diff --git a/packages/babel-cli/src/babel/dir.ts b/packages/babel-cli/src/babel/dir.ts
index 5bbbec2886e5..c65536a3e93f 100644
--- a/packages/babel-cli/src/babel/dir.ts
+++ b/packages/babel-cli/src/babel/dir.ts
@@ -177,34 +177,70 @@ export default async function ({
     // This, alongside with debounce, allows us to only log
     // when we are sure that all the files have been compiled.
     let processing = 0;
+    const { filenames } = cliOptions;
+    let getBase;
+    if (filenames.length === 1) {
+      // fast path: If there is only one filenames, we know it must be the base
+      const base = filenames[0];
+      const absoluteBase = path.resolve(base);
+      getBase = filename => {
+        return filename === absoluteBase ? path.dirname(base) : base;
+      };
+    } else {
+      // A map from absolute compiled file path to its base, from which
+      // the output destination will be determined
+      const filenameToBaseMap: Map<string, string> = new Map(
+        filenames.map(filename => {
+          const absoluteFilename = path.resolve(filename);
+          return [absoluteFilename, path.dirname(filename)];
+        }),
+      );
+
+      const absoluteFilenames: Map<string, string> = new Map(
+        filenames.map(filename => {
+          const absoluteFilename = path.resolve(filename);
+          return [absoluteFilename, filename];
+        }),
+      );
+
+      const { sep } = path;
+      // determine base from the absolute file path
+      getBase = filename => {
+        const base = filenameToBaseMap.get(filename);
+        if (base !== undefined) {
+          return base;
+        }
+        for (const [absoluteFilenameOrDir, relative] of absoluteFilenames) {
+          if (filename.startsWith(absoluteFilenameOrDir + sep)) {
+            filenameToBaseMap.set(filename, relative);
+            return relative;
+          }
+        }
+        // Can't determine the base, probably external deps
+        return "";
+      };
+    }
 
-    cliOptions.filenames.forEach(filenameOrDir => {
+    filenames.forEach(filenameOrDir => {
       watcher.watch(filenameOrDir);
+    });
 
-      watcher.onFilesChange(async filenames => {
-        processing++;
-        if (startTime === null) startTime = process.hrtime();
-
-        try {
-          const written = await Promise.all(
-            filenames.map(filename =>
-              handleFile(
-                filename,
-                filename === filenameOrDir
-                  ? path.dirname(filenameOrDir)
-                  : filenameOrDir,
-              ),
-            ),
-          );
-
-          compiledFiles += written.filter(Boolean).length;
-        } catch (err) {
-          console.error(err);
-        }
+    watcher.onFilesChange(async filenames => {
+      processing++;
+      if (startTime === null) startTime = process.hrtime();
 
-        processing--;
-        if (processing === 0 && !cliOptions.quiet) logSuccess();
-      });
+      try {
+        const written = await Promise.all(
+          filenames.map(filename => handleFile(filename, getBase(filename))),
+        );
+
+        compiledFiles += written.filter(Boolean).length;
+      } catch (err) {
+        console.error(err);
+      }
+
+      processing--;
+      if (processing === 0 && !cliOptions.quiet) logSuccess();
     });
   }
 }
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch --verbose with external dependencies/executor.js b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch --verbose with external dependencies/executor.js
index 06acdf07b0cf..fcf460a0347b 100644
--- a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch --verbose with external dependencies/executor.js	
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch --verbose with external dependencies/executor.js	
@@ -4,7 +4,7 @@ const assert = require("assert");
 // For Node.js <= 10
 if (!assert.match) assert.match = (val, re) => assert(re.test(val));
 
-const run = (function* () {
+const run = (async function* () {
   let files = [yield, yield].sort();
   assert.match(files[0], /src[\\/]index.js -> lib[\\/]index.js/);
   assert.match(files[1], /src[\\/]main.js -> lib[\\/]main.js/);
@@ -12,7 +12,8 @@ const run = (function* () {
 
   logFile("lib/index.js");
   logFile("lib/main.js");
-
+  // wait 200ms for watcher setup
+  await new Promise(resolve => setTimeout(resolve, 200));
   fs.writeFileSync("./file.txt", "Updated!");
 
   files = [yield, yield].sort();
@@ -29,7 +30,7 @@ run.next();
 const batchedStrings = [];
 let batchId = 0;
 
