-            }
-        });
+        const modules = determineModules(compilation);
 
-        // gather all errors from TypeScript and output them to webpack
-        let filesWithErrors: interfaces.TSFiles = {};
-        // calculate array of files to check
-        let filesToCheckForErrors: interfaces.TSFiles = null;
-        if (checkAllFilesForErrors) {
-            // check all files on initial run
-            filesToCheckForErrors = instance.files;
-            checkAllFilesForErrors = false;
-        } else {
-            filesToCheckForErrors = {};
-            // check all modified files, and all dependants
-            Object.keys(instance.modifiedFiles).forEach(modifiedFileName => {
-                collectAllDependants(instance, modifiedFileName).forEach(fName => {
-                    filesToCheckForErrors[fName] = instance.files[fName];
-                });
-            });
-        }
-        // re-check files with errors from previous build
-        if (instance.filesWithErrors) {
-            Object.keys(instance.filesWithErrors).forEach(fileWithErrorName =>
-                filesToCheckForErrors[fileWithErrorName] = instance.filesWithErrors[fileWithErrorName]
-            );
-        }
+        const filesToCheckForErrors = determineFilesToCheckForErrors(checkAllFilesForErrors, instance);
+        checkAllFilesForErrors = false;
 
-        Object.keys(filesToCheckForErrors)
-            .filter(filePath => !!filePath.match(/(\.d)?\.ts(x?)$/))
-            .forEach(filePath => {
-                const errors = languageService.getSyntacticDiagnostics(filePath).concat(languageService.getSemanticDiagnostics(filePath));
-                if (errors.length > 0) {
-                    if (null === filesWithErrors) {
-                        filesWithErrors = {};
-                    }
-                    filesWithErrors[filePath] = instance.files[filePath];
-                }
+        const filesWithErrors: interfaces.TSFiles = {};
+        provideErrorsToWebpack(filesToCheckForErrors, filesWithErrors, compilation, modules, instance);
 
-                // if we have access to a webpack module, use that
-                if (utils.hasOwnProperty(modules, filePath)) {
-                    const associatedModules = modules[filePath];
-
-                    associatedModules.forEach(module => {
-                        // remove any existing errors
-                        removeTSLoaderErrors(module.errors);
-
-                        // append errors
-                        const formattedErrors = utils.formatErrors(errors, instance.loaderOptions, compiler, { module });
-                        utils.registerWebpackErrors(module.errors, formattedErrors);
-                        utils.registerWebpackErrors(compilation.errors, formattedErrors);
-                    });
-                } else {
-                    // otherwise it's a more generic error
-                    utils.registerWebpackErrors(compilation.errors, utils.formatErrors(errors, instance.loaderOptions, compiler, { file: filePath }));
-                }
-            });
-
-        // gather all declaration files from TypeScript and output them to webpack
-        Object.keys(filesToCheckForErrors)
-            .filter(filePath => !!filePath.match(/\.ts(x?)$/))
-            .forEach(filePath => {
-                const output = languageService.getEmitOutput(filePath);
-                const declarationFile = output.outputFiles.filter(fp => !!fp.name.match(/\.d.ts$/)).pop();
-                if (declarationFile) {
-                    const assetPath = path.relative(compilation.compiler.context, declarationFile.name);
-                    compilation.assets[assetPath] = {
-                        source: () => declarationFile.text,
-                        size: () => declarationFile.text.length,
-                    };
-                }
-            });
+        provideDeclarationFilesToWebpack(filesToCheckForErrors, instance.languageService, compilation);
 
         instance.filesWithErrors = filesWithErrors;
         instance.modifiedFiles = null;
@@ -124,6 +38,143 @@ function makeAfterCompile(
     };
 }
 
