diff --git a/src/compiler/parser.ts b/src/compiler/parser.ts
index cc3fb24bdb86d..3836c980b45c7 100644
--- a/src/compiler/parser.ts
+++ b/src/compiler/parser.ts
@@ -463,6 +463,10 @@ namespace ts {
         return file.externalModuleIndicator !== undefined;
     }
 
+    export function isInternalModule(file: SourceFile): boolean {
+        return file.internalModuleIndicator !== undefined;
+    }
+
     // Produces a new SourceFile for the 'newText' provided. The 'textChangeRange' parameter
     // indicates what changed between the 'text' that this SourceFile has and the 'newText'.
     // The SourceFile will be created with the compiler attempting to reuse as many nodes from
@@ -675,7 +679,7 @@ namespace ts {
             Debug.assert(token() === SyntaxKind.EndOfFileToken);
             sourceFile.endOfFileToken = <EndOfFileToken>parseTokenNode();
 
-            setExternalModuleIndicator(sourceFile);
+            setInternalExternalModuleIndicators(sourceFile)
 
             sourceFile.nodeCount = nodeCount;
             sourceFile.identifierCount = identifierCount;
@@ -5912,15 +5916,20 @@ namespace ts {
             sourceFile.checkJsDirective = checkJsDirective;
         }
 
-        function setExternalModuleIndicator(sourceFile: SourceFile) {
-            sourceFile.externalModuleIndicator = forEach(sourceFile.statements, node =>
-                hasModifier(node, ModifierFlags.Export)
+        function setInternalExternalModuleIndicators(sourceFile: SourceFile) {
+            forEach(sourceFile.statements, node => {
+                if (hasModifier(node, ModifierFlags.Export)
                     || node.kind === SyntaxKind.ImportEqualsDeclaration && (<ImportEqualsDeclaration>node).moduleReference.kind === SyntaxKind.ExternalModuleReference
                     || node.kind === SyntaxKind.ImportDeclaration
                     || node.kind === SyntaxKind.ExportAssignment
                     || node.kind === SyntaxKind.ExportDeclaration
-                    ? node
-                    : undefined);
+                ) {
+                    sourceFile.externalModuleIndicator = node
+                }
+                else if (node.kind === SyntaxKind.ModuleDeclaration || node.kind === SyntaxKind.NamespaceImport) {
+                    sourceFile.internalModuleIndicator = node
+                }
+            })
         }
 
         const enum ParsingContext {
diff --git a/src/compiler/program.ts b/src/compiler/program.ts
index 7893fee651e2d..2b97c7f7e15df 100644
--- a/src/compiler/program.ts
+++ b/src/compiler/program.ts
@@ -1754,7 +1754,7 @@ namespace ts {
                     programDiagnostics.add(createCompilerDiagnostic(Diagnostics.Option_isolatedModules_can_only_be_used_when_either_option_module_is_provided_or_option_target_is_ES2015_or_higher));
                 }
 
-                const firstNonExternalModuleSourceFile = forEach(files, f => !isExternalModule(f) && !isDeclarationFile(f) ? f : undefined);
+                const firstNonExternalModuleSourceFile = forEach(files, f => isInternalModule(f) && !isDeclarationFile(f) ? f : undefined);
                 if (firstNonExternalModuleSourceFile) {
                     const span = getErrorSpanForNode(firstNonExternalModuleSourceFile, firstNonExternalModuleSourceFile);
                     programDiagnostics.add(createFileDiagnostic(firstNonExternalModuleSourceFile, span.start, span.length, Diagnostics.Cannot_compile_namespaces_when_the_isolatedModules_flag_is_provided));
diff --git a/src/compiler/types.ts b/src/compiler/types.ts
index 40b8ce3067861..c538e1aeb596e 100644
--- a/src/compiler/types.ts
+++ b/src/compiler/types.ts
@@ -2288,6 +2288,8 @@ namespace ts {
 
         // The first node that causes this file to be an external module
         /* @internal */ externalModuleIndicator: Node;
+        // The first node that causes this file to be an internal module
+        /* @internal */ internalModuleIndicator: Node;
         // The first node that causes this file to be a CommonJS module
         /* @internal */ commonJsModuleIndicator: Node;