diff --git a/src/config.ts b/src/config.ts
index b3ffccc82..06419cfde 100644
--- a/src/config.ts
+++ b/src/config.ts
@@ -24,7 +24,7 @@ export function getConfigFile(
     log: logger.Logger,
     compilerDetailsLogMessage: string
 ) {
-    const configFilePath = findConfigFile(compiler, path.dirname(loader.resourcePath), loaderOptions.configFileName);
+    const configFilePath = findConfigFile(compiler, path.dirname(loader.resourcePath), loaderOptions.configFile);
     let configFileError: WebpackError | undefined;
     let configFile: ConfigFile;
 
@@ -69,26 +69,51 @@ export function getConfigFile(
     };
 }
 
+
 /**
- * The tsconfig.json is found using the same method as `tsc`, starting in the current directory
- * and continuing up the parent directory chain.
+ * Find a tsconfig file by name or by path.
+ * By name, the tsconfig.json is found using the same method as `tsc`, starting in the current
+ * directory and continuing up the parent directory chain.
+ * By path, the file will be found by resolving the given path relative to the requesting entry file.
+ * 
+ * @param compiler The TypeScript compiler instance
+ * @param requestDirPath The directory in which the entry point requesting the tsconfig.json lies
+ * @param configFile The tsconfig file name to look for or a path to that file
+ * @return The absolute path to the tsconfig file, undefined if none was found.
  */
-function findConfigFile(compiler: typeof typescript, searchPath: string, configFileName: string): string | undefined {
-    // Remove path.root from configFileName to fix windows specific issue. #604
-    configFileName = configFileName.substr(path.parse(configFileName).root.length)
-
-    while (true) {
-        const fileName = path.join(searchPath, configFileName);
-        if (compiler.sys.fileExists(fileName)) {
-            return fileName;
-        }
-        const parentPath = path.dirname(searchPath);
-        if (parentPath === searchPath) {
-            break;
+function findConfigFile(compiler: typeof typescript, requestDirPath: string, configFile: string): string | undefined {
+    // If `configFile` is an absolute path, return it right away
+    if (path.isAbsolute(configFile)) {
+        return compiler.sys.fileExists(configFile)
+            ? configFile
+            : undefined;
+    }
+
+    // If `configFile` is a relative path, resolve it.
+    // We define a relative path as: starts with
+    // one or two dots + a common directory delimiter
+    if (configFile.match(/^\.\.?(\/|\\)/)) {
+        const resolvedPath = path.resolve(configFile);
+        return compiler.sys.fileExists(resolvedPath)
+            ? resolvedPath
+            : undefined;
+
+    // If `configFile` is a file name, find it in the directory tree
+    } else {
+        while (true) {
+            const fileName = path.join(requestDirPath, configFile);
+            if (compiler.sys.fileExists(fileName)) {
+                return fileName;
+            }
+            const parentPath = path.dirname(requestDirPath);
+            if (parentPath === requestDirPath) {
+                break;
+            }
+            requestDirPath = parentPath;
         }
-        searchPath = parentPath;
+
+        return undefined;
     }
-    return undefined;
 }
 
 export function getConfigParseResult(
diff --git a/src/index.ts b/src/index.ts
index c507107aa..a42c86073 100644
--- a/src/index.ts
+++ b/src/index.ts
@@ -104,7 +104,7 @@ function getLoaderOptions(loader: Webpack) {
         logLevel: 'INFO',
         logInfoToStdOut: false,
         compiler: 'typescript',
-        configFileName: 'tsconfig.json',
+        configFile: 'tsconfig.json',
         transpileOnly: false,
         visualStudioErrorFormat: false,
         compilerOptions: {},
@@ -115,6 +115,15 @@ function getLoaderOptions(loader: Webpack) {
         happyPackMode: false,
     }, configFileOptions, queryOptions);
 
+    // Use deprecated `configFileName` as fallback for `configFile`
+    if (queryOptions.configFileName) {
+        if (queryOptions.configFile) {
+            throw new Error('ts-loader options `configFile` and `configFileName` are mutually exclusive');
+        } else {
+            options.configFile = queryOptions.configFileName;
+        }
+    }
+
     options.ignoreDiagnostics = arrify(options.ignoreDiagnostics).map(Number);
     options.logLevel = options.logLevel.toUpperCase();
     options.instance = instanceName;
diff --git a/src/instances.ts b/src/instances.ts
index 02f017709..a6abfbd07 100644
--- a/src/instances.ts
+++ b/src/instances.ts
@@ -1,6 +1,7 @@
 import * as typescript from 'typescript';
 import * as path from 'path';
 import * as fs from 'fs';
+import { yellow } from 'chalk';
 
 import { makeAfterCompile } from './after-compile';
 import { getConfigFile, getConfigParseResult } from './config';
@@ -38,6 +39,10 @@ export function getTypeScriptInstance(
     const log = logger.makeLogger(loaderOptions);
     const compiler = getCompiler(loaderOptions, log);
 
+    if (loaderOptions.configFileName) {
+        log.logWarning(yellow('Usage of ts-loader option `configFileName` is deprecated. Use `configFile` instead.'));
+    }
+
     if (compiler.errorMessage !== undefined) {
         return { error: makeError({ rawMessage: compiler.errorMessage }) };
     }
diff --git a/src/interfaces.ts b/src/interfaces.ts
index 9ee5a24d8..b32a72d3a 100644
--- a/src/interfaces.ts
+++ b/src/interfaces.ts
@@ -253,7 +253,8 @@ export interface LoaderOptions {
     logInfoToStdOut: boolean;
     instance: string;
     compiler: string;
-    configFileName: string;
+    configFile: string;
+    configFileName: string; // deprecated, remove in next major release
     transpileOnly: boolean;
     ignoreDiagnostics: number[];
     visualStudioErrorFormat: boolean;