diff --git a/SCAFFOLDING.md b/SCAFFOLDING.md
index c428f5bea43..359badf91ad 100644
--- a/SCAFFOLDING.md
+++ b/SCAFFOLDING.md
@@ -14,7 +14,12 @@ Before writing a `webpack-cli` scaffold, think about what you're trying to achie
 
 ## webpack-addons-yourpackage
 
-In order for `webpack-cli` to compile your package, it relies on a prefix of `webpack-addons`. The package must also be published on npm. If you are curious about how you can create your very own `addon`, please read [How do I compose a webpack-addon?](https://github.com/ev1stensberg/webpack-addons-demo).
+In order for `webpack-cli` to compile your package, it must be available on npm or on your local filesystem. If you are curious about how you can create your very own `addon`, please read [How do I compose a
+webpack-addon?](https://github.com/ev1stensberg/webpack-addons-demo).
+
+If the package is on npm, its name must have a prefix of `webpack-addons`.
+
+If the package is on your local filesystem, it can be named whatever you want. Pass the path to the package.
 
 ## API
 
diff --git a/lib/utils/is-local-path.js b/lib/utils/is-local-path.js
new file mode 100644
index 00000000000..af17d590594
--- /dev/null
+++ b/lib/utils/is-local-path.js
@@ -0,0 +1,19 @@
+"use strict";
+
+const fs = require("fs");
+const path = require("path");
+
+/**
+ * Attempts to detect whether the string is a local path regardless of its
+ * existence by checking its format. The point is to distinguish between
+ * paths and modules on the npm registry. This will fail for non-existent
+ * local Windows paths that begin with a drive letter, e.g. C:..\generator.js,
+ * but will succeed for any existing files and any absolute paths.
+ *
+ * @param {String} str - string to check
+ * @returns {Boolean} whether the string could be a path to a local file or directory
+ */
+
+module.exports = function(str) {
+	return path.isAbsolute(str) || /^\./.test(str) || fs.existsSync(str);
+};
diff --git a/lib/utils/is-local-path.spec.js b/lib/utils/is-local-path.spec.js
new file mode 100644
index 00000000000..32acbaf8384
--- /dev/null
+++ b/lib/utils/is-local-path.spec.js
@@ -0,0 +1,24 @@
+"use strict";
+
+const isLocalPath = require("./is-local-path");
+const path = require("path");
+
+describe("is-local-path", () => {
+	it("returns true for paths beginning in the current directory", () => {
+		const p = path.resolve(".", "test", "dir");
+		expect(isLocalPath(p)).toBe(true);
+	});
+
+	it("returns true for absolute paths", () => {
+		const p = path.join("/", "test", "dir");
+		expect(isLocalPath(p)).toBe(true);
+	});
+
+	it("returns false for npm packages names", () => {
+		expect(isLocalPath("webpack-addons-ylvis")).toBe(false);
+	});
+
+	it("returns false for scoped npm package names", () => {
+		expect(isLocalPath("@webpack/test")).toBe(false);
+	});
+});
diff --git a/lib/utils/npm-packages-exists.js b/lib/utils/npm-packages-exists.js
index 65c38e80eaa..fccc1c25e7a 100644
--- a/lib/utils/npm-packages-exists.js
+++ b/lib/utils/npm-packages-exists.js
@@ -1,8 +1,11 @@
 "use strict";
 const chalk = require("chalk");
+const isLocalPath = require("./is-local-path");
 const npmExists = require("./npm-exists");
 const resolvePackages = require("./resolve-packages").resolvePackages;
 
+const WEBPACK_ADDON_PREFIX = "webpack-addons";
+
 /**
  *
  * Loops through an array and checks if a package is registered
@@ -14,21 +17,38 @@ const resolvePackages = require("./resolve-packages").resolvePackages;
 
