diff --git a/.changeset/slimy-roses-explain.md b/.changeset/slimy-roses-explain.md
new file mode 100644
index 00000000..0a4c75ae
--- /dev/null
+++ b/.changeset/slimy-roses-explain.md
@@ -0,0 +1,5 @@
+---
+'microbundle': patch
+---
+
+Expands generateTypes flag to support libs with TS entrypoints
diff --git a/src/index.js b/src/index.js
index 47448a08..e3314d9a 100644
--- a/src/index.js
+++ b/src/index.js
@@ -518,10 +518,12 @@ function createConfig(options, entry, format, writeMeta) {
 							tsconfigDefaults: {
 								compilerOptions: {
 									sourceMap: options.sourcemap,
-									declaration: true,
+									declaration: options.generateTypes !== false,
 									allowJs: true,
 									emitDeclarationOnly: options.generateTypes && !useTypescript,
-									declarationDir: getDeclarationDir({ options, pkg }),
+									...(options.generateTypes !== false && {
+										declarationDir: getDeclarationDir({ options, pkg }),
+									}),
 									jsx: 'preserve',
 									jsxFactory:
 										// TypeScript fails to resolve Fragments when jsxFactory
diff --git a/test/__snapshots__/index.test.js.snap b/test/__snapshots__/index.test.js.snap
index e70c9176..3f5ad93e 100644
--- a/test/__snapshots__/index.test.js.snap
+++ b/test/__snapshots__/index.test.js.snap
@@ -2728,9 +2728,10 @@ ts-custom-declaration
     index.js.map
     index.umd.js
     index.umd.js.map
+  node_modules
   package.json
   src
-    index.js
+    index.ts
   tsconfig.json
   types
     index.d.ts
diff --git a/test/fixtures/ts-custom-declaration/package.json b/test/fixtures/ts-custom-declaration/package.json
index 2fd7573b..00a923ee 100644
--- a/test/fixtures/ts-custom-declaration/package.json
+++ b/test/fixtures/ts-custom-declaration/package.json
@@ -2,7 +2,7 @@
 	"name": "ts-custom-declarations",
 	"main": "dist/index.js",
 	"types": "types/index.d.ts",
-	"source": "src/index.js",
+	"source": "src/index.ts",
   "scripts": {
     "build": "microbundle --generateTypes false"
   }
diff --git a/test/fixtures/ts-custom-declaration/src/index.js b/test/fixtures/ts-custom-declaration/src/index.ts
similarity index 100%
rename from test/fixtures/ts-custom-declaration/src/index.js
rename to test/fixtures/ts-custom-declaration/src/index.ts