diff --git a/resolvers/deno/lib.rs b/resolvers/deno/lib.rs
index 661caf836d..a74ca614a3 100644
--- a/resolvers/deno/lib.rs
+++ b/resolvers/deno/lib.rs
@@ -355,16 +355,16 @@ impl<
               })
               .map_err(|err| {
                 match err.into_kind() {
-                ResolveReqWithSubPathErrorKind::MissingPackageNodeModulesFolder(
-                  err,
-                ) => err.into(),
-                ResolveReqWithSubPathErrorKind::ResolvePkgFolderFromDenoReq(
-                  err,
-                ) => err.into(),
-                ResolveReqWithSubPathErrorKind::PackageSubpathResolve(err) => {
-                  err.into()
+                  ResolveReqWithSubPathErrorKind::MissingPackageNodeModulesFolder(
+                    err,
+                  ) => err.into(),
+                  ResolveReqWithSubPathErrorKind::ResolvePkgFolderFromDenoReq(
+                    err,
+                  ) => err.into(),
+                  ResolveReqWithSubPathErrorKind::PackageSubpathResolve(err) => {
+                    err.into()
+                  }
                 }
-              }
               });
           }
         }
diff --git a/resolvers/deno/npm/byonm.rs b/resolvers/deno/npm/byonm.rs
index 771f23ce23..6e1be35ca0 100644
--- a/resolvers/deno/npm/byonm.rs
+++ b/resolvers/deno/npm/byonm.rs
@@ -205,9 +205,9 @@ impl<Fs: DenoResolverFs, TEnv: NodeResolverEnv> ByonmNpmResolver<Fs, TEnv> {
     }
 
     // attempt to resolve the npm specifier from the referrer's package.json,
-    if let Ok(file_path) = url_to_file_path(referrer) {
-      let mut current_path = file_path.as_path();
-      while let Some(dir_path) = current_path.parent() {
+    let maybe_referrer_path = url_to_file_path(referrer).ok();
+    if let Some(file_path) = maybe_referrer_path {
+      for dir_path in file_path.as_path().ancestors().skip(1) {
         let package_json_path = dir_path.join("package.json");
         if let Some(pkg_json) = self.load_pkg_json(&package_json_path)? {
           if let Some(alias) =
@@ -216,11 +216,10 @@ impl<Fs: DenoResolverFs, TEnv: NodeResolverEnv> ByonmNpmResolver<Fs, TEnv> {
             return Ok(Some((pkg_json, alias)));
           }
         }
-        current_path = dir_path;
       }
     }
 
-    // otherwise, fall fallback to the project's package.json
+    // fall fallback to the project's package.json
     if let Some(root_node_modules_dir) = &self.root_node_modules_dir {
       let root_pkg_json_path =
         root_node_modules_dir.parent().unwrap().join("package.json");
@@ -232,6 +231,58 @@ impl<Fs: DenoResolverFs, TEnv: NodeResolverEnv> ByonmNpmResolver<Fs, TEnv> {
       }
     }
 
+    // now try to resolve based on the closest node_modules directory
+    let maybe_referrer_path = url_to_file_path(referrer).ok();
+    let search_node_modules = |node_modules: &Path| {
+      if req.version_req.tag().is_some() {
+        return None;
+      }
+
+      let pkg_folder = node_modules.join(&req.name);
+      if let Ok(Some(dep_pkg_json)) =
+        self.load_pkg_json(&pkg_folder.join("package.json"))
+      {
+        if dep_pkg_json.name.as_ref() == Some(&req.name) {
+          let matches_req = dep_pkg_json
+            .version
+            .as_ref()
+            .and_then(|v| Version::parse_from_npm(v).ok())
+            .map(|version| req.version_req.matches(&version))
+            .unwrap_or(true);
+          if matches_req {
+            return Some((dep_pkg_json, req.name.clone()));
+          }
+        }
+      }
+      None
+    };
+    if let Some(file_path) = &maybe_referrer_path {
+      for dir_path in file_path.as_path().ancestors().skip(1) {
+        if let Some(result) =
+          search_node_modules(&dir_path.join("node_modules"))
+        {
+          return Ok(Some(result));
+        }
+      }
+    }
+
+    // and finally check the root node_modules directory
+    if let Some(root_node_modules_dir) = &self.root_node_modules_dir {
+      let already_searched = maybe_referrer_path
+        .as_ref()
+        .and_then(|referrer_path| {
+          root_node_modules_dir
+            .parent()
+            .map(|root_dir| referrer_path.starts_with(root_dir))
+        })
+        .unwrap_or(false);
+      if !already_searched {
+        if let Some(result) = search_node_modules(root_node_modules_dir) {
+          return Ok(Some(result));
+        }
+      }
+    }
+
     Ok(None)
   }
 
