diff --git a/package-lock.json b/package-lock.json
index 2c055f5..aaaeb0d 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -1,12 +1,12 @@
 {
   "name": "@checkdigit/typescript-config",
-  "version": "10.1.1",
+  "version": "10.2.0",
   "lockfileVersion": 3,
   "requires": true,
   "packages": {
     "": {
       "name": "@checkdigit/typescript-config",
-      "version": "10.1.1",
+      "version": "10.2.0",
       "license": "MIT",
       "bin": {
         "builder": "bin/builder.mjs"
diff --git a/package.json b/package.json
index c990cbc..18282f0 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@checkdigit/typescript-config",
-  "version": "10.1.1",
+  "version": "10.2.0",
   "description": "Check Digit standard Typescript configuration",
   "homepage": "https://github.com/checkdigit/typescript-config#readme",
   "bugs": {
diff --git a/src/compile.spec.ts b/src/compile.spec.ts
index 2fcbdda..fedfe1d 100644
--- a/src/compile.spec.ts
+++ b/src/compile.spec.ts
@@ -10,11 +10,12 @@ import compile from './compile.ts';
 
 const commonJsCompatabilityBanner = `import { createRequire as __createRequire } from "node:module";
 import { fileURLToPath as __fileURLToPath } from "node:url";
-import { default as __path } from "node:path";
 const __filename = __fileURLToPath(import.meta.url);
-const __dirname = __path.dirname(__filename);
 const require = __createRequire(import.meta.url);`;
 
+const dirnameInject = `import path from "node:path";
+var __dirname = path.dirname(__filename);`;
+
 const singleModule = {
   [`index.ts`]: `export const hello = 'world';`,
 };
@@ -271,6 +272,7 @@ describe('compile', () => {
     assert.deepEqual(await read(outDir), {
       'two-modules.mjs':
         `${commonJsCompatabilityBanner}\n\n` +
+        `${dirnameInject}\n\n` +
         `var hello = "world";\n` +
         `\n` +
         `var two_modules_default = hello + "world";\n` +
@@ -282,6 +284,41 @@ describe('compile', () => {
     assert.equal(output.default, 'worldworld');
   });
 
+  it('should bundle an ESM module that declares __dirname', async () => {
+    const id = crypto.randomUUID();
+    const inDir = path.join(os.tmpdir(), `in-dir-${id}`, 'src');
+    const outDir = path.join(os.tmpdir(), `out-dir-${id}`, 'build');
+    await writeInput(inDir, {
+      'index.ts': `
+const __dirname = 'declared in project';
+export const localDirname: string = __dirname;
+export { injectedDirname } from './dependency.ts';
+`,
+      'dependency.ts': `export const injectedDirname: string = __dirname;`,
+    });
+    await writeOutput(
+      await compile({
+        type: 'module',
+        entryPoint: 'index.ts',
+        outFile: 'index.mjs',
+        inDir,
+        outDir,
+      }),
+    );
+
+    const output = await import(path.join(outDir, 'index.mjs'));
+    assert.deepEqual(
+      {
+        injectedDirname: output.injectedDirname as unknown,
+        localDirname: output.localDirname as unknown,
+      },
+      {
+        injectedDirname: await fs.realpath(outDir),
+        localDirname: 'declared in project',
+      },
+    );
+  });
+
   it('should bundle an ESM module that imports external modules', async () => {
     const id = crypto.randomUUID();
     const moduleDir = path.join(os.tmpdir(), `in-dir-${id}`);
@@ -301,6 +338,7 @@ describe('compile', () => {
     assert.deepEqual(await read(outDir), {
       'index.mjs':
         `${commonJsCompatabilityBanner}\n\n` +
+        `${dirnameInject}\n\n` +
         `var hello = "world";\n` +
         `\n` +
         `import util from "node:util";\n` +
@@ -334,6 +372,7 @@ describe('compile', () => {
     assert.deepEqual(convert(result.outputFiles), {
       'index.mjs':
         `${commonJsCompatabilityBanner}\n\n` +
+        `${dirnameInject}\n\n` +
         `import { hello as test } from "test-esm-module";\n` +
         `import util from "node:util";\n` +
         `var hello = { test, message: util.format("hello %s", "world") };\n` +
diff --git a/src/compile.ts b/src/compile.ts
index cc8ea57..2ed4520 100644
--- a/src/compile.ts
+++ b/src/compile.ts
@@ -13,11 +13,14 @@ import tsConfigJson from '../tsconfig.json' with { type: 'json' };
 
 const commonJsCompatabilityBanner = `import { createRequire as __createRequire } from "node:module";
 import { fileURLToPath as __fileURLToPath } from "node:url";
-import { default as __path } from "node:path";
 const __filename = __fileURLToPath(import.meta.url);
-const __dirname = __path.dirname(__filename);
 const require = __createRequire(import.meta.url);`;
 
+const packageRoot = path.dirname(path.dirname(fileURLToPath(import.meta.url)));
+const dirNameJsCompatibilityInjection = `import path from 'node:path';
+export const __dirname = path.dirname(__filename);`; // relies on __filename from commonJsCompatabilityBanner
+const dirNameJsCompatibilityInjectionURL = `data:text/javascript,${encodeURIComponent(dirNameJsCompatibilityInjection)}`;
+
 export type ImportKind =
   | 'entry-point'
   | 'import-statement'
@@ -274,7 +277,7 @@ export default async function ({
     tsConfigJson,
     typescript.sys,
     // @checkdigit/typescript-config package root:
-    path.dirname(path.dirname(fileURLToPath(import.meta.url))),
+    packageRoot,
   ).options;
   const program = typescript.createProgram(productionSourceFiles, {
     ...compilerOptions,
@@ -337,6 +340,7 @@ export default async function ({
     metafile: outFile !== undefined,
     sourcesContent: false,
     logLevel: 'error',
+    inject: outFile === undefined ? [] : [dirNameJsCompatibilityInjectionURL],
     banner:
       outFile === undefined
         ? {}