diff --git a/src/configuration.ts b/src/configuration.ts
index 1b69d4550..87babb561 100644
--- a/src/configuration.ts
+++ b/src/configuration.ts
@@ -1,8 +1,10 @@
 import { resolve, dirname } from 'path';
 import type * as _ts from 'typescript';
 import { CreateOptions, DEFAULTS, TSCommon, TsConfigOptions } from './index';
+import type { TSInternal } from './ts-compiler-types';
+import { createTsInternals } from './ts-internals';
 import { getDefaultTsconfigJsonForNodeVersion } from './tsconfigs';
-import { createRequire } from './util';
+import { assign, createRequire, trace } from './util';
 
 /**
  * TypeScript compiler option values required by `ts-node` which cannot be overridden.
@@ -69,6 +71,12 @@ export function readConfig(
    */
   tsNodeOptionsFromTsconfig: TsConfigOptions;
 } {
+  // Ordered [a, b, c] where config a extends b extends c
+  const configChain: Array<{
+    config: any;
+    basePath: string;
+    configPath: string;
+  }> = [];
   let config: any = { compilerOptions: {} };
   let basePath = cwd;
   let configFilePath: string | undefined = undefined;
@@ -88,27 +96,81 @@ export function readConfig(
       : ts.findConfigFile(projectSearchDir, fileExists);
 
     if (configFilePath) {
-      const result = ts.readConfigFile(configFilePath, readFile);
-
-      // Return diagnostics.
-      if (result.error) {
-        return {
-          configFilePath,
-          config: { errors: [result.error], fileNames: [], options: {} },
-          tsNodeOptionsFromTsconfig: {},
-        };
+      let pathToNextConfigInChain = configFilePath;
+      const tsInternals = createTsInternals(ts);
+      const errors: Array<_ts.Diagnostic> = [];
+
+      // Follow chain of "extends"
+      while (true) {
+        const result = ts.readConfigFile(pathToNextConfigInChain, readFile);
+
+        // Return diagnostics.
+        if (result.error) {
+          return {
+            configFilePath,
+            config: { errors: [result.error], fileNames: [], options: {} },
+            tsNodeOptionsFromTsconfig: {},
+          };
+        }
+
+        const c = result.config;
+        const bp = dirname(pathToNextConfigInChain);
+        configChain.push({
+          config: c,
+          basePath: bp,
+          configPath: pathToNextConfigInChain,
+        });
+
+        if (c.extends == null) break;
+        const resolvedExtendedConfigPath = tsInternals.getExtendsConfigPath(
+          c.extends,
+          {
+            fileExists,
+            readDirectory: ts.sys.readDirectory,
+            readFile,
+            useCaseSensitiveFileNames: ts.sys.useCaseSensitiveFileNames,
+            trace,
+          },
+          bp,
+          errors,
+          ((ts as unknown) as TSInternal).createCompilerDiagnostic
+        );
+        if (errors.length) {
+          return {
+            configFilePath,
+            config: { errors, fileNames: [], options: {} },
+            tsNodeOptionsFromTsconfig: {},
+          };
+        }
+        if (resolvedExtendedConfigPath == null) break;
+        pathToNextConfigInChain = resolvedExtendedConfigPath;
       }
 
-      config = result.config;
-      basePath = dirname(configFilePath);
+      ({ config, basePath } = configChain[0]);
     }
   }
 
-  // Fix ts-node options that come from tsconfig.json
-  const tsNodeOptionsFromTsconfig: TsConfigOptions = Object.assign(
-    {},
-    filterRecognizedTsConfigTsNodeOptions(config['ts-node']).recognized
-  );
+  // Merge and fix ts-node options that come from tsconfig.json(s)
+  const tsNodeOptionsFromTsconfig: TsConfigOptions = {};
+  for (let i = configChain.length - 1; i >= 0; i--) {
+    const { config, basePath, configPath } = configChain[i];
+    const options = filterRecognizedTsConfigTsNodeOptions(config['ts-node'])
+      .recognized;
+
+    // Some options are relative to the config file, so must be converted to absolute paths here
+    if (options.require) {
+      // Modules are found relative to the tsconfig file, not the `dir` option
+      const tsconfigRelativeRequire = createRequire(configPath);
+      options.require = options.require.map((path: string) =>
+        tsconfigRelativeRequire.resolve(path)
+      );
+    }
+    if (options.scopeDir) {
+      options.scopeDir = resolve(basePath, options.scopeDir!);
+    }
+
+    assign(tsNodeOptionsFromTsconfig, options);
+  }
 
