diff --git a/src/typescript.ts b/src/typescript.ts
index f18e59b4..02ac9585 100644
--- a/src/typescript.ts
+++ b/src/typescript.ts
@@ -9,6 +9,7 @@ export function makeDefaultTypescriptConfig() {
     preserveConstEnums: true,
     strictNullChecks: true,
     sourceMap: true,
+    allowJs: true,
     target: ts.ScriptTarget.ES5,
     moduleResolution: ts.ModuleResolutionKind.NodeJs,
     lib: ['lib.es2015.d.ts'],
@@ -53,7 +54,21 @@ export function extractFileNames(cwd: string, provider: string, functions?: { [k
       const fnName = _.last(h.split('.'))
       const fnNameLastAppearanceIndex = h.lastIndexOf(fnName)
       // replace only last instance to allow the same name for file and handler
-      return h.substring(0, fnNameLastAppearanceIndex) + 'ts'
+      const fileName = h.substring(0, fnNameLastAppearanceIndex)
+
+      // Check if the .ts files exists. If so return that to watch
+      if (fs.existsSync(path.join(cwd, fileName + 'ts'))) {
+        return fileName + 'ts'
+      }
+
+      // Check if the .js files exists. If so return that to watch
+      if (fs.existsSync(path.join(cwd, fileName + 'js'))) {
+        return fileName + 'js'
+      }
+
+      // Can't find the files. Watch will have an exception anyway. So throw one with error.
+      console.log(`Cannot locate handler - ${fileName} not found`)
+      throw new Error('Typescript compilation failed. Please ensure handlers exists with ext .ts or .js')
     })
 }
 
diff --git a/tests/assets/hello.ts b/tests/assets/hello.ts
new file mode 100644
index 00000000..e69de29b
diff --git a/tests/assets/jsfile.js b/tests/assets/jsfile.js
new file mode 100644
index 00000000..e69de29b
diff --git a/tests/assets/world.ts b/tests/assets/world.ts
new file mode 100644
index 00000000..e69de29b
diff --git a/tests/typescript.extractFileName.test.ts b/tests/typescript.extractFileName.test.ts
index 13ca2339..2c2cfbe5 100644
--- a/tests/typescript.extractFileName.test.ts
+++ b/tests/typescript.extractFileName.test.ts
@@ -4,21 +4,21 @@ import * as path from 'path'
 
 const functions: { [key: string]: ServerlessFunction } = {
     hello: {
-        handler: 'my-folder/hello.handler',
+        handler: 'tests/assets/hello.handler',
         package: {
             include: [],
             exclude: []
         }
     },
     world: {
-        handler: 'my-folder/my-subfolder/world.handler',
+        handler: 'tests/assets/world.handler',
         package: {
             include: [],
             exclude: []
         }
     },
-    create: {
-        handler: 'create.create',
+    js: {
+        handler: 'tests/assets/jsfile.create',
         package: {
             include: [],
             exclude: []
@@ -32,9 +32,9 @@ describe('extractFileName', () => {
             extractFileNames(process.cwd(), 'aws', functions),
         ).toEqual(
             [
-                'my-folder/hello.ts',
-                'my-folder/my-subfolder/world.ts',
-                'create.ts',
+                'tests/assets/hello.ts',
+                'tests/assets/world.ts',
+                'tests/assets/jsfile.js',
             ],
         )
     })