diff --git a/cli/tsc.rs b/cli/tsc.rs
index 0e2e19a9cc..ae2db6978f 100644
--- a/cli/tsc.rs
+++ b/cli/tsc.rs
@@ -621,6 +621,8 @@ impl TsCompiler {
       "esModuleInterop": true,
       "incremental": true,
       "inlineSourceMap": true,
+      // TODO(lucacasonato): enable this by default in 1.5.0
+      "isolatedModules": unstable,
       "jsx": "react",
       "lib": lib,
       "module": "esnext",
@@ -1252,6 +1254,8 @@ pub async fn runtime_compile(
     "allowNonTsExtensions": true,
     "checkJs": false,
     "esModuleInterop": true,
+    // TODO(lucacasonato): enable this by default in 1.5.0
+    "isolatedModules": unstable,
     "jsx": "react",
     "module": "esnext",
     "sourceMap": true,
diff --git a/cli/tsc/99_main_compiler.js b/cli/tsc/99_main_compiler.js
index dede279c15..a2e127508e 100644
--- a/cli/tsc/99_main_compiler.js
+++ b/cli/tsc/99_main_compiler.js
@@ -878,6 +878,13 @@ delete Object.prototype.__proto__;
     7016,
   ];
 
+  const IGNORED_COMPILE_DIAGNOSTICS = [
+    // TS1208: All files must be modules when the '--isolatedModules' flag is
+    // provided.  We can ignore because we guarantuee that all files are
+    // modules.
+    1208,
+  ];
+
   const stats = [];
   let statsStart = 0;
 
@@ -1162,7 +1169,9 @@ delete Object.prototype.__proto__;
         ...program.getSemanticDiagnostics(),
       ];
       diagnostics = diagnostics.filter(
-        ({ code }) => !IGNORED_DIAGNOSTICS.includes(code),
+        ({ code }) =>
+          !IGNORED_DIAGNOSTICS.includes(code) &&
+          !IGNORED_COMPILE_DIAGNOSTICS.includes(code),
       );
 
       // We will only proceed with the emit if there are no diagnostics.
@@ -1333,7 +1342,10 @@ delete Object.prototype.__proto__;
 
     const diagnostics = ts
       .getPreEmitDiagnostics(program)
-      .filter(({ code }) => !IGNORED_DIAGNOSTICS.includes(code));
+      .filter(({ code }) =>
+        !IGNORED_DIAGNOSTICS.includes(code) &&
+        !IGNORED_COMPILE_DIAGNOSTICS.includes(code)
+      );
 
     const emitResult = program.emit();
     assert(emitResult.emitSkipped === false, "Unexpected skip of the emit.");