   // Remove resolution of "files".
   const files =
@@ -160,24 +222,6 @@ export function readConfig(
     )
   );
 
-  // Some options are relative to the config file, so must be converted to absolute paths here
-
-  if (tsNodeOptionsFromTsconfig.require) {
-    // Modules are found relative to the tsconfig file, not the `dir` option
-    const tsconfigRelativeRequire = createRequire(configFilePath!);
-    tsNodeOptionsFromTsconfig.require = tsNodeOptionsFromTsconfig.require.map(
-      (path: string) => {
-        return tsconfigRelativeRequire.resolve(path);
-      }
-    );
-  }
-  if (tsNodeOptionsFromTsconfig.scopeDir) {
-    tsNodeOptionsFromTsconfig.scopeDir = resolve(
-      basePath,
-      tsNodeOptionsFromTsconfig.scopeDir
-    );
-  }
-
   return { configFilePath, config: fixedConfig, tsNodeOptionsFromTsconfig };
 }
 
@@ -188,7 +232,7 @@ export function readConfig(
 function filterRecognizedTsConfigTsNodeOptions(
   jsonObject: any
 ): { recognized: TsConfigOptions; unrecognized: any } {
-  if (jsonObject == null) return { recognized: jsonObject, unrecognized: {} };
+  if (jsonObject == null) return { recognized: {}, unrecognized: {} };
   const {
     compiler,
     compilerHost,
diff --git a/src/index.ts b/src/index.ts
index a3605d1ea..82313aad1 100644
--- a/src/index.ts
+++ b/src/index.ts
@@ -8,7 +8,14 @@ import { BaseError } from 'make-error';
 import type * as _ts from 'typescript';
 
 import type { Transpiler, TranspilerFactory } from './transpilers/types';
-import { assign, normalizeSlashes, parse, split, yn } from './util';
+import {
+  assign,
+  cachedLookup,
+  normalizeSlashes,
+  parse,
+  split,
+  yn,
+} from './util';
 import { readConfig } from './configuration';
 import type { TSCommon, TSInternal } from './ts-compiler-types';
 
@@ -374,21 +381,6 @@ export interface Service {
  */
 export type Register = Service;
 
-/**
- * Cached fs operation wrapper.
- */
-function cachedLookup<T>(fn: (arg: string) => T): (arg: string) => T {
-  const cache = new Map<string, T>();
-
-  return (arg: string): T => {
-    if (!cache.has(arg)) {
-      cache.set(arg, fn(arg));
-    }
-
-    return cache.get(arg)!;
-  };
-}
-
 /** @internal */
 export function getExtensions(config: _ts.ParsedCommandLine) {
   const tsExtensions = ['.ts'];
diff --git a/src/test/index.spec.ts b/src/test/index.spec.ts
index 9cc7800db..049b0481c 100644
--- a/src/test/index.spec.ts
+++ b/src/test/index.spec.ts
@@ -703,6 +703,23 @@ test.suite('ts-node', (test) => {
           join(TEST_DIR, './tsconfig-options/required1.js'),
         ]);
       });
+
+      if (semver.gte(ts.version, '3.2.0')) {
+        test('should pull ts-node options from extended `tsconfig.json`', async () => {
+          const { err, stdout } = await exec(
+            `${BIN_PATH} --show-config --project ./tsconfig-extends/tsconfig.json`
+          );
+          expect(err).to.equal(null);
+          const config = JSON.parse(stdout);
+          expect(config['ts-node'].require).to.deep.equal([
+            resolve(TEST_DIR, 'tsconfig-extends/other/require-hook.js'),
+          ]);
+          expect(config['ts-node'].scopeDir).to.equal(
+            resolve(TEST_DIR, 'tsconfig-extends/other/scopedir')
+          );
+          expect(config['ts-node'].preferTsExts).to.equal(true);
+        });
+      }
     });
 
