diff --git a/src/server/editorServices.ts b/src/server/editorServices.ts
index 117887d7611..c506c656de7 100644
--- a/src/server/editorServices.ts
+++ b/src/server/editorServices.ts
@@ -323,6 +323,7 @@ namespace ts.server {
         cancellationToken: HostCancellationToken;
         useSingleInferredProject: boolean;
         useInferredProjectPerProjectRoot: boolean;
+        lazyConfiguredProjectsFromExternalProject?: boolean;
         typingsInstaller: ITypingsInstaller;
         eventHandler?: ProjectServiceEventHandler;
         suppressDiagnosticEvents?: boolean;
@@ -440,6 +441,7 @@ namespace ts.server {
         public readonly cancellationToken: HostCancellationToken;
         public readonly useSingleInferredProject: boolean;
         public readonly useInferredProjectPerProjectRoot: boolean;
+        private readonly lazyConfiguredProjectsFromExternalProject?: boolean;
         public readonly typingsInstaller: ITypingsInstaller;
         private readonly globalCacheLocationDirectoryPath: Path | undefined;
         public readonly throttleWaitMilliseconds?: number;
@@ -465,6 +467,7 @@ namespace ts.server {
             this.cancellationToken = opts.cancellationToken;
             this.useSingleInferredProject = opts.useSingleInferredProject;
             this.useInferredProjectPerProjectRoot = opts.useInferredProjectPerProjectRoot;
+            this.lazyConfiguredProjectsFromExternalProject = opts.lazyConfiguredProjectsFromExternalProject;
             this.typingsInstaller = opts.typingsInstaller || nullTypingsInstaller;
             this.throttleWaitMilliseconds = opts.throttleWaitMilliseconds;
             this.eventHandler = opts.eventHandler;
@@ -1561,6 +1564,13 @@ namespace ts.server {
             return project;
         }
 
+        /* @internal */
+        private createLoadAndUpdateConfiguredProject(configFileName: NormalizedPath) {
+            const project = this.createAndLoadConfiguredProject(configFileName);
+            project.updateGraph();
+            return project;
+        }
+
         /**
          * Read the config file of the project, and update the project root file names.
          */
@@ -2192,8 +2202,7 @@ namespace ts.server {
                 if (configFileName) {
                     project = this.findConfiguredProjectByProjectName(configFileName);
                     if (!project) {
-                        project = this.createAndLoadConfiguredProject(configFileName);
-                        project.updateGraph();
+                        project = this.createLoadAndUpdateConfiguredProject(configFileName);
                         // Send the event only if the project got created as part of this open request and info is part of the project
                         if (info.isOrphan()) {
                             // Since the file isnt part of configured project, do not send config file info
@@ -2633,7 +2642,9 @@ namespace ts.server {
                     let project = this.findConfiguredProjectByProjectName(tsconfigFile);
                     if (!project) {
                         // errors are stored in the project, do not need to update the graph
-                        project = this.createConfiguredProjectWithDelayLoad(tsconfigFile);
+                        project = this.lazyConfiguredProjectsFromExternalProject ?
+                            this.createConfiguredProjectWithDelayLoad(tsconfigFile) :
+                            this.createLoadAndUpdateConfiguredProject(tsconfigFile);
                     }
                     if (project && !contains(exisingConfigFiles, tsconfigFile)) {
                         // keep project alive even if no documents are opened - its lifetime is bound to the lifetime of containing external project
diff --git a/src/server/session.ts b/src/server/session.ts
index 8d2fbe9e190..69328b4c73b 100644
--- a/src/server/session.ts
+++ b/src/server/session.ts
@@ -465,6 +465,7 @@ namespace ts.server {
         cancellationToken: ServerCancellationToken;
         useSingleInferredProject: boolean;
         useInferredProjectPerProjectRoot: boolean;
+        lazyConfiguredProjectsFromExternalProject?: boolean;
         typingsInstaller: ITypingsInstaller;
         byteLength: (buf: string, encoding?: string) => number;
         hrtime: (start?: number[]) => number[];
@@ -536,6 +537,7 @@ namespace ts.server {
                 cancellationToken: this.cancellationToken,
                 useSingleInferredProject: opts.useSingleInferredProject,
                 useInferredProjectPerProjectRoot: opts.useInferredProjectPerProjectRoot,
+                lazyConfiguredProjectsFromExternalProject: opts.lazyConfiguredProjectsFromExternalProject,
                 typingsInstaller: this.typingsInstaller,
                 throttleWaitMilliseconds,
                 eventHandler: this.eventHandler,
diff --git a/src/testRunner/unittests/tsserverProjectSystem.ts b/src/testRunner/unittests/tsserverProjectSystem.ts
index 589668538c7..7ef838fd6ff 100644
--- a/src/testRunner/unittests/tsserverProjectSystem.ts
+++ b/src/testRunner/unittests/tsserverProjectSystem.ts
@@ -642,37 +642,53 @@ namespace ts.projectSystem {
             checkWatchedDirectories(host, [combinePaths(getDirectoryPath(appFile.path), nodeModulesAtTypes)], /*recursive*/ true);
         });
 
