diff --git a/packages/metro-resolver/src/__tests__/index-test.js b/packages/metro-resolver/src/__tests__/index-test.js
index 2fb86f0d72..1aa91f4c32 100644
--- a/packages/metro-resolver/src/__tests__/index-test.js
+++ b/packages/metro-resolver/src/__tests__/index-test.js
@@ -56,9 +56,19 @@ const CONTEXT: ResolutionContext = (() => {
       },
       'other-root': {
         node_modules: {
+          'banana-module': {
+            'package.json': true,
+            'main.js': true,
+          },
           banana: {
             'package.json': true,
             'main.js': true,
+            node_modules: {
+              'banana-module': {
+                'package.json': true,
+                'main.js': true,
+              },
+            },
           },
         },
       },
@@ -217,14 +227,35 @@ it('uses `nodeModulesPaths` to find additional node_modules not in the direct pa
   expect(() => Resolver.resolve(context, 'kiwi', null))
     .toThrowErrorMatchingInlineSnapshot(`
     "Module does not exist in the Haste module map or in these directories:
-      /other-root/node_modules
       /root/project/node_modules
       /root/node_modules
       /node_modules
+      /other-root/node_modules
     "
   `);
 });
 
+it('resolves transitive dependencies when using `nodeModulesPaths`', () => {
+  const context = Object.assign(
+    {},
+    {...CONTEXT, originModulePath: '/other-root/node_modules/banana/main.js'},
+    {
+      nodeModulesPaths: ['/other-root/node_modules'],
+    },
+  );
+
+  expect(Resolver.resolve(context, 'banana-module', null)).toEqual({
+    type: 'sourceFile',
+    filePath:
+      '/other-root/node_modules/banana/node_modules/banana-module/main.js',
+  });
+
+  expect(Resolver.resolve(context, 'banana-module', null)).not.toEqual({
+    type: 'sourceFile',
+    filePath: '/other-root/node_modules/banana-module/main.js',
+  });
+});
+
 describe('disableHierarchicalLookup', () => {
   const context = Object.assign({}, CONTEXT, {
     disableHierarchicalLookup: true,
diff --git a/packages/metro-resolver/src/resolve.js b/packages/metro-resolver/src/resolve.js
index 0dd56811fd..70109de178 100644
--- a/packages/metro-resolver/src/resolve.js
+++ b/packages/metro-resolver/src/resolve.js
@@ -90,9 +90,10 @@ function resolve(
     } catch (error) {}
   }
 
-  const nodeModulesPaths = Array.from(context.nodeModulesPaths);
+  const nodeModulesPaths = [];
   let next = path.dirname(originModulePath);
   const {disableHierarchicalLookup} = context;
+
   if (!disableHierarchicalLookup) {
     let candidate;
     do {
@@ -102,6 +103,9 @@ function resolve(
     } while (candidate !== next);
   }
 
+  // Fall back to `nodeModulesPaths` after hierarchical lookup, similar to $NODE_PATH
+  nodeModulesPaths.push(...context.nodeModulesPaths);
+
   const extraPaths = [];
   const {extraNodeModules} = context;
   if (extraNodeModules) {