     test.suite(
diff --git a/src/ts-compiler-types.ts b/src/ts-compiler-types.ts
index 0b2236bac..b17111c3a 100644
--- a/src/ts-compiler-types.ts
+++ b/src/ts-compiler-types.ts
@@ -32,6 +32,9 @@ export interface TSCommon {
   getDefaultLibFileName: typeof _ts.getDefaultLibFileName;
   createIncrementalProgram: typeof _ts.createIncrementalProgram;
   createEmitAndSemanticDiagnosticsBuilderProgram: typeof _ts.createEmitAndSemanticDiagnosticsBuilderProgram;
+
+  Extension: typeof _ts.Extension;
+  ModuleResolutionKind: typeof _ts.ModuleResolutionKind;
 }
 
 /**
@@ -50,6 +53,22 @@ export interface TSInternal {
     host: TSInternal.ConvertToTSConfigHost
   ): any;
   libs?: string[];
+  Diagnostics: {
+    File_0_not_found: _ts.DiagnosticMessage;
+  };
+  createCompilerDiagnostic(
+    message: _ts.DiagnosticMessage,
+    ...args: (string | number | undefined)[]
+  ): _ts.Diagnostic;
+  nodeModuleNameResolver(
+    moduleName: string,
+    containingFile: string,
+    compilerOptions: _ts.CompilerOptions,
+    host: _ts.ModuleResolutionHost,
+    cache?: _ts.ModuleResolutionCache,
+    redirectedReference?: _ts.ResolvedProjectReference,
+    lookupConfig?: boolean
+  ): _ts.ResolvedModuleWithFailedLookupLocations;
 }
 /** @internal */
 export namespace TSInternal {
diff --git a/src/ts-internals.ts b/src/ts-internals.ts
new file mode 100644
index 000000000..47a75adae
--- /dev/null
+++ b/src/ts-internals.ts
@@ -0,0 +1,103 @@
+import { isAbsolute, resolve } from 'path';
+import { cachedLookup, normalizeSlashes } from './util';
+import type * as _ts from 'typescript';
+import type { TSCommon, TSInternal } from './ts-compiler-types';
+
+export const createTsInternals = cachedLookup(createTsInternalsUncached);
+/**
+ * Given a reference to the TS compiler, return some TS internal functions that we
+ * could not or did not want to grab off the `ts` object.
+ * These have been copy-pasted from TS's source and tweaked as necessary.
+ */
+function createTsInternalsUncached(_ts: TSCommon) {
+  const ts = _ts as TSCommon & TSInternal;
+  /**
+   * Copied from:
+   * https://github.com/microsoft/TypeScript/blob/v4.3.2/src/compiler/commandLineParser.ts#L2821-L2846
+   */
+  function getExtendsConfigPath(
+    extendedConfig: string,
+    host: _ts.ParseConfigHost,
+    basePath: string,
+    errors: _ts.Push<_ts.Diagnostic>,
+    createDiagnostic: (
+      message: _ts.DiagnosticMessage,
+      arg1?: string
+    ) => _ts.Diagnostic
+  ) {
+    extendedConfig = normalizeSlashes(extendedConfig);
+    if (
+      isRootedDiskPath(extendedConfig) ||
+      startsWith(extendedConfig, './') ||
+      startsWith(extendedConfig, '../')
+    ) {
+      let extendedConfigPath = getNormalizedAbsolutePath(
+        extendedConfig,
+        basePath
+      );
+      if (
+        !host.fileExists(extendedConfigPath) &&
+        !endsWith(extendedConfigPath, ts.Extension.Json)
+      ) {
+        extendedConfigPath = `${extendedConfigPath}.json`;
+        if (!host.fileExists(extendedConfigPath)) {
+          errors.push(
+            createDiagnostic(ts.Diagnostics.File_0_not_found, extendedConfig)
+          );
+          return undefined;
+        }
+      }
+      return extendedConfigPath;
+    }
+    // If the path isn't a rooted or relative path, resolve like a module
+    const resolved = ts.nodeModuleNameResolver(
+      extendedConfig,
+      combinePaths(basePath, 'tsconfig.json'),
+      { moduleResolution: ts.ModuleResolutionKind.NodeJs },
+      host,
+      /*cache*/ undefined,
+      /*projectRefs*/ undefined,
+      /*lookupConfig*/ true
+    );
+    if (resolved.resolvedModule) {
+      return resolved.resolvedModule.resolvedFileName;
+    }
+    errors.push(
+      createDiagnostic(ts.Diagnostics.File_0_not_found, extendedConfig)
+    );
+    return undefined;
+  }
+
+  function startsWith(str: string, prefix: string): boolean {
+    return str.lastIndexOf(prefix, 0) === 0;
+  }
+  function endsWith(str: string, suffix: string): boolean {
+    const expectedPos = str.length - suffix.length;
+    return expectedPos >= 0 && str.indexOf(suffix, expectedPos) === expectedPos;
+  }
+
+  // These functions have alternative implementation to avoid copying too much from TS
+  function isRootedDiskPath(path: string) {
+    return isAbsolute(path);
+  }
+  function combinePaths(
+    path: string,
+    ...paths: (string | undefined)[]
+  ): string {
+    return normalizeSlashes(
+      resolve(path, ...(paths.filter((path) => path) as string[]))
+    );
+  }
+  function getNormalizedAbsolutePath(
+    fileName: string,
+    currentDirectory: string | undefined
+  ) {
+    return normalizeSlashes(
+      currentDirectory != null
+        ? resolve(currentDirectory!, fileName)
+        : resolve(fileName)
+    );
+  }
+
+  return { getExtendsConfigPath };
+}
diff --git a/src/util.ts b/src/util.ts
index 3cc703ee3..63ed6a67e 100644
--- a/src/util.ts
+++ b/src/util.ts
@@ -54,10 +54,34 @@ export function parse(value: string | undefined): object | undefined {
   return typeof value === 'string' ? JSON.parse(value) : undefined;
 }
 