-        it("can handle tsconfig file name with difference casing", () => {
-            const f1 = {
-                path: "/a/b/app.ts",
-                content: "let x = 1"
-            };
-            const config = {
-                path: "/a/b/tsconfig.json",
-                content: JSON.stringify({
-                    include: []
-                })
-            };
+        describe("can handle tsconfig file name with difference casing", () => {
+            function verifyConfigFileCasing(lazyConfiguredProjectsFromExternalProject: boolean) {
+                const f1 = {
+                    path: "/a/b/app.ts",
+                    content: "let x = 1"
+                };
+                const config = {
+                    path: "/a/b/tsconfig.json",
+                    content: JSON.stringify({
+                        include: []
+                    })
+                };
 
-            const host = createServerHost([f1, config], { useCaseSensitiveFileNames: false });
-            const service = createProjectService(host);
-            const upperCaseConfigFilePath = combinePaths(getDirectoryPath(config.path).toUpperCase(), getBaseFileName(config.path));
-            service.openExternalProject(<protocol.ExternalProject>{
-                projectFileName: "/a/b/project.csproj",
-                rootFiles: toExternalFiles([f1.path, upperCaseConfigFilePath]),
-                options: {}
+                const host = createServerHost([f1, config], { useCaseSensitiveFileNames: false });
+                const service = createProjectService(host, /*parameters*/ undefined, { lazyConfiguredProjectsFromExternalProject });
+                const upperCaseConfigFilePath = combinePaths(getDirectoryPath(config.path).toUpperCase(), getBaseFileName(config.path));
+                service.openExternalProject(<protocol.ExternalProject>{
+                    projectFileName: "/a/b/project.csproj",
+                    rootFiles: toExternalFiles([f1.path, upperCaseConfigFilePath]),
+                    options: {}
+                });
+                service.checkNumberOfProjects({ configuredProjects: 1 });
+                const project = service.configuredProjects.get(config.path)!;
+                if (lazyConfiguredProjectsFromExternalProject) {
+                    assert.equal(project.pendingReload, ConfigFileProgramReloadLevel.Full); // External project referenced configured project pending to be reloaded
+                    checkProjectActualFiles(project, emptyArray);
+                }
+                else {
+                    assert.equal(project.pendingReload, ConfigFileProgramReloadLevel.None); // External project referenced configured project pending to be reloaded
+                    checkProjectActualFiles(project, [upperCaseConfigFilePath]);
+                }
+
+                service.openClientFile(f1.path);
+                service.checkNumberOfProjects({ configuredProjects: 1, inferredProjects: 1 });
+
+                assert.equal(project.pendingReload, ConfigFileProgramReloadLevel.None); // External project referenced configured project is updated
+                checkProjectActualFiles(project, [upperCaseConfigFilePath]);
+                checkProjectActualFiles(service.inferredProjects[0], [f1.path]);
+            }
+
+            it("when lazyConfiguredProjectsFromExternalProject not set", () => {
+                verifyConfigFileCasing(/*lazyConfiguredProjectsFromExternalProject*/ false);
             });
-            service.checkNumberOfProjects({ configuredProjects: 1 });
-            const project = service.configuredProjects.get(config.path)!;
-            assert.equal(project.pendingReload, ConfigFileProgramReloadLevel.Full); // External project referenced configured project pending to be reloaded
-            checkProjectActualFiles(project, emptyArray);
 