-process.stdin.on("data", function listener(chunk) {
+process.stdin.on("data", async function listener(chunk) {
   const str = String(chunk).trim();
   if (!str) return;
 
@@ -50,7 +51,7 @@ process.stdin.on("data", function listener(chunk) {
     console.log(str);
   }
 
-  if (run.next(str).done) {
+  if ((await run.next(str)).done) {
     process.exit(0);
   }
 });
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch --verbose with external dependencies/options.json b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch --verbose with external dependencies/options.json
index 6fc02e90636e..b29801fb5518 100644
--- a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch --verbose with external dependencies/options.json	
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch --verbose with external dependencies/options.json	
@@ -2,5 +2,5 @@
   "args": ["src", "--out-dir", "lib", "--watch", "--verbose"],
   "noBabelrc": true,
   "noDefaultPlugins": true,
-  "minNodeVersion": 8
+  "minNodeVersion": 10
 }
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/executor.js b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/executor.js
new file mode 100644
index 000000000000..1d480afb2637
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/executor.js	
@@ -0,0 +1,37 @@
+const fs = require("fs");
+const assert = require("assert");
+
+// For Node.js <= 10
+if (!assert.match) assert.match = (val, re) => assert(re.test(val));
+
+const run = (async function* () {
+  assert.match(yield, /Successfully compiled 4 files with Babel \(\d+ms\)\./);
+
+  // wait 200ms for watcher setup
+  await new Promise(resolve => setTimeout(resolve, 200));
+  // update ./module1/src/index.js
+  fs.writeFileSync(
+    "./module1/src/index.js",
+    `let str = REPLACE_ME + REPLACE_ME;`
+  );
+
+  assert.match(yield, /Successfully compiled 1 file with Babel \(\d+ms\)\./);
+})();
+
+run.next();
+
+process.stdin.on("data", async function listener(chunk) {
+  const str = String(chunk).trim();
+  if (!str) return;
+
+  console.log(str);
+
+  if ((await run.next(str)).done) {
+    process.exit(0);
+  }
+});
+
+setTimeout(() => {
+  console.error("EXECUTOR TIMEOUT");
+  process.exit(1);
+}, 5000);
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/babel.config.cjs b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/babel.config.cjs
new file mode 100644
index 000000000000..82a7bc963ce6
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/babel.config.cjs	
@@ -0,0 +1,25 @@
+const fs = require("fs");
+const path = require("path");
+
+function inlinePlugin(api, { filename }) {
+  const { types: t } = api;
+
+  const contents = api.cache.using(() => fs.readFileSync(filename, "utf8"));
+  api.addExternalDependency(filename);
+
+  return {
+    visitor: {
+      Identifier(path) {
+        if (path.node.name === "REPLACE_ME") {
+          path.replaceWith(t.stringLiteral(contents));
+        }
+      },
+    },
+  };
+}
+
+module.exports = {
+  plugins: [
+    [inlinePlugin, { filename: path.resolve(__dirname, "./file.txt") }],
+  ],
+};
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/file.txt b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/file.txt
new file mode 100644
index 000000000000..50f9dc495c1e
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/file.txt	
@@ -0,0 +1 @@
+Hi :)
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/module1/src/index.js b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/module1/src/index.js
new file mode 100644
index 000000000000..32fcf9431c12
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/module1/src/index.js	
@@ -0,0 +1 @@
+let str = REPLACE_ME;
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/module1/src/main.js b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/module1/src/main.js
new file mode 100644
index 000000000000..97ecfbae3a71
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/module1/src/main.js	
@@ -0,0 +1 @@
+console.log(REPLACE_ME);
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/module2/src/index.js b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/module2/src/index.js
new file mode 100644
index 000000000000..32fcf9431c12
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/module2/src/index.js	
@@ -0,0 +1 @@
+let str = REPLACE_ME;
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/module2/src/main.js b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/module2/src/main.js
new file mode 100644
index 000000000000..97ecfbae3a71
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/in-files/module2/src/main.js	
@@ -0,0 +1 @@
+console.log(REPLACE_ME);
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/options.json b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/options.json
new file mode 100644
index 000000000000..0e04683004f1
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/options.json	
@@ -0,0 +1,6 @@
+{
+  "args": ["*/src", "--out-dir", "../lib", "--relative", "--watch"],
+  "noBabelrc": true,
+  "noDefaultPlugins": true,
+  "minNodeVersion": 10
+}
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/out-files/module1/lib/index.js b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/out-files/module1/lib/index.js
new file mode 100644
index 000000000000..4d75d33908a9
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/out-files/module1/lib/index.js	
@@ -0,0 +1 @@
+let str = "Hi :)" + "Hi :)";
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/out-files/module1/lib/main.js b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/out-files/module1/lib/main.js
new file mode 100644
index 000000000000..b0d766e0fe27
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/out-files/module1/lib/main.js	
@@ -0,0 +1 @@
+console.log("Hi :)");
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/out-files/module2/lib/index.js b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/out-files/module2/lib/index.js
new file mode 100644
index 000000000000..f66c36a515a9
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/out-files/module2/lib/index.js	
@@ -0,0 +1 @@
+let str = "Hi :)";
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/out-files/module2/lib/main.js b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/out-files/module2/lib/main.js
new file mode 100644
index 000000000000..b0d766e0fe27
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/out-files/module2/lib/main.js	
@@ -0,0 +1 @@
+console.log("Hi :)");
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/stdout.txt b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/stdout.txt
new file mode 100644
index 000000000000..8afbc224e55b
--- /dev/null
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch multiple dir/stdout.txt	
@@ -0,0 +1,2 @@
+Successfully compiled 4 files with Babel (123ms).
+Successfully compiled 1 file with Babel (123ms).
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch with external dependencies/executor.js b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch with external dependencies/executor.js
index 474cd214405c..29730dc333e3 100644
--- a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch with external dependencies/executor.js	
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch with external dependencies/executor.js	
@@ -4,29 +4,30 @@ const assert = require("assert");
 // For Node.js <= 10
 if (!assert.match) assert.match = (val, re) => assert(re.test(val));
 
