diff --git a/CHANGELOG.md b/CHANGELOG.md
index 6fbb9acd2..c01fcac34 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -15,7 +15,7 @@
 ## Main
 
 <!-- Your comment below this -->
-
+- [#1180] Set module properly when tsconfig does not contain compilerOptions.module [@matthewh]
 <!-- Your comment above this -->
 
 ## 12.3.2
diff --git a/source/runner/runners/utils/transpiler.ts b/source/runner/runners/utils/transpiler.ts
index 081031b0e..15ca593fd 100644
--- a/source/runner/runners/utils/transpiler.ts
+++ b/source/runner/runners/utils/transpiler.ts
@@ -149,10 +149,14 @@ const sanitizeTSConfig = (config: any, esm: boolean = false) => {
   //
   // @see https://github.com/apollographql/react-apollo/pull/1402#issuecomment-351810274
   //
-  if (!esm && safeConfig.compilerOptions.module) {
-    safeConfig.compilerOptions.module = "commonjs"
-  } else {
-    safeConfig.compilerOptions.module = "es6"
+  if (safeConfig.compilerOptions.module) {
+    if (!esm) {
+      // .ts files should fall back to commonjs
+      safeConfig.compilerOptions.module = "commonjs"
+    } else {
+      // .mts files must use `import`/`export` syntax
+      safeConfig.compilerOptions.module = "es6"
+    }
   }
 
   return safeConfig