diff --git a/e2e/fixtures/workspace-with-tsconfig-issue/.bitmap b/e2e/fixtures/workspace-with-tsconfig-issue/.bitmap
new file mode 100644
index 000000000000..f5942eb8c3ef
--- /dev/null
+++ b/e2e/fixtures/workspace-with-tsconfig-issue/.bitmap
@@ -0,0 +1,37 @@
+/* THIS IS A BIT-AUTO-GENERATED FILE. DO NOT EDIT THIS FILE DIRECTLY. */
+
+/**
+ * The Bitmap file is an auto generated file used by Bit to track all your Bit components. It maps the component to a folder in your file system.
+ * This file should be committed to VCS(version control).
+ * Components are listed using their component ID (https://bit.dev/docs/components/component-id).
+ * If you want to delete components you can use the "bit remove <component-id>" command.
+ * See the docs (https://bit.dev/docs/components/removing-components) for more information, or use "bit remove --help".
+ */
+
+{
+    "buttons/js-button": {
+        "scope": "",
+        "version": "",
+        "mainFile": "index.js",
+        "rootDir": "my-scope/buttons/js-button",
+        "config": {
+            "my-org.my-scope/envs/my-react-env": {},
+            "teambit.envs/envs": {
+                "env": "my-org.my-scope/envs/my-react-env"
+            }
+        }
+    },
+    "envs/my-react-env": {
+        "scope": "",
+        "version": "",
+        "defaultScope": "my-org.my-scope",
+        "mainFile": "index.ts",
+        "rootDir": "my-scope/envs/my-react-env",
+        "config": {
+            "teambit.envs/envs": {
+                "env": "teambit.envs/env"
+            }
+        }
+    },
+    "$schema-version": "15.0.0"
+}
diff --git a/e2e/fixtures/workspace-with-tsconfig-issue/.gitignore b/e2e/fixtures/workspace-with-tsconfig-issue/.gitignore
new file mode 100644
index 000000000000..1521c8b7652b
--- /dev/null
+++ b/e2e/fixtures/workspace-with-tsconfig-issue/.gitignore
@@ -0,0 +1 @@
+dist
diff --git a/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/buttons/js-button/index.js b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/buttons/js-button/index.js
new file mode 100644
index 000000000000..18b3cf35acc7
--- /dev/null
+++ b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/buttons/js-button/index.js
@@ -0,0 +1 @@
+export { JsButton } from './js-button';
diff --git a/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/buttons/js-button/js-button.composition.jsx b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/buttons/js-button/js-button.composition.jsx
new file mode 100644
index 000000000000..1c87494d5cc8
--- /dev/null
+++ b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/buttons/js-button/js-button.composition.jsx
@@ -0,0 +1,8 @@
+import React from 'react';
+import { JsButton } from './js-button';
+
+export const BasicJsButton = () => {
+  return (
+    <JsButton>hello world!</JsButton>
+  );
+}
diff --git a/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/buttons/js-button/js-button.jsx b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/buttons/js-button/js-button.jsx
new file mode 100644
index 000000000000..1880c834b6d1
--- /dev/null
+++ b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/buttons/js-button/js-button.jsx
@@ -0,0 +1,9 @@
+import React from 'react';
+
+export function JsButton({ children }) {
+  return (
+    <div>
+      {children}
+    </div>
+  );
+}
diff --git a/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/buttons/js-button/js-button.spec.jsx b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/buttons/js-button/js-button.spec.jsx
new file mode 100644
index 000000000000..5aa659cd0ad2
--- /dev/null
+++ b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/buttons/js-button/js-button.spec.jsx
@@ -0,0 +1,9 @@
+import React from 'react';
+import { render } from '@testing-library/react';
+import { BasicJsButton } from './js-button.composition';
+
+it('should render with the correct text', () => {
+  const { getByText } = render(<BasicJsButton />);
+  const rendered = getByText('hello world!');
+  expect(rendered).toBeTruthy();
+});
diff --git a/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/envs/my-react-env/config/tsconfig.json b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/envs/my-react-env/config/tsconfig.json
new file mode 100644
index 000000000000..8b3abc66c036
--- /dev/null
+++ b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/envs/my-react-env/config/tsconfig.json
@@ -0,0 +1,7 @@
+/**
+ * @see https://bit.dev/reference/typescript/typescript-config
+ */
+{
+  "extends": "@teambit/react.react-env/config/tsconfig.json",
+  "include": ["**/*", "**/*.json"]
+}
diff --git a/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/envs/my-react-env/env.jsonc b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/envs/my-react-env/env.jsonc
new file mode 100644
index 000000000000..d7b5e3c06f91
--- /dev/null
+++ b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/envs/my-react-env/env.jsonc
@@ -0,0 +1,101 @@
+{
+  /**
+   * standardize your component dependencies.
