diff --git a/packages/core/__tests__/config/load-config.test.ts b/packages/core/__tests__/config/load-config.test.ts
index ddc2e2d2a..f279cbfdc 100644
--- a/packages/core/__tests__/config/load-config.test.ts
+++ b/packages/core/__tests__/config/load-config.test.ts
@@ -1,8 +1,9 @@
 import * as fs from 'node:fs';
 import * as os from 'node:os';
-import { describe, beforeEach, afterEach, test, expect } from 'vitest';
+import { describe, beforeEach, afterEach, test, expect, vi } from 'vitest';
 import { loadConfig } from '../../src/config/index.js';
 import { normalizePath } from '../../src/config/config.js';
+import { require } from '../../src/config/loader.js';
 
 describe('Config: loadConfig', () => {
   const testDir = `${os.tmpdir()}/glint-config-test-load-config-${process.pid}`;
@@ -51,4 +52,49 @@ describe('Config: loadConfig', () => {
     expect(config.environment.getConfiguredTemplateTags()).toEqual({ test: {} });
     expect(config.checkStandaloneTemplates).toBe(false);
   });
+
+  test('locates config in package', () => {
+    const directory = `${testDir}/package-glint-config`;
+    const nodeModulePackageDir = `${directory}/node_modules/@package1`;
+
+    vi.spyOn(require, 'resolve').mockImplementation((id: string | undefined) => {
+      if (id === '@package1/tsconfig.json') {
+        return id.replace('@package1', nodeModulePackageDir);
+      }
+      throw Error(`Cannot resolve module ${id}`);
+    });
+
+    fs.mkdirSync(nodeModulePackageDir, { recursive: true });
+    fs.writeFileSync(
+      `${nodeModulePackageDir}/package.json`,
+      JSON.stringify({
+        name: '@package1',
+        version: '1.0.0',
+      }),
+    );
+    fs.writeFileSync(
+      `${nodeModulePackageDir}/tsconfig.json`,
+      JSON.stringify({
+        glint: {
+          environment: 'kaboom',
+          checkStandaloneTemplates: false,
+        },
+      }),
+    );
+    fs.writeFileSync(
+      `${directory}/tsconfig.json`,
+      JSON.stringify({
+        extends: '@package1/tsconfig.json',
+        glint: {
+          environment: '../local-env',
+        },
+      }),
+    );
+
+    let config = loadConfig(`${directory}`);
+
+    expect(config.rootDir).toBe(normalizePath(`${directory}`));
+    expect(config.environment.getConfiguredTemplateTags()).toEqual({ test: {} });
+    expect(config.checkStandaloneTemplates).toBe(false);
+  });
 });
diff --git a/packages/core/src/config/loader.ts b/packages/core/src/config/loader.ts
index 8f1ad479c..48893dab8 100644
--- a/packages/core/src/config/loader.ts
+++ b/packages/core/src/config/loader.ts
@@ -1,11 +1,17 @@
 import { createRequire } from 'node:module';
 import * as path from 'node:path';
+import * as fs from 'node:fs';
 import SilentError from 'silent-error';
 import { GlintConfig } from './config.js';
 import { GlintConfigInput } from '@glint/core/config-types';
 import type TS from 'typescript';
 
-const require = createRequire(import.meta.url);
+/**
+ * @private
+ *
+ * Only exported for testing purposes. Do not import.
+ */
+export const require = createRequire(import.meta.url);
 
 type TypeScript = typeof TS;
 
@@ -75,8 +81,15 @@ function loadConfigInput(ts: TypeScript, entryPath: string): GlintConfigInput |
     );
 
     fullGlintConfig = { ...currentGlintConfig, ...fullGlintConfig };
-    currentPath =
-      currentContents.extends && path.resolve(path.dirname(currentPath), currentContents.extends);
+
+    if (currentContents.extends) {
+      currentPath = path.resolve(path.dirname(currentPath), currentContents.extends);
+      if (!fs.existsSync(currentPath)) {
+        currentPath = require.resolve(currentContents.extends);
+      }
+    } else {
+      currentPath = undefined;
+    }
   }
 
   return validateConfigInput(fullGlintConfig);