diff --git a/js/compiler.ts b/js/compiler.ts
index 84330490fa..fcbfc7c5ef 100644
--- a/js/compiler.ts
+++ b/js/compiler.ts
@@ -17,11 +17,6 @@ type AmdErrback = (err: any) => void;
 export type AmdFactory = (...args: any[]) => object | void;
 // tslint:enable:no-any
 export type AmdDefine = (deps: string[], factory: AmdFactory) => void;
-type AmdRequire = (
-  deps: string[],
-  callback: AmdCallback,
-  errback?: AmdErrback
-) => void;
 
 // The location that a module is being loaded from. This could be a directory,
 // like ".", or it could be a module specifier like
@@ -264,44 +259,42 @@ export class DenoCompiler implements ts.LanguageServiceHost {
     const localDefine = (deps: string[], factory: AmdFactory): void => {
       // TypeScript will emit a local require dependency when doing dynamic
       // `import()`
-      const localRequire: AmdRequire = (
+      const { _log: log } = this;
+      const localExports = moduleMetaData.exports;
+
+      // tslint:disable-next-line:no-any
+      const resolveDependencies = (deps: string[]): any[] => {
+        return deps.map(dep => {
+          if (dep === "require") {
+            return localRequire;
+          } else if (dep === "exports") {
+            return localExports;
+          } else if (dep in DenoCompiler._builtins) {
+            return DenoCompiler._builtins[dep];
+          } else {
+            const depModuleMetaData = this.run(dep, moduleMetaData.fileName);
+            return depModuleMetaData.exports;
+          }
+        });
+      };
+
+      // this is a function because we need hoisting
+      function localRequire(
         deps: string[],
         callback: AmdCallback,
-        errback?: AmdErrback
-      ): void => {
-        this._log("localRequire", deps);
+        errback: AmdErrback
+      ): void {
+        log("localRequire", deps);
         try {
-          const args = deps.map(dep => {
-            if (dep in DenoCompiler._builtins) {
-              return DenoCompiler._builtins[dep];
-            } else {
-              const depModuleMetaData = this.run(dep, moduleMetaData.fileName);
-              return depModuleMetaData.exports;
-            }
-          });
+          const args = resolveDependencies(deps);
           callback(...args);
         } catch (e) {
-          if (errback) {
-            errback(e);
-          } else {
-            throw e;
-          }
+          errback(e);
         }
-      };
-      const localExports = moduleMetaData.exports;
+      }
+
       this._log("localDefine", moduleMetaData.fileName, deps, localExports);
-      const args = deps.map(dep => {
-        if (dep === "require") {
-          return localRequire;
-        } else if (dep === "exports") {
-          return localExports;
-        } else if (dep in DenoCompiler._builtins) {
-          return DenoCompiler._builtins[dep];
-        } else {
-          const depModuleMetaData = this.run(dep, moduleMetaData.fileName);
-          return depModuleMetaData.exports;
-        }
-      });
+      const args = resolveDependencies(deps);
       factory(...args);
     };
     return localDefine;
diff --git a/js/compiler_test.ts b/js/compiler_test.ts
index d8861e2a98..cc3cda4062 100644
--- a/js/compiler_test.ts
+++ b/js/compiler_test.ts
@@ -108,6 +108,12 @@ const moduleMap: {
       "/root/project/foo/bar.ts",
       fooBarTsSource,
       fooBarTsOutput
+    ),
+    "./qat.ts": mockModuleInfo(
+      "foo/qat",
+      "/root/project/foo/qat.ts",
+      "export const foo = 'bar'",
+      null
     )
   }
 };
@@ -275,6 +281,33 @@ test(function compilerMakeDefine() {
 // external modules, this is implicitly tested though in
 // `compilerRunMultiModule`
 
+test(function compilerLocalRequire() {
+  const moduleMetaData = new ModuleMetaData(
+    "/root/project/foo/baz.ts",
+    fooBazTsSource,
+    fooBazTsOutput
+  );
+  const localDefine = compilerInstance.makeDefine(moduleMetaData);
+  let requireCallbackCalled = false;
+  localDefine(
+    ["require", "exports"],
+    (_require, _exports, _compiler): void => {
+      assertEqual(typeof _require, "function");
+      _require(
+        ["./qat.ts"],
+        _qat => {
+          requireCallbackCalled = true;
+          assert(_qat);
+        },
+        () => {
+          throw new Error("Should not error");
+        }
+      );
+    }
+  );
+  assert(requireCallbackCalled, "Factory expected to be called");
+});
+
 test(function compilerRun() {
   // equal to `deno foo/bar.ts`
   reset();
diff --git a/tests/error_005_missing_dynamic_import.ts b/tests/error_005_missing_dynamic_import.ts
new file mode 100644
index 0000000000..3cb081a276
--- /dev/null
+++ b/tests/error_005_missing_dynamic_import.ts
@@ -0,0 +1,3 @@
+(async () => {
+  const badModule = await import("bad-module.ts");
+})();
diff --git a/tests/error_005_missing_dynamic_import.ts.out b/tests/error_005_missing_dynamic_import.ts.out
new file mode 100644
index 0000000000..b28875bc56
--- /dev/null
+++ b/tests/error_005_missing_dynamic_import.ts.out
@@ -0,0 +1,12 @@
+Error: Cannot resolve module "bad-module.ts" from "[WILDCARD]deno/tests/error_005_missing_dynamic_import.ts".
+  os.codeFetch message: [WILDCARD] (os error 2)
+    at throwResolutionError (deno/js/compiler.ts:[WILDCARD])
+    at DenoCompiler.resolveModule (deno/js/compiler.ts:[WILDCARD])
+    at DenoCompiler.resolveModuleName (deno/js/compiler.ts:[WILDCARD])
+    at moduleNames.map.name (deno/js/compiler.ts:[WILDCARD])
+    at Array.map (<anonymous>)
+    at DenoCompiler.resolveModuleNames (deno/js/compiler.ts:[WILDCARD])
+    at Object.compilerHost.resolveModuleNames (deno/third_party/node_modules/typescript/lib/typescript.js:[WILDCARD])
+    at resolveModuleNamesWorker (deno/third_party/node_modules/typescript/lib/typescript.js:[WILDCARD])
+    at resolveModuleNamesReusingOldState (deno/third_party/node_modules/typescript/lib/typescript.js:[WILDCARD])
+    at processImportedModules (deno/third_party/node_modules/typescript/lib/typescript.js:[WILDCARD])