 module.exports = function npmPackagesExists(pkg) {
 	let acceptedPackages = [];
+
+	function resolvePackagesIfReady() {
+		if (acceptedPackages.length === pkg.length)
+			return resolvePackages(acceptedPackages);
+	}
+
 	pkg.forEach(addon => {
-		//eslint-disable-next-line
-		if (addon.length <= 14 || addon.slice(0, 14) !== "webpack-addons") {
+		if (isLocalPath(addon)) {
+			// If the addon is a path to a local folder, no name validation is necessary.
+			acceptedPackages.push(addon);
+			resolvePackagesIfReady();
+			return;
+		}
+
+		// The addon is on npm; validate name and existence
+		if (
+			addon.length <= WEBPACK_ADDON_PREFIX.length ||
+			addon.slice(0, WEBPACK_ADDON_PREFIX.length) !== WEBPACK_ADDON_PREFIX
+		) {
 			throw new TypeError(
 				chalk.bold(`${addon} isn't a valid name.\n`) +
 					chalk.red(
-						"\nIt should be prefixed with 'webpack-addons', but have different suffix.\n"
+						`\nIt should be prefixed with '${WEBPACK_ADDON_PREFIX}', but have different suffix.\n`
 					)
 			);
 		}
+
 		npmExists(addon)
 			.then(moduleExists => {
 				if (!moduleExists) {
 					Error.stackTraceLimit = 0;
-					throw new TypeError("Package isn't registered on npm.");
+					throw new TypeError(`Cannot resolve location of package ${addon}.`);
 				}
 				if (moduleExists) {
 					acceptedPackages.push(addon);
@@ -38,9 +58,6 @@ module.exports = function npmPackagesExists(pkg) {
 				console.error(err.stack || err);
 				process.exit(0);
 			})
-			.then(_ => {
-				if (acceptedPackages.length === pkg.length)
-					return resolvePackages(acceptedPackages);
-			});
+			.then(resolvePackagesIfReady);
 	});
 };
diff --git a/lib/utils/npm-packages-exists.spec.js b/lib/utils/npm-packages-exists.spec.js
new file mode 100644
index 00000000000..784f700502e
--- /dev/null
+++ b/lib/utils/npm-packages-exists.spec.js
@@ -0,0 +1,36 @@
+const npmPackagesExists = require("./npm-packages-exists");
+
+jest.mock("./npm-exists");
+jest.mock("./resolve-packages");
+
+const mockResolvePackages = require("./resolve-packages").resolvePackages;
+
+describe("npmPackagesExists", () => {
+	test("resolves packages when they are available on the local filesystem", () => {
+		npmPackagesExists(["./testpkg"]);
+		expect(
+			mockResolvePackages.mock.calls[
+				mockResolvePackages.mock.calls.length - 1
+			][0]
+		).toEqual(["./testpkg"]);
+	});
+
+	test("throws a TypeError when an npm package name doesn't include the prefix", () => {
+		expect(() => npmPackagesExists(["my-webpack-addon"])).toThrowError(
+			TypeError
+		);
+	});
+
+	test("resolves packages when they are available on npm", done => {
+		require("./npm-exists").mockImplementation(() => Promise.resolve(true));
+		npmPackagesExists(["webpack-addons-foobar"]);
+		setTimeout(() => {
+			expect(
+				mockResolvePackages.mock.calls[
+					mockResolvePackages.mock.calls.length - 1
+				][0]
+			).toEqual(["webpack-addons-foobar"]);
+			done();
+		}, 10);
+	});
+});
diff --git a/lib/utils/package-manager.js b/lib/utils/package-manager.js
index 4f2fead6d56..415eafef016 100644
--- a/lib/utils/package-manager.js
+++ b/lib/utils/package-manager.js
@@ -48,7 +48,8 @@ function spawnYarn(pkg, isNew) {
  */
 
 function spawnChild(pkg) {
-	const pkgPath = path.resolve(globalPath, pkg);
+	const rootPath = getPathToGlobalPackages();
+	const pkgPath = path.resolve(rootPath, pkg);
 	const packageManager = getPackageManager();
 	const isNew = !fs.existsSync(pkgPath);
 
@@ -71,7 +72,34 @@ function getPackageManager() {
 	return "yarn";
 }
 
+/**
+ *
+ * Returns the path to globally installed
+ * npm packages, depending on the available
+ * package manager determined by `getPackageManager`
+ *
+ * @returns {String} path - Path to global node_modules folder
+ */
+function getPathToGlobalPackages() {
+	const manager = getPackageManager();
+
+	if (manager === "yarn") {
+		try {
+			const yarnDir = spawn
+				.sync("yarn", ["global", "dir"])
+				.stdout.toString()
+				.trim();
+			return path.join(yarnDir, "node_modules");
+		} catch (e) {
+			// Default to the global npm path below
+		}
+	}
+
+	return globalPath;
+}
+
 module.exports = {
 	getPackageManager,
+	getPathToGlobalPackages,
 	spawnChild
 };
diff --git a/lib/utils/package-manager.spec.js b/lib/utils/package-manager.spec.js
index e45b920fb4a..c99fa0bbf79 100644
--- a/lib/utils/package-manager.spec.js
+++ b/lib/utils/package-manager.spec.js
@@ -1,5 +1,7 @@
 "use strict";
 
+const path = require("path");
+
 jest.mock("cross-spawn");
 jest.mock("fs");
 