+interface Modules {
+    [modulePath: string]: interfaces.WebpackModule[];
+}
+
+/**
+ * handle compiler option errors after the first compile
+ */
+function provideCompilerOptionDiagnosticErrorsToWebpack(
+    getCompilerOptionDiagnostics: boolean,
+    compilation: interfaces.WebpackCompilation,
+    instance: interfaces.TSInstance,
+    configFilePath: string
+) {
+    const { languageService, loaderOptions, compiler } = instance;
+    if (getCompilerOptionDiagnostics) {
+        utils.registerWebpackErrors(
+            compilation.errors,
+            utils.formatErrors(
+                languageService.getCompilerOptionsDiagnostics(),
+                loaderOptions, compiler,
+                { file: configFilePath || 'tsconfig.json' }));
+    }
+}
+
+/**
+ * build map of all modules based on normalized filename
+ * this is used for quick-lookup when trying to find modules
+ * based on filepath
+ */
+function determineModules(
+    compilation: interfaces.WebpackCompilation
+) {
+    const modules: Modules = {};
+    compilation.modules.forEach(module => {
+        if (module.resource) {
+            const modulePath = path.normalize(module.resource);
+            if (utils.hasOwnProperty(modules, modulePath)) {
+                const existingModules = modules[modulePath];
+                if (existingModules.indexOf(module) === -1) {
+                    existingModules.push(module);
+                }
+            } else {
+                modules[modulePath] = [module];
+            }
+        }
+    });
+    return modules;
+}
+
+function determineFilesToCheckForErrors(
+    checkAllFilesForErrors: boolean,
+    instance: interfaces.TSInstance
+) {
+    const { files, modifiedFiles, filesWithErrors } = instance
+    // calculate array of files to check
+    let filesToCheckForErrors: interfaces.TSFiles = {};
+    if (checkAllFilesForErrors) {
+        // check all files on initial run
+        filesToCheckForErrors = files;
+    } else if (modifiedFiles) {
+        // check all modified files, and all dependants
+        Object.keys(modifiedFiles).forEach(modifiedFileName => {
+            collectAllDependants(instance.reverseDependencyGraph, modifiedFileName)
+                .forEach(fileName => {
+                    filesToCheckForErrors[fileName] = files[fileName];
+                });
+        });
+    }
+
+    // re-check files with errors from previous build
+    if (filesWithErrors) {
+        Object.keys(filesWithErrors).forEach(fileWithErrorName =>
+            filesToCheckForErrors[fileWithErrorName] = filesWithErrors[fileWithErrorName]
+        );
+    }
+    return filesToCheckForErrors;
+}
+
+function provideErrorsToWebpack(
+    filesToCheckForErrors: interfaces.TSFiles,
+    filesWithErrors: interfaces.TSFiles,
+    compilation: interfaces.WebpackCompilation,
+    modules: Modules,
+    instance: interfaces.TSInstance
+) {
+    const { compiler, languageService, files, loaderOptions } = instance;
+    Object.keys(filesToCheckForErrors)
+        .filter(filePath => !!filePath.match(/(\.d)?\.ts(x?)$/))
+        .forEach(filePath => {
+            const errors = languageService.getSyntacticDiagnostics(filePath).concat(languageService.getSemanticDiagnostics(filePath));
+            if (errors.length > 0) {
+                filesWithErrors[filePath] = files[filePath];
+            }
+
+            // if we have access to a webpack module, use that
+            if (utils.hasOwnProperty(modules, filePath)) {
+                const associatedModules = modules[filePath];
+
+                associatedModules.forEach(module => {
+                    // remove any existing errors
+                    removeTSLoaderErrors(module.errors);
+
+                    // append errors
+                    const formattedErrors = utils.formatErrors(errors, loaderOptions, compiler, { module });
+                    utils.registerWebpackErrors(module.errors, formattedErrors);
+                    utils.registerWebpackErrors(compilation.errors, formattedErrors);
+                });
+            } else {
+                // otherwise it's a more generic error
+                utils.registerWebpackErrors(compilation.errors, utils.formatErrors(errors, loaderOptions, compiler, { file: filePath }));
+            }
+        });
+}
+
+/**
+ * gather all declaration files from TypeScript and output them to webpack
+ */
+function provideDeclarationFilesToWebpack(
+    filesToCheckForErrors: interfaces.TSFiles,
+    languageService: typescript.LanguageService,
+    compilation: interfaces.WebpackCompilation
+) {
+    Object.keys(filesToCheckForErrors)
+        .filter(filePath => !!filePath.match(/\.ts(x?)$/))
+        .forEach(filePath => {
+            const output = languageService.getEmitOutput(filePath);
+            const declarationFile = output.outputFiles.filter(fp => !!fp.name.match(/\.d.ts$/)).pop();
+            if (declarationFile) {
+                const assetPath = path.relative(compilation.compiler.context, declarationFile.name);
+                compilation.assets[assetPath] = {
+                    source: () => declarationFile.text,
+                    size: () => declarationFile.text.length,
+                };
+            }
+        });
+}
+
 /**
  * handle all other errors. The basic approach here to get accurate error
  * reporting is to start with a "blank slate" each compilation and gather
@@ -145,14 +196,19 @@ function removeTSLoaderErrors(errors: interfaces.WebpackError[]) {
 /**
  * Recursively collect all possible dependants of passed file
  */
-function collectAllDependants(instance: interfaces.TSInstance, fileName: string, collected: any = {}): string[] {
-    let result = {};
+function collectAllDependants(
+    reverseDependencyGraph: interfaces.ReverseDependencyGraph,
+    fileName: string,
+    collected: {[file:string]: boolean} = {}
+): string[] {
+    const result = {};
     result[fileName] = true;
     collected[fileName] = true;
-    if (instance.reverseDependencyGraph[fileName]) {
-        Object.keys(instance.reverseDependencyGraph[fileName]).forEach(dependantFileName => {
+    if (reverseDependencyGraph[fileName]) {
+        Object.keys(reverseDependencyGraph[fileName]).forEach(dependantFileName => {
             if (!collected[dependantFileName]) {
-                collectAllDependants(instance, dependantFileName, collected).forEach(fName => result[fName] = true);
+                collectAllDependants(reverseDependencyGraph, dependantFileName, collected)
+                    .forEach(fName => result[fName] = true);
             }
         });
     }
diff --git a/src/interfaces.ts b/src/interfaces.ts
index 0ba989d1c..cac74a3b1 100644
--- a/src/interfaces.ts
+++ b/src/interfaces.ts
@@ -134,12 +134,12 @@ export interface TSInstances {
 }
 