+   * @see https://bit.dev/docs/react-env/dependencies
+   **/
+  "policy": {
+    /**
+     * peer dependencies for components using that env.
+     */
+    "peers": [
+      {
+        "name": "react",
+        /* the version to be installed and used by the env */
+        "version": "^18.0.0",
+        /* the range of versions this env's components are compatible with */
+        "supportedRange": "^17.0.0 || ^18.0.0"
+      },
+      {
+        "name": "react-dom",
+        "version": "^18.0.0",
+        "supportedRange": "^17.0.0 || ^18.0.0"
+      },
+      {
+        "name": "graphql",
+        "version": "14.7.0",
+        "supportedRange": "^14.7.0"
+      },
+      {
+        "name": "react-router-dom",
+        "version": "6.8.1",
+        "supportedRange": "^6.8.1"
+      },
+      {
+        "name": "@mdx-js/react",
+        "version": "1.6.22",
+        "supportedRange": "^1.6.22"
+      },
+      {
+        "name": "@teambit/mdx.ui.mdx-scope-context",
+        "version": "0.0.496",
+        "supportedRange": "^0.0.496"
+      }
+    ],
+    /**
+     * dev dependencies for components using that env
+     */
+    "dev": [
+      {
+        "name": "@types/react",
+        "version": "^18.0.0",
+        /**
+         * hide the dependency from bit's inspection tools.
+         * in most cases, a component should only list its env as a dev dependency
+         */
+        "hidden": true,
+        /* add this dependency to components, even if they don't directly import it */
+        "force": true
+      },
+      {
+        "name": "@types/react-dom",
+        "version": "^18.0.0",
+        "hidden": true,
+        "force": true
+      },
+      {
+        "name": "@types/jest",
+        "version": "^29.2.2",
+        "hidden": true,
+        "force": true
+      },
+      {
+        "name": "@testing-library/react",
+        "version": "^13.4.0"
+      },
+      {
+        "name": "@testing-library/react-hooks",
+        "version": "^8.0.1"
+      }
+    ]
+  },
+
+  /**
+   * associate files with a specific dev service.
+   * associated files are considered as dev files.
+   * @see https://bit.dev/docs/react-env/dependencies#configure-files-as-dev-files
+   **/
+  "patterns": {
+    /**
+     * files to be loaded and displayed in the 'preview' tab.
+     * @see https://bit.dev/docs/react-env/component-previews
+     */
+    "compositions": ["**/*.composition.*", "**/*.preview.*"],
+    /**
+     * files to be loaded and displayed in the 'overview' tab.
+     * @see https://bit.dev/docs/react-env/component-docs
+     */
+    "docs": ["**/*.docs.*"],
+    /* files to be included in the component testing */
+    "tests": ["**/*.spec.*", "**/*.test.*"]
+  }
+}
diff --git a/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/envs/my-react-env/index.ts b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/envs/my-react-env/index.ts
new file mode 100644
index 000000000000..4b1710a85f96
--- /dev/null
+++ b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/envs/my-react-env/index.ts
@@ -0,0 +1,3 @@
+import { MyReactEnv } from './my-react-env.bit-env';
+export { MyReactEnv };
+export default MyReactEnv;
diff --git a/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/envs/my-react-env/my-react-env.bit-env.ts b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/envs/my-react-env/my-react-env.bit-env.ts
new file mode 100644
index 000000000000..39a6b3abc519
--- /dev/null
+++ b/e2e/fixtures/workspace-with-tsconfig-issue/my-scope/envs/my-react-env/my-react-env.bit-env.ts
@@ -0,0 +1,30 @@
+/**
+ * this env extends react-env
+ * @see https://bit.cloud/teambit/react/react-env
+ */
+import { ReactEnv } from '@teambit/react.react-env';
+
+import { Compiler } from '@teambit/compiler';
+import { EnvHandler } from '@teambit/envs';
+import {
+  TypescriptCompiler,
+  resolveTypes,
+} from '@teambit/typescript.typescript-compiler';
+
+export class MyReactEnv extends ReactEnv {
+  /* a shorthand name for the env */
+  name = 'my-react-env';
+
+  /* the compiler to use during development */
+  compiler(): EnvHandler<Compiler> {
+    /**
+     * @see https://bit.dev/reference/typescript/using-typescript
+     * */
+    return TypescriptCompiler.from({
+      tsconfig: require.resolve('./config/tsconfig.json'),
+      types: resolveTypes(__dirname, ['./types']),
+    });
+  }
+}
+
+export default new MyReactEnv();
diff --git a/e2e/fixtures/workspace-with-tsconfig-issue/tsconfig.json b/e2e/fixtures/workspace-with-tsconfig-issue/tsconfig.json
new file mode 100644
index 000000000000..375253ade1a4
--- /dev/null
+++ b/e2e/fixtures/workspace-with-tsconfig-issue/tsconfig.json
@@ -0,0 +1,20 @@
+/**
+ * this is NOT the config for your components.
