diff --git a/src/index.js b/src/index.js
index 081e9f9..944d790 100644
--- a/src/index.js
+++ b/src/index.js
@@ -94,7 +94,7 @@ export default async function microbundle(options) {
 		.concat(
 			options.entries && options.entries.length
 				? options.entries
-				: options.pkg.source ||
+				: (options.pkg.source && resolve(cwd, options.pkg.source)) ||
 				  ((await isDir(resolve(cwd, 'src'))) && (await jsOrTs('src/index'))) ||
 				  (await jsOrTs('index')) ||
 				  options.pkg.module,
diff --git a/test/__snapshots__/index.test.js.snap b/test/__snapshots__/index.test.js.snap
index 3e93682..e1c6140 100644
--- a/test/__snapshots__/index.test.js.snap
+++ b/test/__snapshots__/index.test.js.snap
@@ -105,6 +105,85 @@ Build \\"basicLibTsx\\" to dist:
 295 B: basic-lib-tsx.umd.js"
 `;
 
+exports[`fixtures basic-with-cwd 1`] = `
+"Used script: microbundle --cwd ./basic
+
+Directory tree:
+
+basic-with-cwd
+  basic
+    dist
+      basic.js
+      basic.js.map
+      basic.mjs
+      basic.mjs.map
+      basic.umd.js
+      basic.umd.js.map
+    package.json
+    src
+      index.js
+      two.js
+  package.json
+
+
+Build \\"basic\\" to dist:
+211 B: basic.js
+211 B: basic.mjs
+287 B: basic.umd.js"
+`;
+
+exports[`fixtures custom-source 1`] = `
+"Used script: microbundle
+
+Directory tree:
+
+custom-source
+  dist
+    custom-source.js
+    custom-source.js.map
+    custom-source.mjs
+    custom-source.mjs.map
+    custom-source.umd.js
+    custom-source.umd.js.map
+  package.json
+  src
+    custom-source.js
+    two.js
+
+
+Build \\"customSource\\" to dist:
+211 B: custom-source.js
+211 B: custom-source.mjs
+293 B: custom-source.umd.js"
+`;
+
+exports[`fixtures custom-source-with-cwd 1`] = `
+"Used script: microbundle --cwd ./custom-source
+
+Directory tree:
+
+custom-source-with-cwd
+  custom-source
+    dist
+      custom-src.js
+      custom-src.js.map
+      custom-src.mjs
+      custom-src.mjs.map
+      custom-src.umd.js
+      custom-src.umd.js.map
+    package.json
+    src
+      custom-source.js
+      two.js
+  package.json
+
+
+Build \\"customSrc\\" to dist:
+211 B: custom-src.js
+211 B: custom-src.mjs
+291 B: custom-src.umd.js"
+`;
+
 exports[`fixtures jsx 1`] = `
 "Used script: microbundle
 
diff --git a/test/fixtures/basic-with-cwd/basic/package.json b/test/fixtures/basic-with-cwd/basic/package.json
new file mode 100644
index 0000000..d1949ef
--- /dev/null
+++ b/test/fixtures/basic-with-cwd/basic/package.json
@@ -0,0 +1,3 @@
+{
+  "name": "basic"
+}
diff --git a/test/fixtures/basic-with-cwd/basic/src/index.js b/test/fixtures/basic-with-cwd/basic/src/index.js
new file mode 100644
index 0000000..a756a0a
--- /dev/null
+++ b/test/fixtures/basic-with-cwd/basic/src/index.js
@@ -0,0 +1,5 @@
+import { two } from './two';
+
+export default async function(...args) {
+	return [await two(...args), await two(...args)];
+}
diff --git a/test/fixtures/basic-with-cwd/basic/src/two.js b/test/fixtures/basic-with-cwd/basic/src/two.js
new file mode 100644
index 0000000..9f1f741
--- /dev/null
+++ b/test/fixtures/basic-with-cwd/basic/src/two.js
@@ -0,0 +1,3 @@
+export async function two(...args) {
+	return args.reduce((total, value) => total + value, 0);
+}
diff --git a/test/fixtures/basic-with-cwd/package.json b/test/fixtures/basic-with-cwd/package.json
new file mode 100644
index 0000000..c0f4418
--- /dev/null
+++ b/test/fixtures/basic-with-cwd/package.json
@@ -0,0 +1,6 @@
+{
+  "name": "basic-with-cwd",
+  "scripts": {
+    "build": "microbundle --cwd ./basic"
+  }
+}
diff --git a/test/fixtures/custom-source-with-cwd/custom-source/package.json b/test/fixtures/custom-source-with-cwd/custom-source/package.json
new file mode 100644
index 0000000..d966cf2
--- /dev/null
+++ b/test/fixtures/custom-source-with-cwd/custom-source/package.json
@@ -0,0 +1,4 @@
+{
+  "name": "custom-src",
+  "source": "src/custom-source.js"
+}
diff --git a/test/fixtures/custom-source-with-cwd/custom-source/src/custom-source.js b/test/fixtures/custom-source-with-cwd/custom-source/src/custom-source.js
new file mode 100644
index 0000000..a756a0a
--- /dev/null
+++ b/test/fixtures/custom-source-with-cwd/custom-source/src/custom-source.js
@@ -0,0 +1,5 @@
+import { two } from './two';
+
+export default async function(...args) {
+	return [await two(...args), await two(...args)];
+}
diff --git a/test/fixtures/custom-source-with-cwd/custom-source/src/two.js b/test/fixtures/custom-source-with-cwd/custom-source/src/two.js
new file mode 100644
index 0000000..9f1f741
--- /dev/null
+++ b/test/fixtures/custom-source-with-cwd/custom-source/src/two.js
@@ -0,0 +1,3 @@
+export async function two(...args) {
+	return args.reduce((total, value) => total + value, 0);
+}
diff --git a/test/fixtures/custom-source-with-cwd/package.json b/test/fixtures/custom-source-with-cwd/package.json
new file mode 100644
index 0000000..7ec564d
--- /dev/null
+++ b/test/fixtures/custom-source-with-cwd/package.json
@@ -0,0 +1,6 @@
+{
+  "name": "custom-source-with-cwd",
+  "scripts": {
+    "build": "microbundle --cwd ./custom-source"
+  }
+}
diff --git a/test/fixtures/custom-source/package.json b/test/fixtures/custom-source/package.json
new file mode 100644
index 0000000..b83de40
--- /dev/null
+++ b/test/fixtures/custom-source/package.json
@@ -0,0 +1,4 @@
+{
+  "name": "custom-source",
+  "source": "src/custom-source.js"
+}
diff --git a/test/fixtures/custom-source/src/custom-source.js b/test/fixtures/custom-source/src/custom-source.js
new file mode 100644
index 0000000..a756a0a
--- /dev/null
+++ b/test/fixtures/custom-source/src/custom-source.js
@@ -0,0 +1,5 @@
+import { two } from './two';
+
+export default async function(...args) {
+	return [await two(...args), await two(...args)];
+}
diff --git a/test/fixtures/custom-source/src/two.js b/test/fixtures/custom-source/src/two.js
new file mode 100644
index 0000000..9f1f741
--- /dev/null
+++ b/test/fixtures/custom-source/src/two.js
@@ -0,0 +1,3 @@
+export async function two(...args) {
+	return args.reduce((total, value) => total + value, 0);
+}