 interface DependencyGraph {
-    [index: string]: string[];
+    [file: string]: string[];
 }
 
-interface ReverseDependencyGraph {
-    [index: string]: {
-        [index: string]: boolean
+export interface ReverseDependencyGraph {
+    [file: string]: {
+        [file: string]: boolean
     };
 }
 
diff --git a/src/utils.ts b/src/utils.ts
index 8c7ba517e..a54266d18 100644
--- a/src/utils.ts
+++ b/src/utils.ts
@@ -6,7 +6,7 @@ import constants = require('./constants');
 import interfaces = require('./interfaces');
 
 export function registerWebpackErrors(existingErrors: interfaces.WebpackError[], errorsToPush: interfaces.WebpackError[]) {
-    Array.prototype.splice.apply(existingErrors, (<(number | interfaces.WebpackError)[]> [0, 0]).concat(errorsToPush));
+    Array.prototype.splice.apply(existingErrors, (<(number | interfaces.WebpackError)[]>[0, 0]).concat(errorsToPush));
 }
 
 export function hasOwnProperty<T extends {}>(obj: T, property: string) {
@@ -42,7 +42,7 @@ export function formatErrors(
             } else {
                 error = makeError({ rawMessage: messageText });
             }
-            return <interfaces.WebpackError> objectAssign(error, merge);
+            return <interfaces.WebpackError>objectAssign(error, merge);
         });
 }
 
@@ -69,14 +69,16 @@ export function makeError({ rawMessage, message, location, file }: MakeError): i
         loaderSource: 'ts-loader'
     };
 
-    return <interfaces.WebpackError> objectAssign(error, { location, file });
+    return <interfaces.WebpackError>objectAssign(error, { location, file });
 }
 
 export function appendTsSuffixIfMatch(patterns: RegExp[], path: string): string {
-    for (let regexp of patterns) {
-      if (regexp.test(path)) {
-        return path + '.ts';
-      }
+    if (patterns.length > 0) {
+        for (let regexp of patterns) {
+            if (regexp.test(path)) {
+                return path + '.ts';
+            }
+        }
     }
     return path;
 }
diff --git a/test/comparison-tests/aliasResolution/tsconfig.json b/test/comparison-tests/aliasResolution/tsconfig.json
index b7e84945a..94d996e96 100644
--- a/test/comparison-tests/aliasResolution/tsconfig.json
+++ b/test/comparison-tests/aliasResolution/tsconfig.json
@@ -1,7 +1,5 @@
 {
 	"compilerOptions": {
 		
