diff --git a/packages/react-scripts/config/webpack.config.dev.js b/packages/react-scripts/config/webpack.config.dev.js
index c9d5ae0b295..90b290e6a75 100644
--- a/packages/react-scripts/config/webpack.config.dev.js
+++ b/packages/react-scripts/config/webpack.config.dev.js
@@ -29,7 +29,15 @@ const publicPath = '/';
 const publicUrl = '';
 // Get environment variables to inject into our app.
 const env = getClientEnvironment(publicUrl);
-
+// Application package.json
+const pkg = require(paths.appPackageJson);
+// An array property in the apps package.json called "transpileDependencies"
+const transpileModules = pkg.transpileDependencies || [];
+// The list of packages in node_modules that babel will include in it's transpile.
+const babelInclude = [
+  paths.appSrc,
+  ...transpileModules.map(m => path.resolve(paths.appNodeModules, m)),
+];
 // This is the development configuration.
 // It is focused on developer experience and fast rebuilds.
 // The production configuration is different and lives in a separate file.
@@ -163,7 +171,7 @@ module.exports = {
           // Process JS with Babel.
           {
             test: /\.(js|jsx|mjs)$/,
-            include: paths.appSrc,
+            include: babelInclude,
             loader: require.resolve('babel-loader'),
             options: {
               // @remove-on-eject-begin
diff --git a/packages/react-scripts/config/webpack.config.prod.js b/packages/react-scripts/config/webpack.config.prod.js
index 3b2a2068db2..48650ffc2c7 100644
--- a/packages/react-scripts/config/webpack.config.prod.js
+++ b/packages/react-scripts/config/webpack.config.prod.js
@@ -35,6 +35,15 @@ const shouldUseSourceMap = process.env.GENERATE_SOURCEMAP !== 'false';
 const publicUrl = publicPath.slice(0, -1);
 // Get environment variables to inject into our app.
 const env = getClientEnvironment(publicUrl);
+// Application package.json
+const pkg = require(paths.appPackageJson);
+// An array property in the apps package.json called "transpileDependencies"
+const transpileModules = pkg.transpileDependencies || [];
+// The list of packages in node_modules that babel will include in it's transpile.
+const babelInclude = [
+  paths.appSrc,
+  ...transpileModules.map(m => path.resolve(paths.appNodeModules, m)),
+];
 
 // Assert this just to be safe.
 // Development builds of React are slow and not intended for production.
@@ -170,7 +179,7 @@ module.exports = {
           // Process JS with Babel.
           {
             test: /\.(js|jsx|mjs)$/,
-            include: paths.appSrc,
+            include: babelInclude,
             loader: require.resolve('babel-loader'),
             options: {
               // @remove-on-eject-begin