diff --git a/docs/src/test-typescript-js.md b/docs/src/test-typescript-js.md
index 8000d90f2ee1c..6a83c061173e6 100644
--- a/docs/src/test-typescript-js.md
+++ b/docs/src/test-typescript-js.md
@@ -28,7 +28,7 @@ npx tsc -p tsconfig.json --noEmit -w
 
 ## tsconfig.json
 
-Playwright will pick up `tsconfig.json` for each source file it loads. Note that Playwright **only supports** the following tsconfig options: `allowJs`, `baseUrl`, `paths` and `references`.
+Playwright will pick up `tsconfig.json` for each source file it loads. Note that Playwright **only supports** the following tsconfig options: `allowJs`, `baseUrl`, `paths`, `references` and `extends`.
 
 We recommend setting up a separate `tsconfig.json` in the tests directory so that you can change some preferences specifically for the tests. Here is an example directory structure.
 
diff --git a/packages/playwright/src/transform/tsconfig-loader.ts b/packages/playwright/src/transform/tsconfig-loader.ts
index 7345fe4e0fd66..3dc9d7e89d9fb 100644
--- a/packages/playwright/src/transform/tsconfig-loader.ts
+++ b/packages/playwright/src/transform/tsconfig-loader.ts
@@ -61,7 +61,8 @@ export function loadTsConfig(configPath: string): LoadedTsConfig[] {
   }
 }
 
-function resolveConfigFile(baseConfigFile: string, referencedConfigFile: string) {
+function resolveConfigFile(baseConfigFile: string, referencedConfigFile: string, kind: 'extends' | 'references') {
+  const originalReferencedConfigFile = referencedConfigFile;
   if (!referencedConfigFile.endsWith('.json'))
     referencedConfigFile += '.json';
   const currentDir = path.dirname(baseConfigFile);
@@ -69,6 +70,8 @@ function resolveConfigFile(baseConfigFile: string, referencedConfigFile: string)
   // TODO: I don't see how this makes sense, delete in the next minor release.
   if (referencedConfigFile.includes('/') && referencedConfigFile.includes('.') && !fs.existsSync(resolvedConfigFile))
     resolvedConfigFile = path.join(currentDir, 'node_modules', referencedConfigFile);
+  if (!fs.existsSync(resolvedConfigFile))
+    throw new Error(`Failed to resolve "${kind}" path "${originalReferencedConfigFile}" referenced from ${baseConfigFile}`);
   return resolvedConfigFile;
 }
 
@@ -95,7 +98,7 @@ function innerLoadTsConfig(
 
   const extendsArray = Array.isArray(parsedConfig.extends) ? parsedConfig.extends : (parsedConfig.extends ? [parsedConfig.extends] : []);
   for (const extendedConfig of extendsArray) {
-    const extendedConfigPath = resolveConfigFile(configFilePath, extendedConfig);
+    const extendedConfigPath = resolveConfigFile(configFilePath, extendedConfig, 'extends');
     const base = innerLoadTsConfig(extendedConfigPath, references, visited);
     // Retain result instance, so that caching works.
     Object.assign(result, base, { tsConfigPath: configFilePath });
@@ -120,7 +123,7 @@ function innerLoadTsConfig(
   }
 
   for (const ref of parsedConfig.references || [])
-    references.push(innerLoadTsConfig(resolveConfigFile(configFilePath, ref.path), references, visited));
+    references.push(innerLoadTsConfig(resolveConfigFile(configFilePath, ref.path, 'references'), references, visited));
 
   if (path.basename(configFilePath) === 'jsconfig.json' && result.allowJs === undefined)
     result.allowJs = true;
diff --git a/tests/playwright-test/resolver.spec.ts b/tests/playwright-test/resolver.spec.ts
index 0c4de8a501bae..765897bbe67fd 100644
--- a/tests/playwright-test/resolver.spec.ts
+++ b/tests/playwright-test/resolver.spec.ts
@@ -587,6 +587,43 @@ test('should resolve paths relative to the originating config when extending and
   expect(result.exitCode).toBe(0);
 });
 
+test('should fail loudly when extends path cannot be resolved', async ({ runInlineTest }) => {
+  test.info().annotations.push({ type: 'issue', description: 'https://github.com/microsoft/playwright/issues/41543' });
+
+  const result = await runInlineTest({
+    'tsconfig.json': `{
+      "extends": "./tsconfig.bas.json",
+    }`,
+    'a.test.ts': `
+      import { test, expect } from '@playwright/test';
+      test('test', () => {});
+    `,
+  });
+
+  expect(result.exitCode).toBe(1);
+  expect(result.output).toContain('Failed to resolve "extends" path "./tsconfig.bas.json"');
+});
+
+test('should fail loudly when references path cannot be resolved', async ({ runInlineTest }) => {
+  test.info().annotations.push({ type: 'issue', description: 'https://github.com/microsoft/playwright/issues/41543' });
+
+  const result = await runInlineTest({
+    'tsconfig.json': `{
+      "files": [],
+      "references": [
+        { "path": "./tsconfig.doesnotexist.json" }
+      ]
+    }`,
+    'a.test.ts': `
+      import { test, expect } from '@playwright/test';
+      test('test', () => {});
+    `,
+  });
+
+  expect(result.exitCode).toBe(1);
+  expect(result.output).toContain('Failed to resolve "references" path "./tsconfig.doesnotexist.json"');
+});
+
 test('should respect tsconfig project references', async ({ runInlineTest }) => {
   test.info().annotations.push({ type: 'issue', description: 'https://github.com/microsoft/playwright/issues/29256' });
 
@@ -599,6 +636,9 @@ test('should respect tsconfig project references', async ({ runInlineTest }) =>
         { "path": "./tsconfig.test.json" }
       ]
     }`,
+    'tsconfig.app.json': `{
+      "compilerOptions": {},
+    }`,
     'tsconfig.test.json': `{
       "compilerOptions": {
         "baseUrl": ".",