diff --git a/packages/typescript/src/options/validate.ts b/packages/typescript/src/options/validate.ts
index ae53834a3..6c76c925a 100644
--- a/packages/typescript/src/options/validate.ts
+++ b/packages/typescript/src/options/validate.ts
@@ -65,13 +65,20 @@ export function validatePaths(
             `@rollup/plugin-typescript: Path of Typescript compiler option '${dirProperty}' must be located inside Rollup 'dir' option.`
           );
         }
-      } else {
+      } else if (dirProperty === 'outDir') {
         const fromTsDirToRollup = relative(compilerOptions[dirProperty]!, outputDir);
         if (fromTsDirToRollup.startsWith('..')) {
           context.error(
             `@rollup/plugin-typescript: Path of Typescript compiler option '${dirProperty}' must be located inside the same directory as the Rollup 'file' option.`
           );
         }
+      } else {
+        const fromTsDirToRollup = relative(outputDir, compilerOptions[dirProperty]!);
+        if (fromTsDirToRollup.startsWith('..')) {
+          context.error(
+            `@rollup/plugin-typescript: Path of Typescript compiler option '${dirProperty}' must be located inside the same directory as the Rollup 'file' option.`
+          );
+        }
       }
     }
   }
diff --git a/packages/typescript/test/test.js b/packages/typescript/test/test.js
index e0b83fd0d..1758779f0 100644
--- a/packages/typescript/test/test.js
+++ b/packages/typescript/test/test.js
@@ -129,6 +129,28 @@ test.serial(
   }
 );
 
+test.serial(
+  'ensures declarationDir is allowed in Rollup output directory when output.file is used',
+  async (t) => {
+    const bundle = await rollup({
+      input: 'fixtures/basic/main.ts',
+      plugins: [
+        typescript({
+          tsconfig: 'fixtures/basic/tsconfig.json',
+          declarationDir: 'fixtures/basic/dist/other',
+          declaration: true
+        })
+      ],
+      onwarn
+    });
+
+    // this should not throw an error
+    await t.notThrowsAsync(() =>
+      getCode(bundle, { format: 'es', file: 'fixtures/basic/dist/index.js' }, true)
+    );
+  }
+);
+
 test.serial(
   'ensures output files can be written to subdirectories within the tsconfig outDir',
   async (t) => {