-            service.openClientFile(f1.path);
-            service.checkNumberOfProjects({ configuredProjects: 1, inferredProjects: 1 });
-
-            assert.equal(project.pendingReload, ConfigFileProgramReloadLevel.None); // External project referenced configured project is updated
-            checkProjectActualFiles(project, [upperCaseConfigFilePath]);
-            checkProjectActualFiles(service.inferredProjects[0], [f1.path]);
+            it("when lazyConfiguredProjectsFromExternalProject is set", () => {
+                verifyConfigFileCasing(/*lazyConfiguredProjectsFromExternalProject*/ true);
+            });
         });
 
         it("create configured project without file list", () => {
@@ -2950,45 +2966,55 @@ namespace ts.projectSystem {
             assert.equal(navbar[0].spans[0].length, f1.content.length);
         });
 
-        it("deleting config file opened from the external project works", () => {
-            const site = {
-                path: "/user/someuser/project/js/site.js",
-                content: ""
-            };
-            const configFile = {
-                path: "/user/someuser/project/tsconfig.json",
-                content: "{}"
-            };
-            const projectFileName = "/user/someuser/project/WebApplication6.csproj";
-            const host = createServerHost([libFile, site, configFile]);
-            const projectService = createProjectService(host);
+        describe("deleting config file opened from the external project works", () => {
+            function verifyDeletingConfigFile(lazyConfiguredProjectsFromExternalProject: boolean) {
+                const site = {
+                    path: "/user/someuser/project/js/site.js",
+                    content: ""
+                };
+                const configFile = {
+                    path: "/user/someuser/project/tsconfig.json",
+                    content: "{}"
+                };
+                const projectFileName = "/user/someuser/project/WebApplication6.csproj";
+                const host = createServerHost([libFile, site, configFile]);
+                const projectService = createProjectService(host, /*parameters*/ undefined, { lazyConfiguredProjectsFromExternalProject });
 
-            const externalProject: protocol.ExternalProject = {
-                projectFileName,
-                rootFiles: [toExternalFile(site.path), toExternalFile(configFile.path)],
-                options: { allowJs: false },
-                typeAcquisition: { include: [] }
-            };
+                const externalProject: protocol.ExternalProject = {
+                    projectFileName,
+                    rootFiles: [toExternalFile(site.path), toExternalFile(configFile.path)],
+                    options: { allowJs: false },
+                    typeAcquisition: { include: [] }
+                };
 
-            projectService.openExternalProjects([externalProject]);
+                projectService.openExternalProjects([externalProject]);
 
-            let knownProjects = projectService.synchronizeProjectList([]);
-            checkNumberOfProjects(projectService, { configuredProjects: 1, externalProjects: 0, inferredProjects: 0 });
+                let knownProjects = projectService.synchronizeProjectList([]);
+                checkNumberOfProjects(projectService, { configuredProjects: 1, externalProjects: 0, inferredProjects: 0 });
 
-            const configProject = configuredProjectAt(projectService, 0);
-            checkProjectActualFiles(configProject, []); // Since no files opened from this project, its not loaded
+                const configProject = configuredProjectAt(projectService, 0);
+                checkProjectActualFiles(configProject, lazyConfiguredProjectsFromExternalProject ?
+                    emptyArray : // Since no files opened from this project, its not loaded
+                    [libFile.path, configFile.path]);
 
-            host.reloadFS([libFile, site]);
-            host.checkTimeoutQueueLengthAndRun(1);
+                host.reloadFS([libFile, site]);
+                host.checkTimeoutQueueLengthAndRun(1);
 
-            knownProjects = projectService.synchronizeProjectList(map(knownProjects, proj => proj.info!)); // TODO: GH#18217 GH#20039
-            checkNumberOfProjects(projectService, { configuredProjects: 0, externalProjects: 0, inferredProjects: 0 });
+                knownProjects = projectService.synchronizeProjectList(map(knownProjects, proj => proj.info!)); // TODO: GH#18217 GH#20039
+                checkNumberOfProjects(projectService, { configuredProjects: 0, externalProjects: 0, inferredProjects: 0 });
 
-            externalProject.rootFiles.length = 1;
-            projectService.openExternalProjects([externalProject]);
+                externalProject.rootFiles.length = 1;
+                projectService.openExternalProjects([externalProject]);
 