-	},
-	"files": [
-	]
+	}
 }
\ No newline at end of file
diff --git a/test/comparison-tests/babel-es6resolveParent/tsconfig.json b/test/comparison-tests/babel-es6resolveParent/tsconfig.json
index 1471fc877..094529053 100644
--- a/test/comparison-tests/babel-es6resolveParent/tsconfig.json
+++ b/test/comparison-tests/babel-es6resolveParent/tsconfig.json
@@ -3,7 +3,5 @@
 		"target": "es6",
         "moduleResolution": "node",
         "jsx": "react"
-	},
-	"files": [
-	]
+	}
 }
\ No newline at end of file
diff --git a/test/comparison-tests/babel-issue81/tsconfig.json b/test/comparison-tests/babel-issue81/tsconfig.json
index 15262ce6e..c82ccfa51 100644
--- a/test/comparison-tests/babel-issue81/tsconfig.json
+++ b/test/comparison-tests/babel-issue81/tsconfig.json
@@ -3,6 +3,5 @@
         "target": "es6",
 		"sourceMap": true,
         "experimentalDecorators": true
-	},
-    "files": []
+	}
 }
\ No newline at end of file
diff --git a/test/comparison-tests/babel-issue92/tsconfig.json b/test/comparison-tests/babel-issue92/tsconfig.json
index e3ff4fd85..49ba2ff12 100644
--- a/test/comparison-tests/babel-issue92/tsconfig.json
+++ b/test/comparison-tests/babel-issue92/tsconfig.json
@@ -1,7 +1,5 @@
 {
 	"compilerOptions": {
 		"target": "es6"
-	},
-	"files": [
-	]
+	}
 }
\ No newline at end of file
diff --git a/test/comparison-tests/declarationOutput/tsconfig.json b/test/comparison-tests/declarationOutput/tsconfig.json
index 3dd31f25b..6c9058ec4 100644
--- a/test/comparison-tests/declarationOutput/tsconfig.json
+++ b/test/comparison-tests/declarationOutput/tsconfig.json
@@ -1,7 +1,5 @@
 {
 	"compilerOptions": {
 		"declaration": true
-	},
-    "files": [
-    ]
+	}
 }
diff --git a/test/comparison-tests/html-webpack-plugin/tsconfig.json b/test/comparison-tests/html-webpack-plugin/tsconfig.json
index 01e163ec5..0efa0a638 100644
--- a/test/comparison-tests/html-webpack-plugin/tsconfig.json
+++ b/test/comparison-tests/html-webpack-plugin/tsconfig.json
@@ -1,6 +1,4 @@
 {
 	"compilerOptions": {
-	},
-	"files": [
-	]
+	}
 }
\ No newline at end of file
diff --git a/test/comparison-tests/instance/_FLAKY_ b/test/comparison-tests/instance/_FLAKY_
new file mode 100644
index 000000000..e69de29bb
diff --git a/test/comparison-tests/instance/tsconfig.json b/test/comparison-tests/instance/tsconfig.json
index fc16344c1..427787ccb 100644
--- a/test/comparison-tests/instance/tsconfig.json
+++ b/test/comparison-tests/instance/tsconfig.json
@@ -1,5 +1,7 @@
 {
 	"compilerOptions": {
 	},
-    "files": []
+	"files": [
+		"a.ts"
+	]
 }
\ No newline at end of file
diff --git a/test/comparison-tests/issue71/tsconfig.json b/test/comparison-tests/issue71/tsconfig.json
index ca2bf6cb6..20a52967e 100644
--- a/test/comparison-tests/issue71/tsconfig.json
+++ b/test/comparison-tests/issue71/tsconfig.json
@@ -1,7 +1,5 @@
 {
 	"compilerOptions": {
 		"noEmitOnError": true
-	},
-	"files": [
-	]
+	}
 }
\ No newline at end of file
diff --git a/test/comparison-tests/large/tsconfig.json b/test/comparison-tests/large/tsconfig.json
index 9ec54a63c..94d996e96 100644
--- a/test/comparison-tests/large/tsconfig.json
+++ b/test/comparison-tests/large/tsconfig.json
@@ -1,8 +1,5 @@
 {
 	"compilerOptions": {
 		
-	},
-	"files": [
-		
-	]
+	}
 }
\ No newline at end of file
diff --git a/test/comparison-tests/noErrorsPlugin/tsconfig.json b/test/comparison-tests/noErrorsPlugin/tsconfig.json
index b7e84945a..94d996e96 100644
--- a/test/comparison-tests/noErrorsPlugin/tsconfig.json
+++ b/test/comparison-tests/noErrorsPlugin/tsconfig.json
@@ -1,7 +1,5 @@
 {
 	"compilerOptions": {
 		
-	},
-	"files": [
-	]
+	}
 }
\ No newline at end of file
diff --git a/test/comparison-tests/nodeResolution/tsconfig.json b/test/comparison-tests/nodeResolution/tsconfig.json
index b7e84945a..94d996e96 100644
--- a/test/comparison-tests/nodeResolution/tsconfig.json
+++ b/test/comparison-tests/nodeResolution/tsconfig.json
@@ -1,7 +1,5 @@
 {
 	"compilerOptions": {
 		
-	},
-	"files": [
-	]
+	}
 }
\ No newline at end of file
diff --git a/test/comparison-tests/vue/tsconfig.json b/test/comparison-tests/vue/tsconfig.json
index 0508d5f17..b71270932 100644
--- a/test/comparison-tests/vue/tsconfig.json
+++ b/test/comparison-tests/vue/tsconfig.json
@@ -1,5 +1,4 @@
 {
 	"compilerOptions": {
-	},
-    "files": []
+	}
 }