+const directorySeparator = '/';
+const backslashRegExp = /\\/g;
 /**
  * Replace backslashes with forward slashes.
  * @internal
  */
 export function normalizeSlashes(value: string): string {
-  return value.replace(/\\/g, '/');
+  return value.replace(backslashRegExp, directorySeparator);
 }
+
+/**
+ * Cached fs operation wrapper.
+ */
+export function cachedLookup<T, R>(fn: (arg: T) => R): (arg: T) => R {
+  const cache = new Map<T, R>();
+
+  return (arg: T): R => {
+    if (!cache.has(arg)) {
+      const v = fn(arg);
+      cache.set(arg, v);
+      return v;
+    }
+    return cache.get(arg)!;
+  };
+}
+
+/**
+ * We do not support ts's `trace` option yet.  In the meantime, rather than omit
+ * `trace` options in hosts, I am using this placeholder.
+ */
+export function trace(s: string): void {}
diff --git a/tests/tsconfig-extends/other/require-hook.js b/tests/tsconfig-extends/other/require-hook.js
new file mode 100644
index 000000000..e69de29bb
diff --git a/tests/tsconfig-extends/other/tsconfig.json b/tests/tsconfig-extends/other/tsconfig.json
new file mode 100644
index 000000000..14c5e0cec
--- /dev/null
+++ b/tests/tsconfig-extends/other/tsconfig.json
@@ -0,0 +1,6 @@
+{
+  "ts-node": {
+    "require": ["./require-hook"],
+    "scopeDir": "./scopedir"
+  }
+}
diff --git a/tests/tsconfig-extends/tsconfig.json b/tests/tsconfig-extends/tsconfig.json
new file mode 100644
index 000000000..6ffbeefb6
--- /dev/null
+++ b/tests/tsconfig-extends/tsconfig.json
@@ -0,0 +1,6 @@
+{
+  "extends": "./other/tsconfig.json",
+  "ts-node": {
+    "preferTsExts": true
+  }
+}