diff --git a/packages/node-resolve/.eslintignore b/packages/node-resolve/.eslintignore
index 97ee4d3c2..360732235 100644
--- a/packages/node-resolve/.eslintignore
+++ b/packages/node-resolve/.eslintignore
@@ -1 +1 @@
-test/fixtures/node_modules
+test/fixtures/**/node_modules
diff --git a/packages/node-resolve/README.md b/packages/node-resolve/README.md
index 99cc3ed74..9f1ee069d 100755
--- a/packages/node-resolve/README.md
+++ b/packages/node-resolve/README.md
@@ -141,6 +141,18 @@ customResolveOptions: {
 }
 ```
 
+### `rootDir`
+
+Type: `String`<br>
+Default: `process.cwd()`
+
+Root directory to resolve modules from. Used when resolving entrypoint imports, and when resolving deduplicated modules. Useful when executing rollup in a package of a monorepository.
+
+```
+// Set the root directory to be the parent folder
+rootDir: path.join(process.cwd(), '..')
+```
+
 ## Using with @rollup/plugin-commonjs
 
 Since most packages in your node_modules folder are probably legacy CommonJS rather than JavaScript modules, you may need to use [@rollup/plugin-commonjs](https://github.com/rollup/plugins/packages/commonjs):
diff --git a/packages/node-resolve/src/index.js b/packages/node-resolve/src/index.js
index f8928c04b..d47e20dee 100755
--- a/packages/node-resolve/src/index.js
+++ b/packages/node-resolve/src/index.js
@@ -143,6 +143,7 @@ export default function nodeResolve(options = {}) {
   const isPreferBuiltinsSet = options.preferBuiltins === true || options.preferBuiltins === false;
   const preferBuiltins = isPreferBuiltinsSet ? options.preferBuiltins : true;
   const customResolveOptions = options.customResolveOptions || {};
+  const rootDir = options.rootDir || process.cwd();
   const { jail } = options;
   const only = Array.isArray(options.only)
     ? options.only.map((o) =>
@@ -295,10 +296,10 @@ export default function nodeResolve(options = {}) {
       // ignore IDs with null character, these belong to other plugins
       if (/\0/.test(importee)) return null;
 
-      const basedir = importer ? dirname(importer) : process.cwd();
+      const basedir = importer ? dirname(importer) : rootDir;
 
       if (shouldDedupe(importee)) {
-        importee = join(process.cwd(), 'node_modules', importee);
+        importee = join(rootDir, 'node_modules', importee);
       }
 
       // https://github.com/defunctzombie/package-browser-field-spec
diff --git a/packages/node-resolve/test/fixtures/monorepo-dedupe/node_modules/react/index.js b/packages/node-resolve/test/fixtures/monorepo-dedupe/node_modules/react/index.js
new file mode 100644
index 000000000..11bfed165
--- /dev/null
+++ b/packages/node-resolve/test/fixtures/monorepo-dedupe/node_modules/react/index.js
@@ -0,0 +1 @@
+export default 'react imported from root';
diff --git a/packages/node-resolve/test/fixtures/monorepo-dedupe/packages/package-a/index.js b/packages/node-resolve/test/fixtures/monorepo-dedupe/packages/package-a/index.js
new file mode 100644
index 000000000..3d4346020
--- /dev/null
+++ b/packages/node-resolve/test/fixtures/monorepo-dedupe/packages/package-a/index.js
@@ -0,0 +1,5 @@
+import React from 'react';
+
+import packageB from '../package-b/index.js';
+
+export default `Package A React: ${React} | ${packageB}`;
diff --git a/packages/node-resolve/test/fixtures/monorepo-dedupe/packages/package-a/node_modules/react/index.js b/packages/node-resolve/test/fixtures/monorepo-dedupe/packages/package-a/node_modules/react/index.js
new file mode 100644
index 000000000..f2cbfe9d2
--- /dev/null