-            checkNumberOfProjects(projectService, { configuredProjects: 0, externalProjects: 1, inferredProjects: 0 });
-            checkProjectActualFiles(projectService.externalProjects[0], [site.path, libFile.path]);
+                checkNumberOfProjects(projectService, { configuredProjects: 0, externalProjects: 1, inferredProjects: 0 });
+                checkProjectActualFiles(projectService.externalProjects[0], [site.path, libFile.path]);
+            }
+            it("when lazyConfiguredProjectsFromExternalProject not set", () => {
+                verifyDeletingConfigFile(/*lazyConfiguredProjectsFromExternalProject*/ false);
+            });
+            it("when lazyConfiguredProjectsFromExternalProject is set", () => {
+                verifyDeletingConfigFile(/*lazyConfiguredProjectsFromExternalProject*/ true);
+            });
         });
 
         it("Getting errors from closed script info does not throw exception (because of getting project from orphan script info)", () => {
@@ -3298,49 +3324,60 @@ namespace ts.projectSystem {
 
         });
 
-        it("includes deferred files in the project context", () => {
-            const file1 = {
-                path: "/a.deferred",
-                content: "const a = 1;"
-            };
-            // Deferred extensions should not affect JS files.
-            const file2 = {
-                path: "/b.js",
-                content: "const b = 1;"
-            };
-            const tsconfig = {
-                path: "/tsconfig.json",
-                content: ""
-            };
+        describe("includes deferred files in the project context", () => {
+            function verifyDeferredContext(lazyConfiguredProjectsFromExternalProject: boolean) {
+                const file1 = {
+                    path: "/a.deferred",
+                    content: "const a = 1;"
+                };
+                // Deferred extensions should not affect JS files.
+                const file2 = {
+                    path: "/b.js",
+                    content: "const b = 1;"
+                };
+                const tsconfig = {
+                    path: "/tsconfig.json",
+                    content: ""
+                };
 
-            const host = createServerHost([file1, file2, tsconfig]);
-            const session = createSession(host);
-            const projectService = session.getProjectService();
+                const host = createServerHost([file1, file2, tsconfig]);
+                const session = createSession(host, { lazyConfiguredProjectsFromExternalProject });
+                const projectService = session.getProjectService();
 
-            // Configure the deferred extension.
-            const extraFileExtensions = [{ extension: ".deferred", scriptKind: ScriptKind.Deferred, isMixedContent: true }];
-            const configureHostRequest = makeSessionRequest<protocol.ConfigureRequestArguments>(CommandNames.Configure, { extraFileExtensions });
-            session.executeCommand(configureHostRequest);
+                // Configure the deferred extension.
+                const extraFileExtensions = [{ extension: ".deferred", scriptKind: ScriptKind.Deferred, isMixedContent: true }];
+                const configureHostRequest = makeSessionRequest<protocol.ConfigureRequestArguments>(CommandNames.Configure, { extraFileExtensions });
+                session.executeCommand(configureHostRequest);
 
-            // Open external project
-            const projectName = "/proj1";
-            projectService.openExternalProject({
-                projectFileName: projectName,
-                rootFiles: toExternalFiles([file1.path, file2.path, tsconfig.path]),
-                options: {}
+                // Open external project
+                const projectName = "/proj1";
+                projectService.openExternalProject({
+                    projectFileName: projectName,
+                    rootFiles: toExternalFiles([file1.path, file2.path, tsconfig.path]),
+                    options: {}
+                });
+
+                // Assert
+                checkNumberOfProjects(projectService, { configuredProjects: 1 });
+
+                const configuredProject = configuredProjectAt(projectService, 0);
+                if (lazyConfiguredProjectsFromExternalProject) {
+                    // configured project is just created and not yet loaded
+                    checkProjectActualFiles(configuredProject, emptyArray);
+                    projectService.ensureInferredProjectsUpToDate_TestOnly();
+                }
+                checkProjectActualFiles(configuredProject, [file1.path, tsconfig.path]);
+
+                // Allow allowNonTsExtensions will be set to true for deferred extensions.
+                assert.isTrue(configuredProject.getCompilerOptions().allowNonTsExtensions);
+            }
+
+            it("when lazyConfiguredProjectsFromExternalProject not set", () => {
+                verifyDeferredContext(/*lazyConfiguredProjectsFromExternalProject*/ false);
+            });
+            it("when lazyConfiguredProjectsFromExternalProject is set", () => {
+                verifyDeferredContext(/*lazyConfiguredProjectsFromExternalProject*/ true);
             });
-
-            // Assert
-            checkNumberOfProjects(projectService, { configuredProjects: 1 });
-
-            const configuredProject = configuredProjectAt(projectService, 0);
-            // configured project is just created and not yet loaded
-            checkProjectActualFiles(configuredProject, emptyArray);
-            projectService.ensureInferredProjectsUpToDate_TestOnly();
-            checkProjectActualFiles(configuredProject, [file1.path, tsconfig.path]);
-
-            // Allow allowNonTsExtensions will be set to true for deferred extensions.
-            assert.isTrue(configuredProject.getCompilerOptions().allowNonTsExtensions);
         });
 