+ * it is only used by your IDE, for a better development experience.
+ * to change your component compilation, customize your env.
+ * @see https://bit.dev/reference/typescript/typescript-config
+ */
+{
+  "extends": "./node_modules/@teambit/react.react-env/config/tsconfig.json",
+  "compilerOptions": {
+    "noEmit": true,
+    "allowJs": true,
+    "jsx": "react",
+  },
+  "include": [
+    "**/*.js"
+  ],
+  "exclude": [
+    "dist"
+  ]
+}
\ No newline at end of file
diff --git a/e2e/fixtures/workspace-with-tsconfig-issue/workspace.jsonc b/e2e/fixtures/workspace-with-tsconfig-issue/workspace.jsonc
new file mode 100644
index 000000000000..57b349c04cc1
--- /dev/null
+++ b/e2e/fixtures/workspace-with-tsconfig-issue/workspace.jsonc
@@ -0,0 +1,56 @@
+/**
+ * this is the main configuration file of your bit workspace.
+ * for full documentation, please see: https://bit.dev/docs/workspace/workspace-configuration
+ **/{
+  "$schema": "https://static.bit.dev/teambit/schemas/schema.json",
+  /**
+   * main configuration of the Bit workspace.
+   **/
+  "teambit.workspace/workspace": {
+    /**
+     * the name of the component workspace. used for development purposes.
+     **/
+    "name": "my-workspace",
+    /**
+     * set the icon to be shown on the Bit server.
+     **/
+    "icon": "https://static.bit.dev/bit-logo.svg",
+    /**
+     * default directory to place a component during `bit import` and `bit create`.
+     * the following placeholders are available:
+     * name - component name includes namespace, e.g. 'ui/button'.
+     * scopeId - full scope-id includes the owner, e.g. 'teambit.compilation'.
+     * scope - scope name only, e.g. 'compilation'.
+     * owner - owner name in bit.dev, e.g. 'teambit'.
+     **/
+    "defaultDirectory": "{scope}/{name}",
+    /**
+     * default scope for all components in workspace.
+     **/
+    "defaultScope": "my-org.my-scope"
+  },
+  /**
+   * main configuration for component dependency resolution.
+   **/
+  "teambit.dependencies/dependency-resolver": {
+    /**
+     * choose the package manager for Bit to use. you can choose between 'yarn', 'pnpm'
+     */
+    "packageManager": "teambit.dependencies/pnpm",
+    "policy": {
+      "dependencies": {
+        "@teambit/mdx.ui.mdx-scope-context": "0.0.496",
+        "@teambit/react.react-env": "0.0.55",
+        "@teambit/typescript.typescript-compiler": "0.0.7"
+      },
+      "peerDependencies": {}
+    },
+    "linkCoreAspects": true,
+    "rootComponents": true
+  },
+  "teambit.generator/generator": {
+    "envs": [
+      "my-org.my-scope/envs/my-react-env"
+    ]
+  }
+}
diff --git a/e2e/harmony/install-and-compile.e2e.ts b/e2e/harmony/install-and-compile.e2e.ts
index 28f0f9f174c3..eb40810902ea 100644
--- a/e2e/harmony/install-and-compile.e2e.ts
+++ b/e2e/harmony/install-and-compile.e2e.ts
@@ -195,3 +195,15 @@ describe('skipping compilation on install', function () {
     expect(path.join(helper.scopes.localPath, `node_modules/@${helper.scopes.remote}/comp1/dist`)).to.not.be.a.path();
   });
 });
+
+describe('do not fail on environment loading files from a location inside node_modules that does not exist', function () {
+  this.timeout(0);
+  let helper: Helper;
+  before(() => {
+    helper = new Helper();
+    helper.fixtures.copyFixtureDir('workspace-with-tsconfig-issue', helper.scopes.localPath);
+  });
+  it('should not fail', () => {
+    helper.command.install();
+  });
+});
diff --git a/scopes/dependencies/dependency-resolver/dependency-installer.ts b/scopes/dependencies/dependency-resolver/dependency-installer.ts
index 7e04731ae964..6002797c4ae0 100644
--- a/scopes/dependencies/dependency-resolver/dependency-installer.ts