+++ b/packages/node-resolve/test/fixtures/monorepo-dedupe/packages/package-a/node_modules/react/index.js
@@ -0,0 +1 @@
+export default 'react imported from package a';
diff --git a/packages/node-resolve/test/fixtures/monorepo-dedupe/packages/package-b/index.js b/packages/node-resolve/test/fixtures/monorepo-dedupe/packages/package-b/index.js
new file mode 100644
index 000000000..0115a9bac
--- /dev/null
+++ b/packages/node-resolve/test/fixtures/monorepo-dedupe/packages/package-b/index.js
@@ -0,0 +1,3 @@
+import React from 'react';
+
+export default `package B react: ${React}`;
diff --git a/packages/node-resolve/test/fixtures/monorepo-dedupe/packages/package-b/node_modules/react/index.js b/packages/node-resolve/test/fixtures/monorepo-dedupe/packages/package-b/node_modules/react/index.js
new file mode 100644
index 000000000..9b109ecf5
--- /dev/null
+++ b/packages/node-resolve/test/fixtures/monorepo-dedupe/packages/package-b/node_modules/react/index.js
@@ -0,0 +1 @@
+export default 'react imported from package b';
diff --git a/packages/node-resolve/test/root-dir.js b/packages/node-resolve/test/root-dir.js
new file mode 100644
index 000000000..837695c50
--- /dev/null
+++ b/packages/node-resolve/test/root-dir.js
@@ -0,0 +1,25 @@
+const { join } = require('path');
+
+const test = require('ava');
+const { rollup } = require('rollup');
+
+const { testBundle } = require('../../../util/test');
+
+const nodeResolve = require('..');
+
+process.chdir(join(__dirname, 'fixtures', 'monorepo-dedupe', 'packages', 'package-a'));
+
+test('deduplicates modules from the given root directory', async (t) => {
+  const bundle = await rollup({
+    input: 'index.js',
+    plugins: [
+      nodeResolve({
+        dedupe: ['react'],
+        rootDir: join(__dirname, 'fixtures', 'monorepo-dedupe')
+      })
+    ]
+  });
+  const { module } = await testBundle(t, bundle);
+
+  t.snapshot(module.exports);
+});
diff --git a/packages/node-resolve/test/snapshots/root-dir.js.md b/packages/node-resolve/test/snapshots/root-dir.js.md
new file mode 100644
index 000000000..004f7d9b6
--- /dev/null
+++ b/packages/node-resolve/test/snapshots/root-dir.js.md
@@ -0,0 +1,17 @@
+# Snapshot report for `test/root-dir.js`
+
+The actual snapshot is saved in `root-dir.js.snap`.
+
+Generated by [AVA](https://ava.li).
+
+## deduplicated from the given root directory
+
+> Snapshot 1
+
+    'Package A React: react imported from root | package B react: react imported from root'
+
+## deduplicates modules from the given root directory
+
+> Snapshot 1
+
+    'Package A React: react imported from root | package B react: react imported from root'
diff --git a/packages/node-resolve/test/snapshots/root-dir.js.snap b/packages/node-resolve/test/snapshots/root-dir.js.snap
new file mode 100644
index 000000000..0dfe37a48
Binary files /dev/null and b/packages/node-resolve/test/snapshots/root-dir.js.snap differ
diff --git a/packages/node-resolve/types/index.d.ts b/packages/node-resolve/types/index.d.ts
index caf8aad09..7b398bc8e 100755
--- a/packages/node-resolve/types/index.d.ts
+++ b/packages/node-resolve/types/index.d.ts
@@ -92,6 +92,14 @@ export interface Options {
    * to node-resolve
    */
   customResolveOptions?: AsyncOpts;
+
+  /**
+   * Root directory to resolve modules from. Used when resolving entrypoint imports,
+   * and when resolving deduplicated modules. Useful when executing rollup in a package
+   * of a monorepository.
+   * @default process.cwd()
+   */
+  rootDir?: string;
 }
 
 /**