         it("Orphan source files are handled correctly on watch trigger", () => {
@@ -3943,143 +3980,165 @@ namespace ts.projectSystem {
     });
 
     describe("tsserverProjectSystem external projects", () => {
-        it("correctly handling add/remove tsconfig - 1", () => {
-            const f1 = {
-                path: "/a/b/app.ts",
-                content: "let x = 1;"
-            };
-            const f2 = {
-                path: "/a/b/lib.ts",
-                content: ""
-            };
-            const tsconfig = {
-                path: "/a/b/tsconfig.json",
-                content: ""
-            };
-            const host = createServerHost([f1, f2]);
-            const projectService = createProjectService(host);
+        describe("correctly handling add/remove tsconfig - 1", () => {
+            function verifyAddRemoveConfig(lazyConfiguredProjectsFromExternalProject: boolean) {
+                const f1 = {
+                    path: "/a/b/app.ts",
+                    content: "let x = 1;"
+                };
+                const f2 = {
+                    path: "/a/b/lib.ts",
+                    content: ""
+                };
+                const tsconfig = {
+                    path: "/a/b/tsconfig.json",
+                    content: ""
+                };
+                const host = createServerHost([f1, f2]);
+                const projectService = createProjectService(host, /*parameters*/ undefined, { lazyConfiguredProjectsFromExternalProject });
 
-            // open external project
-            const projectName = "/a/b/proj1";
-            projectService.openExternalProject({
-                projectFileName: projectName,
-                rootFiles: toExternalFiles([f1.path, f2.path]),
-                options: {}
+                // open external project
+                const projectName = "/a/b/proj1";
+                projectService.openExternalProject({
+                    projectFileName: projectName,
+                    rootFiles: toExternalFiles([f1.path, f2.path]),
+                    options: {}
+                });
+                projectService.openClientFile(f1.path);
+                projectService.checkNumberOfProjects({ externalProjects: 1 });
+                checkProjectActualFiles(projectService.externalProjects[0], [f1.path, f2.path]);
+
+                // rename lib.ts to tsconfig.json
+                host.reloadFS([f1, tsconfig]);
+                projectService.openExternalProject({
+                    projectFileName: projectName,
+                    rootFiles: toExternalFiles([f1.path, tsconfig.path]),
+                    options: {}
+                });
+                projectService.checkNumberOfProjects({ configuredProjects: 1 });
+                if (lazyConfiguredProjectsFromExternalProject) {
+                    checkProjectActualFiles(configuredProjectAt(projectService, 0), emptyArray); // Configured project created but not loaded till actually needed
+                    projectService.ensureInferredProjectsUpToDate_TestOnly();
+                }
+                checkProjectActualFiles(configuredProjectAt(projectService, 0), [f1.path, tsconfig.path]);
+
+                // rename tsconfig.json back to lib.ts
+                host.reloadFS([f1, f2]);
+                projectService.openExternalProject({
+                    projectFileName: projectName,
+                    rootFiles: toExternalFiles([f1.path, f2.path]),
+                    options: {}
+                });
+
+                projectService.checkNumberOfProjects({ externalProjects: 1 });
+                checkProjectActualFiles(projectService.externalProjects[0], [f1.path, f2.path]);
+            }
+            it("when lazyConfiguredProjectsFromExternalProject not set", () => {
+                verifyAddRemoveConfig(/*lazyConfiguredProjectsFromExternalProject*/ false);
             });
-            projectService.openClientFile(f1.path);
-            projectService.checkNumberOfProjects({ externalProjects: 1 });
-            checkProjectActualFiles(projectService.externalProjects[0], [f1.path, f2.path]);
-
-            // rename lib.ts to tsconfig.json
-            host.reloadFS([f1, tsconfig]);
-            projectService.openExternalProject({
-                projectFileName: projectName,
-                rootFiles: toExternalFiles([f1.path, tsconfig.path]),
-                options: {}
+            it("when lazyConfiguredProjectsFromExternalProject is set", () => {
+                verifyAddRemoveConfig(/*lazyConfiguredProjectsFromExternalProject*/ true);
             });
-            projectService.checkNumberOfProjects({ configuredProjects: 1 });
-            checkProjectActualFiles(configuredProjectAt(projectService, 0), emptyArray); // Configured project created but not loaded till actually needed
-            projectService.ensureInferredProjectsUpToDate_TestOnly();
-            checkProjectActualFiles(configuredProjectAt(projectService, 0), [f1.path, tsconfig.path]);
-
-            // rename tsconfig.json back to lib.ts
-            host.reloadFS([f1, f2]);
-            projectService.openExternalProject({
-                projectFileName: projectName,
-                rootFiles: toExternalFiles([f1.path, f2.path]),
-                options: {}
-            });
-
-            projectService.checkNumberOfProjects({ externalProjects: 1 });
-            checkProjectActualFiles(projectService.externalProjects[0], [f1.path, f2.path]);
         });
 