-const run = function* () {
+const run = (async function* () {
   assert.match(yield, /Successfully compiled 2 files with Babel \(\d+ms\)\./);
 
   logFile("lib/index.js");
   logFile("lib/main.js");
-
+  // wait 200ms for watcher setup
+  await new Promise(resolve => setTimeout(resolve, 200));
   fs.writeFileSync("./file.txt", "Updated!");
 
   assert.match(yield, /Successfully compiled 2 files with Babel \(\d+ms\)\./);
 
   logFile("lib/index.js");
   logFile("lib/main.js");
-}();
+})();
 
 run.next();
 
-process.stdin.on("data", function listener(chunk) {
+process.stdin.on("data", async function listener(chunk) {
   const str = String(chunk).trim();
   if (!str) return;
 
   console.log(str);
 
-  if (run.next(str).done) {
+  if ((await run.next(str)).done) {
     process.exit(0);
   }
 });
diff --git a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch with external dependencies/options.json b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch with external dependencies/options.json
index 290c3dcabb24..bb43a72b2540 100644
--- a/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch with external dependencies/options.json	
+++ b/packages/babel-cli/test/fixtures/babel/dir --out-dir --watch with external dependencies/options.json	
@@ -2,5 +2,5 @@
   "args": ["src", "--out-dir", "lib", "--watch"],
   "noBabelrc": true,
   "noDefaultPlugins": true,
-  "minNodeVersion": 8
+  "minNodeVersion": 10
 }