diff --git a/pkg/modular_test/lib/src/loader.dart b/pkg/modular_test/lib/src/loader.dart
index 2e6b3ed..8642fd8 100644
--- a/pkg/modular_test/lib/src/loader.dart
+++ b/pkg/modular_test/lib/src/loader.dart
@@ -60,7 +60,9 @@
         var relativeUri = Uri.parse(fileName);
         var isMain = moduleName == 'main';
         var module = Module(moduleName, [], testUri, [relativeUri],
-            mainSource: isMain ? relativeUri : null, isMain: isMain);
+            mainSource: isMain ? relativeUri : null,
+            isMain: isMain,
+            packageBase: Uri.parse('.'));
         if (isMain) mainModule = module;
         modules[moduleName] = module;
       } else if (fileName == '.packages') {
@@ -82,7 +84,8 @@
         return _moduleConflict(moduleName, modules[moduleName], testUri);
       }
       var sources = await _listModuleSources(entryUri);
-      modules[moduleName] = Module(moduleName, [], entryUri, sources);
+      modules[moduleName] = Module(moduleName, [], testUri, sources,
+          packageBase: Uri.parse('$moduleName/'));
     }
   }
   if (spec == null) {
@@ -106,8 +109,9 @@
 Future<List<Uri>> _listModuleSources(Uri root) async {
   List<Uri> sources = [];
   Directory folder = Directory.fromUri(root);
+  int baseUriPrefixLength = folder.parent.uri.path.length;
   await for (var file in folder.list(recursive: true)) {
-    sources.add(Uri.parse(file.uri.path.substring(root.path.length)));
+    sources.add(Uri.parse(file.uri.path.substring(baseUriPrefixLength)));
   }
   return sources..sort((a, b) => a.path.compareTo(b.path));
 }
@@ -156,12 +160,13 @@
       module.isPackage = true;
     } else {
       var packageLibUri = packages[packageName];
+      var rootUri = Directory.fromUri(packageLibUri).parent.uri;
       var sources = await _listModuleSources(packageLibUri);
       // TODO(sigmund): validate that we don't use a different alias for a
       // module that is part of the test (package name and module name should
       // match).
-      modules[packageName] =
-          Module(packageName, [], packageLibUri, sources, isPackage: true);
+      modules[packageName] = Module(packageName, [], rootUri, sources,
+          isPackage: true, packageBase: Uri.parse('lib/'));
     }
   }
 }
@@ -214,7 +219,8 @@
   var isFile = name.endsWith('.dart');
   var entryType = isFile ? 'file' : 'folder';
 
-  var existingIsFile = existing.rootUri == root;
+  var existingIsFile =
+      existing.packageBase.path == './' && existing.sources.length == 1;
   var existingEntryType = existingIsFile ? 'file' : 'folder';
 
   var existingName = existingIsFile
diff --git a/pkg/modular_test/lib/src/suite.dart b/pkg/modular_test/lib/src/suite.dart
index a91c9b3..e5f17a4 100644
--- a/pkg/modular_test/lib/src/suite.dart
+++ b/pkg/modular_test/lib/src/suite.dart
@@ -41,11 +41,18 @@
   /// package name matches the module name.
   bool isPackage;
 
+  /// When [isPackage], the base where all package URIs are resolved against.
+  /// Stored as a relative [Uri] from [rootUri].
+  final Uri packageBase;
+
   /// Whether this is the main entry module of a test.
   bool isMain;
 
   Module(this.name, this.dependencies, this.rootUri, this.sources,
-      {this.mainSource, this.isPackage: false, this.isMain: false}) {
+      {this.mainSource,
+      this.isPackage: false,
+      this.isMain: false,
+      this.packageBase}) {
     if (!_validModuleName.hasMatch(name)) {
       throw ArgumentError("invalid module name: $name");
     }
diff --git a/pkg/modular_test/test/loader/dag/expectation.txt b/pkg/modular_test/test/loader/dag/expectation.txt
index ef49643..885c41f 100644
--- a/pkg/modular_test/test/loader/dag/expectation.txt
+++ b/pkg/modular_test/test/loader/dag/expectation.txt
@@ -18,8 +18,8 @@
 d
   is package? no
   (no dependencies)
-  d.dart
-  e.dart
+  d/d.dart
+  d/e.dart
 
 main
   **main module**
diff --git a/pkg/modular_test/test/loader/dag_with_packages/expectation.txt b/pkg/modular_test/test/loader/dag_with_packages/expectation.txt
index ff6f03a..df35ba5 100644
--- a/pkg/modular_test/test/loader/dag_with_packages/expectation.txt
+++ b/pkg/modular_test/test/loader/dag_with_packages/expectation.txt
@@ -18,8 +18,8 @@
 d
   is package? no
   (no dependencies)
-  d.dart
-  e.dart
+  d/d.dart
+  d/e.dart
 
 main
   **main module**
diff --git a/pkg/modular_test/test/loader/default_package_dependency_error/expectation.txt b/pkg/modular_test/test/loader/default_package_dependency_error/expectation.txt
index 891da78..cf449f3 100644
--- a/pkg/modular_test/test/loader/default_package_dependency_error/expectation.txt
+++ b/pkg/modular_test/test/loader/default_package_dependency_error/expectation.txt
@@ -3,9 +3,9 @@
 expect
   is package? yes
   dependencies: meta
-  expect.dart
-  matchers_lite.dart
-  minitest.dart
+  lib/expect.dart
+  lib/matchers_lite.dart
+  lib/minitest.dart
 
 main
   **main module**
@@ -16,5 +16,5 @@
 meta
   is package? yes
   (no dependencies)
-  dart2js.dart
-  meta.dart
+  lib/dart2js.dart
+  lib/meta.dart
diff --git a/pkg/modular_test/test/loader/tree/expectation.txt b/pkg/modular_test/test/loader/tree/expectation.txt
index ffcf4b0..f438e22 100644
--- a/pkg/modular_test/test/loader/tree/expectation.txt
+++ b/pkg/modular_test/test/loader/tree/expectation.txt
@@ -18,8 +18,8 @@
 d
   is package? no
   (no dependencies)
-  d.dart
-  e.dart
+  d/d.dart
+  d/e.dart
 
 main
   **main module**
diff --git a/pkg/modular_test/test/loader/valid_packages/expectation.txt b/pkg/modular_test/test/loader/valid_packages/expectation.txt
index e549eaa..3c0888d 100644
--- a/pkg/modular_test/test/loader/valid_packages/expectation.txt
+++ b/pkg/modular_test/test/loader/valid_packages/expectation.txt
@@ -3,17 +3,17 @@
 expect
   is package? yes
   dependencies: meta
-  expect.dart
-  matchers_lite.dart
-  minitest.dart
+  lib/expect.dart
+  lib/matchers_lite.dart
+  lib/minitest.dart
 
 js
   is package? yes
   (no dependencies)
-  js.dart
-  js_util.dart
-  src/
-  src/varargs.dart
+  lib/js.dart
+  lib/js_util.dart
+  lib/src/
+  lib/src/varargs.dart
 
 main
   **main module**
@@ -24,5 +24,5 @@
 meta
   is package? yes
   (no dependencies)
-  dart2js.dart
-  meta.dart
+  lib/dart2js.dart
+  lib/meta.dart