+        describe("correctly handling add/remove tsconfig - 2", () => {
+            function verifyAddRemoveConfig(lazyConfiguredProjectsFromExternalProject: boolean) {
+                const f1 = {
+                    path: "/a/b/app.ts",
+                    content: "let x = 1;"
+                };
+                const cLib = {
+                    path: "/a/b/c/lib.ts",
+                    content: ""
+                };
+                const cTsconfig = {
+                    path: "/a/b/c/tsconfig.json",
+                    content: "{}"
+                };
+                const dLib = {
+                    path: "/a/b/d/lib.ts",
+                    content: ""
+                };
+                const dTsconfig = {
+                    path: "/a/b/d/tsconfig.json",
+                    content: "{}"
+                };
+                const host = createServerHost([f1, cLib, cTsconfig, dLib, dTsconfig]);
+                const projectService = createProjectService(host, /*parameters*/ undefined, { lazyConfiguredProjectsFromExternalProject });
 
-        it("correctly handling add/remove tsconfig - 2", () => {
-            const f1 = {
-                path: "/a/b/app.ts",
-                content: "let x = 1;"
-            };
-            const cLib = {
-                path: "/a/b/c/lib.ts",
-                content: ""
-            };
-            const cTsconfig = {
-                path: "/a/b/c/tsconfig.json",
-                content: "{}"
-            };
-            const dLib = {
-                path: "/a/b/d/lib.ts",
-                content: ""
-            };
-            const dTsconfig = {
-                path: "/a/b/d/tsconfig.json",
-                content: "{}"
-            };
-            const host = createServerHost([f1, cLib, cTsconfig, dLib, dTsconfig]);
-            const projectService = createProjectService(host);
+                // open external project
+                const projectName = "/a/b/proj1";
+                projectService.openExternalProject({
+                    projectFileName: projectName,
+                    rootFiles: toExternalFiles([f1.path]),
+                    options: {}
+                });
 
