diff --git a/index.js b/index.js
index b6511d0..7b3ca6e 100644
--- a/index.js
+++ b/index.js
@@ -1,6 +1,7 @@
 'use strict';
 
 const fs = require('node:fs');
+const path = require('node:path');
 const { debuglog } = require('node:util');
 const cabinet = require('filing-cabinet');
 const precinct = require('precinct');
@@ -162,6 +163,7 @@ function traverse(config = {}) {
   for (const dependency of dependencies) {
     const localConfig = config.clone();
     localConfig.filename = dependency;
+    localConfig.directory = getDirectory(localConfig);
 
     if (localConfig.isListForm) {
       for (const item of traverse(localConfig)) {
@@ -193,3 +195,25 @@ function dedupeNonExistent(nonExistent) {
     i++;
   }
 }
+
+// If the file is in a node module, use the root directory of the module
+function getDirectory(localConfig) {
+  if (!localConfig.filename.includes('node_modules')) {
+    return localConfig.directory;
+  }
+
+  return getProjectPath(path.dirname(localConfig.filename)) || localConfig.directory;
+}
+
+function getProjectPath(filename) {
+  try {
+    const nodeModuleParts = filename.split('node_modules');
+    const packageSubPathPath = nodeModuleParts.pop().split(path.sep).filter(Boolean);
+    const packageName = packageSubPathPath[0].startsWith('@') ? `${packageSubPathPath[0]}${path.sep}${packageSubPathPath[1]}` : packageSubPathPath[0];
+
+    return path.normalize([...nodeModuleParts, `${path.sep}${packageName}`].join('node_modules'));
+  } catch {
+    debug(`Could not determine the root directory of package file ${filename}. Using default`);
+    return null;
+  }
+}
diff --git a/test/test.mjs b/test/test.mjs
index aa705d8..8a97d8d 100644
--- a/test/test.mjs
+++ b/test/test.mjs
@@ -472,6 +472,77 @@ describe('dependencyTree', () => {
     });
   });
 
+  describe('it uses package specific node_module directory when resolving package dependencies', () => {
+    testTreesForFormat('commonjs');
+
+    it('it can find sub package in node module package', () => {
+      mockfs({
+        [path.join(__dirname, '/es6')]: {
+          'module.entry.js': 'import * as module from "parent_module_a"',
+          node_modules: {
+            parent_module_a: {
+              'index.main.js': 'import * as child_module from "child_node_module"; module.exports = child_module;',
+              'package.json': '{ "main": "index.main.js"}',
+              node_modules: {
+                child_node_module: {
+                  'index.main.js': 'module.exports = "child_node_module_of_parent_a"',
+                  'package.json': '{ "main": "index.main.js"}'
+                }
+              }
+            }
+          }
+        }
+      });
+
+      const directory = path.join(__dirname, '/es6');
+      const filename = path.normalize(`${directory}/module.entry.js`);
+
+      const treeList = dependencyTree({
+        filename,
+        directory,
+        isListForm: true
+      });
+
+      assert.ok(treeList.includes(path.normalize(`${directory}/node_modules/parent_module_a/node_modules/child_node_module/index.main.js`)));
+    });
+
+    it('it uses correct version of sub package in node module package', () => {
+      mockfs({
+        [path.join(__dirname, '/es6')]: {
+          'module.entry.js': 'import * as module from "parent_module_a"',
+          node_modules: {
+            child_node_module: {
+              'index.main.js': 'module.exports = "child_node_module"',
+              'package.json': '{ "main": "index.main.js", "version": "2.0.0"}'
+            },
+            parent_module_a: {
+              'index.main.js': 'import * as child_module from "child_node_module"; module.exports = child_module;',
+              'package.json': '{ "main": "index.main.js"}',
+              node_modules: {
+                child_node_module: {
+                  'index.main.js': 'module.exports = "child_node_module_of_parent_a"',
+                  'package.json': '{ "main": "index.main.js", "version": "1.0.0"}'
+                }
+              }
+            }
+          }
+        }
+      });
+
+      const directory = path.join(__dirname, '/es6');
+      const filename = path.normalize(`${directory}/module.entry.js`);
+
+      const treeList = dependencyTree({
+        filename,
+        directory,
+        isListForm: true
+      });
+
+      assert.ok(!treeList.includes(path.normalize(`${directory}/node_modules/child_node_module/index.main.js`)));
+      assert.ok(treeList.includes(path.normalize(`${directory}/node_modules/parent_module_a/node_modules/child_node_module/index.main.js`)));
+    });
+  });
+
   describe('module formats', () => {
     describe('amd', () => {
       testTreesForFormat('amd');