diff --git a/packages/js/src/utils/buildable-libs-utils.spec.ts b/packages/js/src/utils/buildable-libs-utils.spec.ts
index 2c3443bea78d89..f9cb121e31be4c 100644
--- a/packages/js/src/utils/buildable-libs-utils.spec.ts
+++ b/packages/js/src/utils/buildable-libs-utils.spec.ts
@@ -1,10 +1,14 @@
 import { DependencyType, ProjectGraph, TaskGraph } from '@nx/devkit';
+import { TempFs } from '@nx/devkit/internal-testing-utils';
+import { readFileSync } from 'fs';
 import {
-  calculateProjectDependencies,
   calculateDependenciesFromTaskGraph,
+  calculateProjectDependencies,
+  createTmpTsConfig,
   DependentBuildableProjectNode,
   updatePaths,
 } from './buildable-libs-utils';
+import { join } from 'path';
 
 describe('updatePaths', () => {
   const deps: DependentBuildableProjectNode[] = [
@@ -768,3 +772,45 @@ describe('missingDependencies', () => {
     ).toThrow();
   });
 });
+
+describe('createTmpTsConfig', () => {
+  it('should create a temporary tsconfig file extending the provided tsconfig', () => {
+    const fs = new TempFs('buildable-libs-utils#createTmpTsConfig');
+    const tsconfigPath = 'packages/foo/tsconfig.json';
+    fs.createFileSync(tsconfigPath, '{}');
+
+    const tmpTsConfigPath = createTmpTsConfig(
+      tsconfigPath,
+      fs.tempDir,
+      'packages/foo',
+      []
+    );
+
+    const tmpTsConfig = readFileSync(tmpTsConfigPath, 'utf8');
+    // would be generated at <workspaceRoot>/tmp/packages/foo/build/tsconfig.generated.json
+    // while the extended tsconfig path is <workspaceRoot>/packages/foo/tsconfig.json
+    expect(JSON.parse(tmpTsConfig).extends).toBe(
+      '../../../../packages/foo/tsconfig.json'
+    );
+  });
+
+  it('should also work when the provided tsconfig is an absolute path', () => {
+    const fs = new TempFs('buildable-libs-utils#createTmpTsConfig');
+    const tsconfigPath = join(fs.tempDir, 'packages/foo/tsconfig.json');
+    fs.createFileSync(tsconfigPath, '{}');
+
+    const tmpTsConfigPath = createTmpTsConfig(
+      tsconfigPath,
+      fs.tempDir,
+      'packages/foo',
+      []
+    );
+
+    const tmpTsConfig = readFileSync(tmpTsConfigPath, 'utf8');
+    // would be generated at <workspaceRoot>/tmp/packages/foo/build/tsconfig.generated.json
+    // while the extended tsconfig path is <workspaceRoot>/packages/foo/tsconfig.json
+    expect(JSON.parse(tmpTsConfig).extends).toBe(
+      '../../../../packages/foo/tsconfig.json'
+    );
+  });
+});
diff --git a/packages/js/src/utils/buildable-libs-utils.ts b/packages/js/src/utils/buildable-libs-utils.ts
index a2754b3dc4555b..a272a44cd91e8f 100644
--- a/packages/js/src/utils/buildable-libs-utils.ts
+++ b/packages/js/src/utils/buildable-libs-utils.ts
@@ -16,7 +16,7 @@ import { unlinkSync } from 'fs';
 import { isNpmProject } from 'nx/src/project-graph/operators';
 import { directoryExists, fileExists } from 'nx/src/utils/fileutils';
 import { output } from 'nx/src/utils/output';
-import { dirname, join, relative, isAbsolute, extname } from 'path';
+import { dirname, join, relative, extname, resolve } from 'path';
 import type * as ts from 'typescript';
 import { readTsConfigPaths } from './typescript/ts-config';
 
@@ -194,18 +194,23 @@ function collectDependencies(
 }
 
 function readTsConfigWithRemappedPaths(
-  tsConfig: string,
-  generatedTsConfigPath: string,
-  dependencies: DependentBuildableProjectNode[]
+  originalTsconfigPath: string,
+  generatedTsconfigPath: string,
+  dependencies: DependentBuildableProjectNode[],
+  workspaceRoot: string
 ) {
   const generatedTsConfig: any = { compilerOptions: {} };
-  const dirnameTsConfig = dirname(generatedTsConfigPath);
-  const relativeTsconfig = isAbsolute(dirnameTsConfig)
-    ? relative(workspaceRoot, dirnameTsConfig)
-    : dirnameTsConfig;
-  generatedTsConfig.extends = relative(relativeTsconfig, tsConfig);
+  const normalizedTsConfig = resolve(workspaceRoot, originalTsconfigPath);
+  const normalizedGeneratedTsConfigDir = resolve(
+    workspaceRoot,
+    dirname(generatedTsconfigPath)
+  );
+  generatedTsConfig.extends = relative(
+    normalizedGeneratedTsConfigDir,
+    normalizedTsConfig
+  );
   generatedTsConfig.compilerOptions.paths = computeCompilerOptionsPaths(
-    tsConfig,
+    originalTsconfigPath,
     dependencies
   );
 
@@ -443,7 +448,8 @@ export function createTmpTsConfig(
   const parsedTSConfig = readTsConfigWithRemappedPaths(
     tsconfigPath,
     tmpTsConfigPath,
-    dependencies
+    dependencies,
+    workspaceRoot
   );
   process.on('exit', () => cleanupTmpTsConfigFile(tmpTsConfigPath));