@@ -27,6 +29,11 @@ describe("package-manager", () => {
 		);
 	}
 
+	function mockSpawnErrorTwice() {
+		mockSpawnErrorOnce();
+		mockSpawnErrorOnce();
+	}
+
 	spawn.sync.mockReturnValue(defaultSyncResult);
 
 	it("should return 'yarn' from getPackageManager if it's installed", () => {
@@ -65,7 +72,7 @@ describe("package-manager", () => {
 	it("should spawn npm install from spawnChild", () => {
 		const packageName = "some-pkg";
 
-		mockSpawnErrorOnce();
+		mockSpawnErrorTwice();
 		packageManager.spawnChild(packageName);
 		expect(spawn.sync).toHaveBeenLastCalledWith(
 			"npm",
@@ -77,7 +84,7 @@ describe("package-manager", () => {
 	it("should spawn npm update from spawnChild", () => {
 		const packageName = "some-pkg";
 
-		mockSpawnErrorOnce();
+		mockSpawnErrorTwice();
 		fs.existsSync.mockReturnValueOnce(true);
 
 		packageManager.spawnChild(packageName);
@@ -87,4 +94,25 @@ describe("package-manager", () => {
 			{ stdio: "inherit" }
 		);
 	});
+
+	it("should return the yarn global dir from getPathToGlobalPackages if yarn is installed", () => {
+		const yarnDir = "/Users/test/.config/yarn/global";
+		// Mock confirmation that yarn is installed
+		spawn.sync.mockReturnValueOnce(defaultSyncResult);
+		// Mock stdout of `yarn global dir`
+		spawn.sync.mockReturnValueOnce({
+			stdout: {
+				toString: () => `${yarnDir}\n`
+			}
+		});
+		const globalPath = packageManager.getPathToGlobalPackages();
+		const expected = path.join(yarnDir, "node_modules");
+		expect(globalPath).toBe(expected);
+	});
+
+	it("should return the npm global dir from getPathToGlobalPackages if yarn is not installed", () => {
+		mockSpawnErrorOnce();
+		const globalPath = packageManager.getPathToGlobalPackages();
+		expect(globalPath).toBe(require("global-modules"));
+	});
 });
diff --git a/lib/utils/resolve-packages.js b/lib/utils/resolve-packages.js
index b937a4ee43b..7ed4fb2b582 100644
--- a/lib/utils/resolve-packages.js
+++ b/lib/utils/resolve-packages.js
@@ -2,10 +2,12 @@
 
 const path = require("path");
 const chalk = require("chalk");
-const globalPath = require("global-modules");
 
 const creator = require("../init/index").creator;
 
+const getPathToGlobalPackages = require("./package-manager")
+	.getPathToGlobalPackages;
+const isLocalPath = require("./is-local-path");
 const spawnChild = require("./package-manager").spawnChild;
 
 /**
@@ -41,10 +43,36 @@ function resolvePackages(pkg) {
 
 	let packageLocations = [];
 
+	function invokeGeneratorIfReady() {
+		if (packageLocations.length === pkg.length)
+			return creator(packageLocations);
+	}
+
 	pkg.forEach(addon => {
+		// Resolve paths to modules on local filesystem
+		if (isLocalPath(addon)) {
+			let absolutePath = addon;
+
+			try {
+				absolutePath = path.resolve(process.cwd(), addon);
+				require.resolve(absolutePath);
+				packageLocations.push(absolutePath);
+			} catch (err) {
+				console.log(`Cannot find a generator at ${absolutePath}.`);
+				console.log("\nReason:\n");
+				console.error(chalk.bold.red(err));
+				process.exitCode = 1;
+			}
+
+			invokeGeneratorIfReady();
+			return;
+		}
+
+		// Resolve modules on npm registry
 		processPromise(spawnChild(addon))
 			.then(_ => {
 				try {
+					const globalPath = getPathToGlobalPackages();
 					packageLocations.push(path.resolve(globalPath, addon));
 				} catch (err) {
 					console.log("Package wasn't validated correctly..");
@@ -55,15 +83,12 @@ function resolvePackages(pkg) {
 				}
 			})
 			.catch(err => {
-				console.log("Package Couldn't be installed, aborting..");
+				console.log("Package couldn't be installed, aborting..");
 				console.log("\nReason: \n");
 				console.error(chalk.bold.red(err));
 				process.exitCode = 1;
 			})
-			.then(_ => {
-				if (packageLocations.length === pkg.length)
-					return creator(packageLocations);
-			});
+			.then(invokeGeneratorIfReady);
 	});
 }