diff --git a/src/compiler/core.ts b/src/compiler/core.ts
index 5ca2bcee1d60d..4fb85fb36c417 100644
--- a/src/compiler/core.ts
+++ b/src/compiler/core.ts
@@ -2258,6 +2258,8 @@ namespace ts {
      * Adds a trailing directory separator to a path, if it does not already have one.
      * @param path The path.
      */
+    export function ensureTrailingDirectorySeparator(path: Path): Path;
+    export function ensureTrailingDirectorySeparator(path: string): string;
     export function ensureTrailingDirectorySeparator(path: string) {
         if (path.charAt(path.length - 1) !== directorySeparator) {
             return path + directorySeparator;
diff --git a/src/harness/unittests/typingsInstaller.ts b/src/harness/unittests/typingsInstaller.ts
index 5bf968064f6df..9b874b2aca62e 100644
--- a/src/harness/unittests/typingsInstaller.ts
+++ b/src/harness/unittests/typingsInstaller.ts
@@ -141,12 +141,15 @@ namespace ts.projectSystem {
             checkNumberOfProjects(projectService, { configuredProjects: 1 });
             const p = configuredProjectAt(projectService, 0);
             checkProjectActualFiles(p, [file1.path, tsconfig.path]);
+            checkWatchedFiles(host, [tsconfig.path, libFile.path, packageJson.path, "/a/b/bower_components", "/a/b/node_modules"]);
 
             installer.installAll(/*expectedCount*/ 1);
 
             checkNumberOfProjects(projectService, { configuredProjects: 1 });
             host.checkTimeoutQueueLengthAndRun(2);
             checkProjectActualFiles(p, [file1.path, jquery.path, tsconfig.path]);
+            // should not watch jquery
+            checkWatchedFiles(host, [tsconfig.path, libFile.path, packageJson.path, "/a/b/bower_components", "/a/b/node_modules"]);
         });
 
         it("inferred project (typings installed)", () => {
diff --git a/src/server/editorServices.ts b/src/server/editorServices.ts
index b05d2ab6c95ed..d7b6d814fe55e 100644
--- a/src/server/editorServices.ts
+++ b/src/server/editorServices.ts
@@ -389,6 +389,7 @@ namespace ts.server {
         public readonly useSingleInferredProject: boolean;
         public readonly useInferredProjectPerProjectRoot: boolean;
         public readonly typingsInstaller: ITypingsInstaller;
+        private readonly globalCacheLocationDirectoryPath: Path;
         public readonly throttleWaitMilliseconds?: number;
         private readonly eventHandler?: ProjectServiceEventHandler;
 
@@ -423,6 +424,8 @@ namespace ts.server {
             }
             this.currentDirectory = this.host.getCurrentDirectory();
             this.toCanonicalFileName = createGetCanonicalFileName(this.host.useCaseSensitiveFileNames);
+            this.globalCacheLocationDirectoryPath = this.typingsInstaller.globalTypingsCacheLocation &&
+                ensureTrailingDirectorySeparator(this.toPath(this.typingsInstaller.globalTypingsCacheLocation));
             this.throttledOperations = new ThrottledOperations(this.host, this.logger);
 
             if (this.typesMapLocation) {
@@ -1725,7 +1728,10 @@ namespace ts.server {
         private watchClosedScriptInfo(info: ScriptInfo) {
             Debug.assert(!info.fileWatcher);
             // do not watch files with mixed content - server doesn't know how to interpret it
-            if (!info.isDynamicOrHasMixedContent()) {
+            // do not watch files in the global cache location
+            if (!info.isDynamicOrHasMixedContent() &&
+                (!this.globalCacheLocationDirectoryPath ||
+                    !startsWith(info.path, this.globalCacheLocationDirectoryPath))) {
                 const { fileName } = info;
                 info.fileWatcher = this.watchFactory.watchFilePath(
                     this.host,
diff --git a/tests/baselines/reference/api/tsserverlibrary.d.ts b/tests/baselines/reference/api/tsserverlibrary.d.ts
index a2f9506dc1cac..3e095dba77de3 100644
--- a/tests/baselines/reference/api/tsserverlibrary.d.ts
+++ b/tests/baselines/reference/api/tsserverlibrary.d.ts
@@ -7847,6 +7847,7 @@ declare namespace ts.server {
         readonly useSingleInferredProject: boolean;
         readonly useInferredProjectPerProjectRoot: boolean;
         readonly typingsInstaller: ITypingsInstaller;
+        private readonly globalCacheLocationDirectoryPath;
         readonly throttleWaitMilliseconds?: number;
         private readonly eventHandler?;
         readonly globalPlugins: ReadonlyArray<string>;