diff --git a/npm/webpack-dev-server/src/helpers/angularHandler.ts b/npm/webpack-dev-server/src/helpers/angularHandler.ts
index 0ef004aba0ca..0daa2d355d7f 100644
--- a/npm/webpack-dev-server/src/helpers/angularHandler.ts
+++ b/npm/webpack-dev-server/src/helpers/angularHandler.ts
@@ -133,7 +133,7 @@ export async function generateTsConfig (devServerConfig: AngularWebpackDevServer
   includePaths.push(cypressTypes)
 
   const tsConfigContent = JSON.stringify({
-    extends: getProjectFilePath('tsconfig.json'),
+    extends: getProjectFilePath(buildOptions.tsConfig ?? 'tsconfig.json'),
     compilerOptions: {
       outDir: getProjectFilePath('out-tsc/cy'),
       allowSyntheticDefaultImports: true,
diff --git a/npm/webpack-dev-server/test/handlers/angularHandler.spec.ts b/npm/webpack-dev-server/test/handlers/angularHandler.spec.ts
index 02ef0a9fef58..6aac320eb345 100644
--- a/npm/webpack-dev-server/test/handlers/angularHandler.spec.ts
+++ b/npm/webpack-dev-server/test/handlers/angularHandler.spec.ts
@@ -195,7 +195,8 @@ const expectGeneratesTsConfig = async (devServerConfig: AngularWebpackDevServerC
   let tsConfig = JSON.parse(await fs.readFile(tsConfigPath, 'utf8'))
 
   expect(tsConfig).to.deep.eq({
-    extends: toPosix(path.join(projectRoot, 'tsconfig.json')),
+    // verifies the default `tsconfig.app.json` is extended
+    extends: toPosix(path.join(projectRoot, 'tsconfig.app.json')),
     compilerOptions: {
       outDir: toPosix(path.join(projectRoot, 'out-tsc/cy')),
       allowSyntheticDefaultImports: true,
@@ -211,6 +212,7 @@ const expectGeneratesTsConfig = async (devServerConfig: AngularWebpackDevServerC
   const modifiedBuildOptions = cloneDeep(buildOptions)
 
   delete modifiedBuildOptions.polyfills
+  modifiedBuildOptions.tsConfig = 'tsconfig.cy.json'
 
   const modifiedDevServerConfig = cloneDeep(devServerConfig)
   const supportFile = path.join(projectRoot, 'cypress', 'support', 'component.ts')
@@ -220,9 +222,18 @@ const expectGeneratesTsConfig = async (devServerConfig: AngularWebpackDevServerC
   tsConfigPath = await generateTsConfig(modifiedDevServerConfig, modifiedBuildOptions)
   tsConfig = JSON.parse(await fs.readFile(tsConfigPath, 'utf8'))
 
-  expect(tsConfig.include).to.deep.equal([
-    toPosix(path.join(projectRoot, 'src/**/*.cy.ts')),
-    toPosix(supportFile),
-    toPosix(path.join(projectRoot, 'node_modules/cypress/types/index.d.ts')),
-  ])
+  expect(tsConfig).to.deep.eq({
+    // verifies the custom `tsconfig.cy.json` is extended
+    extends: toPosix(path.join(projectRoot, 'tsconfig.cy.json')),
+    compilerOptions: {
+      outDir: toPosix(path.join(projectRoot, 'out-tsc/cy')),
+      allowSyntheticDefaultImports: true,
+      skipLibCheck: true,
+    },
+    include: [
+      toPosix(path.join(projectRoot, 'src/**/*.cy.ts')),
+      toPosix(supportFile),
+      toPosix(path.join(projectRoot, 'node_modules/cypress/types/index.d.ts')),
+    ],
+  })
 }