diff --git a/packages/compiler-cli/src/perform_watch.ts b/packages/compiler-cli/src/perform_watch.ts
index 095c44197c..c9e802dc37 100644
--- a/packages/compiler-cli/src/perform_watch.ts
+++ b/packages/compiler-cli/src/perform_watch.ts
@@ -153,7 +153,7 @@ export function performWatchCompilation(host: PerformWatchHost):
   }
 
   // Invoked to perform initial compilation or re-compilation in watch mode
-  function doCompilation(modifiedResourceFiles?: Set<string>): Diagnostics {
+  function doCompilation(): Diagnostics {
     if (!cachedOptions) {
       cachedOptions = host.readConfiguration();
     }
@@ -197,8 +197,12 @@ export function performWatchCompilation(host: PerformWatchHost):
         return ce.content !;
       };
       // Provide access to the file paths that triggered this rebuild
-      cachedCompilerHost.getModifiedResourceFiles =
-          modifiedResourceFiles !== undefined ? () => modifiedResourceFiles : undefined;
+      cachedCompilerHost.getModifiedResourceFiles = function() {
+        if (timerHandleForRecompilation === undefined) {
+          return undefined;
+        }
+        return timerHandleForRecompilation.modifiedResourceFiles;
+      };
     }
     ignoreFilesForWatch.clear();
     const oldProgram = cachedProgram;
@@ -287,7 +291,7 @@ export function performWatchCompilation(host: PerformWatchHost):
   function recompile() {
     host.reportDiagnostics(
         [createMessageDiagnostic('File change detected. Starting incremental compilation.')]);
-    doCompilation(timerHandleForRecompilation !.modifiedResourceFiles);
+    doCompilation();
     timerHandleForRecompilation = undefined;
   }
 }
diff --git a/packages/compiler-cli/test/BUILD.bazel b/packages/compiler-cli/test/BUILD.bazel
index 2c06400846..3c651e6540 100644
--- a/packages/compiler-cli/test/BUILD.bazel
+++ b/packages/compiler-cli/test/BUILD.bazel
@@ -109,6 +109,7 @@ ts_library(
         ":test_utils",
         "//packages/compiler",
         "//packages/compiler-cli",
+        "//packages/private/testing",
         "@npm//typescript",
     ],
 )
diff --git a/packages/compiler-cli/test/perform_watch_spec.ts b/packages/compiler-cli/test/perform_watch_spec.ts
index b38d732ebf..479a3e388b 100644
--- a/packages/compiler-cli/test/perform_watch_spec.ts
+++ b/packages/compiler-cli/test/perform_watch_spec.ts
@@ -6,6 +6,7 @@
  * found in the LICENSE file at https://angular.io/license
  */
 
+import {ivyEnabled} from '@angular/private/testing';
 import * as fs from 'fs';
 import * as path from 'path';
 import * as ts from 'typescript';
@@ -24,8 +25,8 @@ describe('perform watch', () => {
     outDir = path.resolve(testSupport.basePath, 'outDir');
   });
 
-  function createConfig(): ng.ParsedConfiguration {
-    const options = testSupport.createCompilerOptions({outDir});
+  function createConfig(overrideOptions: ng.CompilerOptions = {}): ng.ParsedConfiguration {
+    const options = testSupport.createCompilerOptions({outDir, ...overrideOptions});
     return {
       options,
       rootNames: [path.resolve(testSupport.basePath, 'src/index.ts')],
@@ -50,6 +51,33 @@ describe('perform watch', () => {
     expect(fs.existsSync(path.resolve(outDir, 'src', 'main.ngfactory.js'))).toBe(true);
   });
 
+  it('should recompile components when its template changes', () => {
+    const config = createConfig({enableIvy: ivyEnabled});
+    const host = new MockWatchHost(config);
+
+    testSupport.writeFiles({
+      'src/main.ts': createModuleAndCompSource('main', './main.html'),
+      'src/main.html': 'initial',
+      'src/index.ts': `export * from './main'; `,
+    });
+
+    const watchResult = performWatchCompilation(host);
+    expectNoDiagnostics(config.options, watchResult.firstCompileResult);
+
+    const htmlPath = path.posix.join(testSupport.basePath, 'src', 'main.html');
+    const genPath = ivyEnabled ? path.posix.join(outDir, 'src', 'main.js') :
+                                 path.posix.join(outDir, 'src', 'main.ngfactory.js');
+
+    const initial = fs.readFileSync(genPath, {encoding: 'utf8'});
+    expect(initial).toContain('"initial"');
+
+    testSupport.write(htmlPath, 'updated');
+    host.triggerFileChange(FileChangeEvent.Change, htmlPath);
+
+    const updated = fs.readFileSync(genPath, {encoding: 'utf8'});
+    expect(updated).toContain('"updated"');
+  });
+
   it('should cache files on subsequent runs', () => {
     const config = createConfig();
     const host = new MockWatchHost(config);