-            // open external project
-            const projectName = "/a/b/proj1";
-            projectService.openExternalProject({
-                projectFileName: projectName,
-                rootFiles: toExternalFiles([f1.path]),
-                options: {}
+                projectService.checkNumberOfProjects({ externalProjects: 1 });
+                checkProjectActualFiles(projectService.externalProjects[0], [f1.path]);
+
+                // add two config file as root files
+                projectService.openExternalProject({
+                    projectFileName: projectName,
+                    rootFiles: toExternalFiles([f1.path, cTsconfig.path, dTsconfig.path]),
+                    options: {}
+                });
+                projectService.checkNumberOfProjects({ configuredProjects: 2 });
+                if (lazyConfiguredProjectsFromExternalProject) {
+                    checkProjectActualFiles(configuredProjectAt(projectService, 0), emptyArray); // Configured project created but not loaded till actually needed
+                    checkProjectActualFiles(configuredProjectAt(projectService, 1), emptyArray); // Configured project created but not loaded till actually needed
+                    projectService.ensureInferredProjectsUpToDate_TestOnly();
+                }
+                checkProjectActualFiles(configuredProjectAt(projectService, 0), [cLib.path, cTsconfig.path]);
+                checkProjectActualFiles(configuredProjectAt(projectService, 1), [dLib.path, dTsconfig.path]);
+
+                // remove one config file
+                projectService.openExternalProject({
+                    projectFileName: projectName,
+                    rootFiles: toExternalFiles([f1.path, dTsconfig.path]),
+                    options: {}
+                });
+
+                projectService.checkNumberOfProjects({ configuredProjects: 1 });
+                checkProjectActualFiles(configuredProjectAt(projectService, 0), [dLib.path, dTsconfig.path]);
+
+                // remove second config file
+                projectService.openExternalProject({
+                    projectFileName: projectName,
+                    rootFiles: toExternalFiles([f1.path]),
+                    options: {}
+                });
+
+                projectService.checkNumberOfProjects({ externalProjects: 1 });
+                checkProjectActualFiles(projectService.externalProjects[0], [f1.path]);
+
+                // open two config files
+                // add two config file as root files
+                projectService.openExternalProject({
+                    projectFileName: projectName,
+                    rootFiles: toExternalFiles([f1.path, cTsconfig.path, dTsconfig.path]),
+                    options: {}
+                });
+                projectService.checkNumberOfProjects({ configuredProjects: 2 });
+                if (lazyConfiguredProjectsFromExternalProject) {
+                    checkProjectActualFiles(configuredProjectAt(projectService, 0), emptyArray); // Configured project created but not loaded till actually needed
+                    checkProjectActualFiles(configuredProjectAt(projectService, 1), emptyArray); // Configured project created but not loaded till actually needed
+                    projectService.ensureInferredProjectsUpToDate_TestOnly();
+                }
+                checkProjectActualFiles(configuredProjectAt(projectService, 0), [cLib.path, cTsconfig.path]);
+                checkProjectActualFiles(configuredProjectAt(projectService, 1), [dLib.path, dTsconfig.path]);
+
+                // close all projects - no projects should be opened
+                projectService.closeExternalProject(projectName);
+                projectService.checkNumberOfProjects({});
+            }
+
+            it("when lazyConfiguredProjectsFromExternalProject not set", () => {
+                verifyAddRemoveConfig(/*lazyConfiguredProjectsFromExternalProject*/ false);
             });
-
-            projectService.checkNumberOfProjects({ externalProjects: 1 });
-            checkProjectActualFiles(projectService.externalProjects[0], [f1.path]);
-
-            // add two config file as root files
-            projectService.openExternalProject({
-                projectFileName: projectName,
-                rootFiles: toExternalFiles([f1.path, cTsconfig.path, dTsconfig.path]),
-                options: {}
+            it("when lazyConfiguredProjectsFromExternalProject is set", () => {
+                verifyAddRemoveConfig(/*lazyConfiguredProjectsFromExternalProject*/ true);
             });
-            projectService.checkNumberOfProjects({ configuredProjects: 2 });
-            checkProjectActualFiles(configuredProjectAt(projectService, 0), emptyArray); // Configured project created but not loaded till actually needed
-            checkProjectActualFiles(configuredProjectAt(projectService, 1), emptyArray); // Configured project created but not loaded till actually needed
-            projectService.ensureInferredProjectsUpToDate_TestOnly();
-            checkProjectActualFiles(configuredProjectAt(projectService, 0), [cLib.path, cTsconfig.path]);
-            checkProjectActualFiles(configuredProjectAt(projectService, 1), [dLib.path, dTsconfig.path]);
-
-            // remove one config file
-            projectService.openExternalProject({
-                projectFileName: projectName,
-                rootFiles: toExternalFiles([f1.path, dTsconfig.path]),
-                options: {}
-            });
-
-            projectService.checkNumberOfProjects({ configuredProjects: 1 });
-            checkProjectActualFiles(configuredProjectAt(projectService, 0), [dLib.path, dTsconfig.path]);
-
-            // remove second config file
-            projectService.openExternalProject({
-                projectFileName: projectName,
-                rootFiles: toExternalFiles([f1.path]),
-                options: {}
-            });
-
-            projectService.checkNumberOfProjects({ externalProjects: 1 });
-            checkProjectActualFiles(projectService.externalProjects[0], [f1.path]);
-
-            // open two config files
-            // add two config file as root files
-            projectService.openExternalProject({
-                projectFileName: projectName,
-                rootFiles: toExternalFiles([f1.path, cTsconfig.path, dTsconfig.path]),
-                options: {}
-            });
-            projectService.checkNumberOfProjects({ configuredProjects: 2 });
-            checkProjectActualFiles(configuredProjectAt(projectService, 0), emptyArray); // Configured project created but not loaded till actually needed
-            checkProjectActualFiles(configuredProjectAt(projectService, 1), emptyArray); // Configured project created but not loaded till actually needed
-            projectService.ensureInferredProjectsUpToDate_TestOnly();
-            checkProjectActualFiles(configuredProjectAt(projectService, 0), [cLib.path, cTsconfig.path]);
-            checkProjectActualFiles(configuredProjectAt(projectService, 1), [dLib.path, dTsconfig.path]);
-
-            // close all projects - no projects should be opened
-            projectService.closeExternalProject(projectName);
-            projectService.checkNumberOfProjects({});
         });
 