+++ b/scopes/dependencies/dependency-resolver/dependency-installer.ts
@@ -40,6 +40,7 @@ export type InstallOptions = {
   packageManagerConfigRootDir?: string;
   resolveVersionsFromDependenciesOnly?: boolean;
   linkedDependencies?: Record<string, Record<string, string>>;
+  pruneNodeModules?: boolean;
 };
 
 export type GetComponentManifestsOptions = {
@@ -179,6 +180,7 @@ export class DependencyInstaller {
       engineStrict: this.engineStrict,
       packageManagerConfigRootDir: options.packageManagerConfigRootDir,
       peerDependencyRules: this.peerDependencyRules,
+      pruneNodeModules: options.pruneNodeModules,
       hidePackageManagerOutput,
       ...packageManagerOptions,
     };
diff --git a/scopes/dependencies/dependency-resolver/package-manager.ts b/scopes/dependencies/dependency-resolver/package-manager.ts
index 0e4cd7c84268..07c9b9d6b443 100644
--- a/scopes/dependencies/dependency-resolver/package-manager.ts
+++ b/scopes/dependencies/dependency-resolver/package-manager.ts
@@ -53,6 +53,8 @@ export type PackageManagerInstallOptions = {
   updateAll?: boolean;
 
   hidePackageManagerOutput?: boolean;
+
+  pruneNodeModules?: boolean;
 };
 
 export type PackageManagerGetPeerDependencyIssuesOptions = PackageManagerInstallOptions;
diff --git a/scopes/dependencies/pnpm/lynx.ts b/scopes/dependencies/pnpm/lynx.ts
index 2bf295cbed1f..8206e0aab3a9 100644
--- a/scopes/dependencies/pnpm/lynx.ts
+++ b/scopes/dependencies/pnpm/lynx.ts
@@ -166,6 +166,7 @@ export async function install(
     updateAll?: boolean;
     nodeLinker?: 'hoisted' | 'isolated';
     overrides?: Record<string, string>;
+    pruneNodeModules?: boolean;
     rootComponents?: boolean;
     rootComponentsForCapsules?: boolean;
     includeOptionalDeps?: boolean;
@@ -225,7 +226,7 @@ export async function install(
     workspacePackages,
     preferFrozenLockfile: true,
     pruneLockfileImporters: true,
-    modulesCacheMaxAge: 0,
+    modulesCacheMaxAge: options.pruneNodeModules ? 0 : undefined,
     neverBuiltDependencies: ['core-js'],
     registries: registriesMap,
     resolutionMode: 'highest',
diff --git a/scopes/dependencies/pnpm/pnpm.package-manager.ts b/scopes/dependencies/pnpm/pnpm.package-manager.ts
index 4ceb0f13cad5..d46ad0105ed5 100644
--- a/scopes/dependencies/pnpm/pnpm.package-manager.ts
+++ b/scopes/dependencies/pnpm/pnpm.package-manager.ts
@@ -74,6 +74,7 @@ export class PnpmPackageManager implements PackageManager {
         sideEffectsCacheRead: installOptions.sideEffectsCache ?? true,
         sideEffectsCacheWrite: installOptions.sideEffectsCache ?? true,
         pnpmHomeDir: config.pnpmHomeDir,
+        pruneNodeModules: installOptions.pruneNodeModules,
         updateAll: installOptions.updateAll,
         hidePackageManagerOutput: installOptions.hidePackageManagerOutput,
       },
diff --git a/scopes/workspace/install/install.main.runtime.ts b/scopes/workspace/install/install.main.runtime.ts
index d191d3f3e89e..cc25d9a62faa 100644
--- a/scopes/workspace/install/install.main.runtime.ts
+++ b/scopes/workspace/install/install.main.runtime.ts
@@ -247,7 +247,12 @@ export class InstallMain {
         current.manifests,
         mergedRootPolicy,
         current.componentDirectoryMap,
-        { installTeambitBit: false },
+        {
+          installTeambitBit: false,
+          // We clean node_modules only on the first install.
+          // Otherwise, we might load an env from a location that we later remove.
+          pruneNodeModules: installCycle === 0,
+        },
         pmInstallOptions
       );
       // Core aspects should be relinked after installation because Yarn removes all symlinks created not by Yarn.