diff --git a/tests/specs/npm/byonm_npm_specifier_in_node_modules/__test__.jsonc b/tests/specs/npm/byonm_npm_specifier_in_node_modules/__test__.jsonc
new file mode 100644
index 0000000000..e2c5495387
--- /dev/null
+++ b/tests/specs/npm/byonm_npm_specifier_in_node_modules/__test__.jsonc
@@ -0,0 +1,18 @@
+{
+  "tests": {
+    "matches": {
+      "args": "run -A matches.ts",
+      "output": "5\n"
+    },
+    "not_matches": {
+      "args": "run -A not_matches.ts",
+      "output": "not_matches.out",
+      "exitCode": 1
+    },
+    "not_matches_aliased": {
+      "args": "run -A not_matches_aliased.ts",
+      "output": "not_matches_aliased.out",
+      "exitCode": 1
+    }
+  }
+}
diff --git a/tests/specs/npm/byonm_npm_specifier_in_node_modules/matches.ts b/tests/specs/npm/byonm_npm_specifier_in_node_modules/matches.ts
new file mode 100644
index 0000000000..986e7baf4c
--- /dev/null
+++ b/tests/specs/npm/byonm_npm_specifier_in_node_modules/matches.ts
@@ -0,0 +1,3 @@
+import { add } from "npm:package@1";
+
+console.log(add(2, 3));
diff --git a/tests/specs/npm/byonm_npm_specifier_in_node_modules/node_modules/aliased/index.js b/tests/specs/npm/byonm_npm_specifier_in_node_modules/node_modules/aliased/index.js
new file mode 100644
index 0000000000..efe826ba65
--- /dev/null
+++ b/tests/specs/npm/byonm_npm_specifier_in_node_modules/node_modules/aliased/index.js
@@ -0,0 +1,3 @@
+module.exports.add = function(a, b) {
+  return a + b;
+};
diff --git a/tests/specs/npm/byonm_npm_specifier_in_node_modules/node_modules/aliased/package.json b/tests/specs/npm/byonm_npm_specifier_in_node_modules/node_modules/aliased/package.json
new file mode 100644
index 0000000000..618960872f
--- /dev/null
+++ b/tests/specs/npm/byonm_npm_specifier_in_node_modules/node_modules/aliased/package.json
@@ -0,0 +1,4 @@
+{
+  "name": "not-same-name",
+  "version": "1.0.0"
+}
\ No newline at end of file
diff --git a/tests/specs/npm/byonm_npm_specifier_in_node_modules/node_modules/package/index.js b/tests/specs/npm/byonm_npm_specifier_in_node_modules/node_modules/package/index.js
new file mode 100644
index 0000000000..efe826ba65
--- /dev/null
+++ b/tests/specs/npm/byonm_npm_specifier_in_node_modules/node_modules/package/index.js
@@ -0,0 +1,3 @@
+module.exports.add = function(a, b) {
+  return a + b;
+};
diff --git a/tests/specs/npm/byonm_npm_specifier_in_node_modules/node_modules/package/package.json b/tests/specs/npm/byonm_npm_specifier_in_node_modules/node_modules/package/package.json
new file mode 100644
index 0000000000..5723987e9f
--- /dev/null
+++ b/tests/specs/npm/byonm_npm_specifier_in_node_modules/node_modules/package/package.json
@@ -0,0 +1,4 @@
+{
+  "name": "package",
+  "version": "1.0.0"
+}
\ No newline at end of file
diff --git a/tests/specs/npm/byonm_npm_specifier_in_node_modules/not_matches.out b/tests/specs/npm/byonm_npm_specifier_in_node_modules/not_matches.out
new file mode 100644
index 0000000000..c549e13ff2
--- /dev/null
+++ b/tests/specs/npm/byonm_npm_specifier_in_node_modules/not_matches.out
@@ -0,0 +1,2 @@
+error: Could not find a matching package for 'npm:package@2' in the node_modules directory. Ensure you have all your JSR and npm dependencies listed in your deno.json or package.json, then run `deno install`. Alternatively, turn on auto-install by specifying `"nodeModulesDir": "auto"` in your deno.json file.
+    at file:///[WILDLINE]
diff --git a/tests/specs/npm/byonm_npm_specifier_in_node_modules/not_matches.ts b/tests/specs/npm/byonm_npm_specifier_in_node_modules/not_matches.ts
new file mode 100644
index 0000000000..a337bd7d86
--- /dev/null
+++ b/tests/specs/npm/byonm_npm_specifier_in_node_modules/not_matches.ts
@@ -0,0 +1,3 @@
+import { add } from "npm:package@2"; // won't match 2
+
+console.log(add(2, 3));
diff --git a/tests/specs/npm/byonm_npm_specifier_in_node_modules/not_matches_aliased.out b/tests/specs/npm/byonm_npm_specifier_in_node_modules/not_matches_aliased.out
new file mode 100644
index 0000000000..93b52f64bc
--- /dev/null
+++ b/tests/specs/npm/byonm_npm_specifier_in_node_modules/not_matches_aliased.out
@@ -0,0 +1,2 @@
+error: Could not find a matching package for 'npm:aliased@1' in the node_modules directory. Ensure you have all your JSR and npm dependencies listed in your deno.json or package.json, then run `deno install`. Alternatively, turn on auto-install by specifying `"nodeModulesDir": "auto"` in your deno.json file.
+    at file:///[WILDLINE]
diff --git a/tests/specs/npm/byonm_npm_specifier_in_node_modules/not_matches_aliased.ts b/tests/specs/npm/byonm_npm_specifier_in_node_modules/not_matches_aliased.ts
new file mode 100644
index 0000000000..85fa11e319
--- /dev/null
+++ b/tests/specs/npm/byonm_npm_specifier_in_node_modules/not_matches_aliased.ts
@@ -0,0 +1,3 @@
+import { add } from "npm:aliased@1";
+
+console.log(add(2, 3));
diff --git a/tests/specs/npm/byonm_npm_specifier_in_node_modules/package.json b/tests/specs/npm/byonm_npm_specifier_in_node_modules/package.json
new file mode 100644
index 0000000000..2c63c08510
--- /dev/null
+++ b/tests/specs/npm/byonm_npm_specifier_in_node_modules/package.json
@@ -0,0 +1,2 @@
+{
+}