         it("correctly handles changes in lib section of config file", () => {
diff --git a/src/tsserver/server.ts b/src/tsserver/server.ts
index 3e5986e9408..6b8a146d8f3 100644
--- a/src/tsserver/server.ts
+++ b/src/tsserver/server.ts
@@ -499,6 +499,7 @@ namespace ts.server {
                 cancellationToken,
                 useSingleInferredProject,
                 useInferredProjectPerProjectRoot,
+                lazyConfiguredProjectsFromExternalProject,
                 typingsInstaller: typingsInstaller || nullTypingsInstaller,
                 byteLength: Buffer.byteLength,
                 hrtime: process.hrtime,
@@ -937,6 +938,7 @@ namespace ts.server {
 
     const useSingleInferredProject = hasArgument("--useSingleInferredProject");
     const useInferredProjectPerProjectRoot = hasArgument("--useInferredProjectPerProjectRoot");
+    const lazyConfiguredProjectsFromExternalProject = hasArgument("--lazyConfiguredProjectsFromExternalProject");
     const disableAutomaticTypingAcquisition = hasArgument("--disableAutomaticTypingAcquisition");
     const suppressDiagnosticEvents = hasArgument("--suppressDiagnosticEvents");
     const syntaxOnly = hasArgument("--syntaxOnly");
diff --git a/tests/baselines/reference/api/tsserverlibrary.d.ts b/tests/baselines/reference/api/tsserverlibrary.d.ts
index 584557e8b0f..3194a2b79bb 100644
--- a/tests/baselines/reference/api/tsserverlibrary.d.ts
+++ b/tests/baselines/reference/api/tsserverlibrary.d.ts
@@ -8325,6 +8325,7 @@ declare namespace ts.server {
         cancellationToken: HostCancellationToken;
         useSingleInferredProject: boolean;
         useInferredProjectPerProjectRoot: boolean;
+        lazyConfiguredProjectsFromExternalProject?: boolean;
         typingsInstaller: ITypingsInstaller;
         eventHandler?: ProjectServiceEventHandler;
         suppressDiagnosticEvents?: boolean;
@@ -8397,6 +8398,7 @@ declare namespace ts.server {
         readonly cancellationToken: HostCancellationToken;
         readonly useSingleInferredProject: boolean;
         readonly useInferredProjectPerProjectRoot: boolean;
+        private readonly lazyConfiguredProjectsFromExternalProject?;
         readonly typingsInstaller: ITypingsInstaller;
         private readonly globalCacheLocationDirectoryPath;
         readonly throttleWaitMilliseconds?: number;
@@ -8598,6 +8600,7 @@ declare namespace ts.server {
         cancellationToken: ServerCancellationToken;
         useSingleInferredProject: boolean;
         useInferredProjectPerProjectRoot: boolean;
+        lazyConfiguredProjectsFromExternalProject?: boolean;
         typingsInstaller: ITypingsInstaller;
         byteLength: (buf: string, encoding?: string) => number;
         hrtime: (start?: number[]) => number[];