diff --git a/src/transpilation/resolve.ts b/src/transpilation/resolve.ts
index e011f4350..af7981ffc 100644
--- a/src/transpilation/resolve.ts
+++ b/src/transpilation/resolve.ts
@@ -208,13 +208,9 @@ class ResolutionContext {
             if (resolvedNodeModulesFile) return resolvedNodeModulesFile;
         }
 
-        // Check if file is a file in the project
-        const resolvedPath = this.formatPathToFile(dependencyPath, requiringFile);
-        const fileFromPath = this.getFileFromPath(resolvedPath);
-        if (fileFromPath) return fileFromPath;
-
-        if (this.options.paths) {
-            // If no file found yet and paths are present, try to find project file via paths mappings
+        // Bare specifiers: check paths mappings first, matching TypeScript's resolution order.
+        // TS never applies paths to relative imports, so skip for those.
+        if (!ts.isExternalModuleNameRelative(dependencyPath) && this.options.paths) {
             // When baseUrl is not set, resolve paths relative to the tsconfig directory (TS 6.0+ behavior)
             const pathsBase =
                 this.options.baseUrl ??
@@ -225,6 +221,11 @@ class ResolutionContext {
             }
         }
 
+        // Check if file is a file in the project
+        const resolvedPath = this.formatPathToFile(dependencyPath, requiringFile);
+        const fileFromPath = this.getFileFromPath(resolvedPath);
+        if (fileFromPath) return fileFromPath;
+
         // Not a TS file in our project sources, use resolver to check if we can find dependency
         try {
             const resolveResult = resolver.resolveSync({}, fileDirectory, dependencyPath);
diff --git a/test/transpile/module-resolution.spec.ts b/test/transpile/module-resolution.spec.ts
index e6543df69..35e79ed3d 100644
--- a/test/transpile/module-resolution.spec.ts
+++ b/test/transpile/module-resolution.spec.ts
@@ -707,6 +707,18 @@ test("supports complicated paths configuration", () => {
         .expectToEqual({ foo: 314, bar: 271 });
 });
 
+test("paths mapping wins over sibling project file (TS resolution order)", () => {
+    const baseProjectPath = path.resolve(__dirname, "module-resolution", "paths-vs-project-file");
+    const projectPath = path.join(baseProjectPath, "program");
+    const projectTsConfig = path.join(projectPath, "tsconfig.json");
+    const mainFile = path.join(projectPath, "main.ts");
+
+    util.testProject(projectTsConfig)
+        .setMainFileName(mainFile)
+        .setOptions({ luaBundle: "bundle.lua", luaBundleEntry: mainFile })
+        .expectToEqual({ value: "paths-mapped" });
+});
+
 test("module resolution using plugin", () => {
     const baseProjectPath = path.resolve(__dirname, "module-resolution", "project-with-module-resolution-plugin");
     const projectTsConfig = path.join(baseProjectPath, "tsconfig.json");
diff --git a/test/transpile/module-resolution/paths-vs-project-file/other/alias.ts b/test/transpile/module-resolution/paths-vs-project-file/other/alias.ts
new file mode 100644
index 000000000..b09331910
--- /dev/null
+++ b/test/transpile/module-resolution/paths-vs-project-file/other/alias.ts
@@ -0,0 +1 @@
+export const value = "paths-mapped";
diff --git a/test/transpile/module-resolution/paths-vs-project-file/program/alias.ts b/test/transpile/module-resolution/paths-vs-project-file/program/alias.ts
new file mode 100644
index 000000000..565154b68
--- /dev/null
+++ b/test/transpile/module-resolution/paths-vs-project-file/program/alias.ts
@@ -0,0 +1 @@
+export const value = "project-file";
diff --git a/test/transpile/module-resolution/paths-vs-project-file/program/main.ts b/test/transpile/module-resolution/paths-vs-project-file/program/main.ts
new file mode 100644
index 000000000..7b4bc6587
--- /dev/null
+++ b/test/transpile/module-resolution/paths-vs-project-file/program/main.ts
@@ -0,0 +1,3 @@
+import { value } from "alias";
+
+export { value };
diff --git a/test/transpile/module-resolution/paths-vs-project-file/program/tsconfig.json b/test/transpile/module-resolution/paths-vs-project-file/program/tsconfig.json
new file mode 100644
index 000000000..26c1a151f
--- /dev/null
+++ b/test/transpile/module-resolution/paths-vs-project-file/program/tsconfig.json
@@ -0,0 +1,9 @@
+{
+    "compilerOptions": {
+        "rootDir": "..",
+        "outDir": "dist",
+        "paths": {
+            "alias": ["../other/alias"]
+        }
+    }
+}