diff --git a/src/config.ts b/src/config.ts
index 8b7b5af4e..764e45e25 100644
--- a/src/config.ts
+++ b/src/config.ts
@@ -54,11 +54,6 @@ export function getConfigFile(
         configFile.config.compilerOptions = Object.assign({},
             configFile.config.compilerOptions,
             loaderOptions.compilerOptions);
-
-        // do any necessary config massaging
-        if (loaderOptions.transpileOnly) {
-            configFile.config.compilerOptions.isolatedModules = true;
-        }
     }
 
     return {
diff --git a/src/servicesHost.ts b/src/servicesHost.ts
index 1bc44554c..ddc0c201e 100644
--- a/src/servicesHost.ts
+++ b/src/servicesHost.ts
@@ -65,8 +65,8 @@ function makeServicesHost(
         directoryExists: compiler.sys ? (<any> compiler.sys).directoryExists : undefined,
 
         // The following three methods are necessary for @types resolution from TS 2.4.1 onwards see: https://github.com/Microsoft/TypeScript/issues/16772
-        fileExists: moduleResolutionHost.fileExists,
-        readFile: moduleResolutionHost.readFile,
+        fileExists: compiler.sys ? (<any> compiler.sys).fileExists : undefined,
+        readFile: compiler.sys ? (<any> compiler.sys).readFile : undefined,
         readDirectory: compiler.sys ? (<any> compiler.sys).readDirectory : undefined,
 
         getCurrentDirectory: () => process.cwd(),